Please Call Me (PCM) inventor Nkosana Makate has accused businessman Errol Elsdon of using Black Rock Mining as his “alter ego” in the battle over funding his fight against Vodacom.
Black Rock, which is suing Makate for 40% of his undisclosed payout from Vodacom, was effectively indistinguishable from Elsdon, Makate argues in recently filed court papers.
In the documents, Makate also accuses Elsdon and his co-financiers of making “false and fraudulent misrepresentations and nondisclosures” that “induced” him into the funding agreement.
Makate describes Elsdon as Black Rock's “controlling mind” and alleges the company was used as a “device or facade” and a “shield” to protect him from any liabilities that he may have faced as the claimed investor in the litigation.
The allegations add another layer to an already tangled funding saga involving a cast of businessmen, lawyers, investors and companies stretching from South Africa to the British Virgin Islands, Bermuda, Luxembourg and Cyprus.
Enticing proposition
The saga – which ITWeb will unpack in detail over the coming weeks – dates back to 2011, when Makate signed a deal with the late Christiaan Schoeman in his personal capacity and that of “a company to be nominated”.
In terms of that agreement – which also resulted in Makate's current lawyer, Wilna Lubbe, being appointed to lead the charge against South Africa's largest mobile operator – Schoeman and Black Rock Mining, which was nominated in 2013, would fund the fight in return for 40% of the proceeds.
Makate also claims in the latest court filing that Black Rock misrepresented itself as a company that was “in the business of litigation funding, such as was needed by Makate”. Further, according to the court documents, the company allegedly distorted its financial means and legal standing to be able to fulfil its side of a funding deal.
He said, she said
Alongside various court filings made since last November – shortly after Makate’s settlement with Vodacom – Elsdon and the PCM inventor have been involved in various public spats, with Makate calling Elsdon and Black Rock frauds, and Elsdon threatening to sue him for defamation.
Elsdon has issued a press release saying he “will not be branded a criminal for honouring a contract,” in response to Makate's statements that his British Virgin Islands-registered company Black Rock Mining is “fraudulent”.
But Makate and Elsdon are not the only actors in this saga; a number of co-financiers were also involved. Tracey Röscher is named throughout several court papers – alongside businessman Kevin Brian Jenkins, and of course Schoeman, and his unnamed ex-wife – as also being one of the early funders. Röscher's role in litigation is limited.
Until Makate's most recent filing, Röscher is mostly named in court papers as an early investor, apart from being cited in 2016 in an offshoot case, when she and Elsdon sued Schoeman, Lubbe, and the law firm in which Lubbe is a partner – Stemela and Lubbe Inc – in a matter that is tangential to the current drama. Jenkins, who appears to be an investor with various interests, only makes an early appearance.
Schoeman vanishes from the legal wrangling after 2018, with his death confirmed in various court documents, though the date and circumstances of his death are not recorded in the papers ITWeb reviewed.
* Click here for more detailed information on the people involved in this saga.
All mine
Back to the current case. Elsdon is now suing Makate for what he says is his rightful share, with the PCM inventor arguing that the majority of the funding never materialised – just under R8 000 was paid over, it is claimed. Elsdon, conversely, claims he provided R4.39 million, with £250 000 – R3.75 million at the time – being secured from Bermuda-based Global Distressed Alpha Fund in 2013.
While the value of Makate’s Vodacom settlement is confidential, Elsdon has claimed it was worth R1 billion. Peter Takaendesa, chief investment officer at Mergence Investment Managers, has estimated the settlement at around R660 million.
In addition, Makate argues in court papers that Black Rock – which last December lost a bid to freeze the Vodacom settlement pending an arbitration hearing – ceased to exist when it was deregistered in the British Virgin Islands between April 2014 and December 2020.
The High Court ruled that the funds didn’t urgently need to be frozen because there was no danger of it being “dissipated” and Black Rock couldn’t claim financial harm regarding a matter it hadn’t yet won.
Deal or no deal
Another leg to Makate’s argument is that neither Black Rock nor Elsdon are entitled to any of the settlement as the contract was cancelled at least a decade ago. This is where the company ‘Raining Men’ first appears.
A 2018 judgement by Judge NB Tuchten in the North Gauteng High Court in Pretoria records that Schoeman, who had at one stage described Raining Men as his company (although other investors were involved), sent Lubbe an e-mail in December 2014 concerning the funding deal's status.
In the e-mail, Schoeman distances himself from Raining Men, stating: “There is no agreement between Makate and Raining Men, and they are not entitled to any rights under the Funding Agreement... I am the only person who holds those rights, until I nominate a company in my place.”
“The validity of the cancellation is, however, now in dispute,” recorded Judge Tuchten. The judge does note that “at the time it [the cancellation] was purportedly made, it suited Schoeman, Elsdon and Röscher for the funding agreement to be cancelled”.
Makate backs this assertation up, although with different timeframes. A Heads of Argument filed in response to Elsdon’s November bid to freeze the money, states the deal was cancelled twice: once in 2015 and again in 2021.
Twists and turns
Another twist to this matter comes in 2015, when there was a legal skirmish over whether the deal had been struck with Raining Men, at that stage still connected with Schoeman, or with Elsdon’s Black Rock.
An arbitrator ruled five years later that the nomination was with Black Rock as a purported transfer of the deal to Raining Men was fraudulent. The arbitrator, advocate MH Mabena, also made several other points as to the contract, the companies and additional deals, which ITWeb will unpack later in this PCM series.
Elsdon’s lawyers, SN Mnguni Inc, were specifically asked by ITWeb to comment on the allegations contained in Makate’s latest court papers and, at the time of publication, have not done so. They have previously said: “Our client’s representatives have instructed us to defend the matter vigorously as they remain steadfast in the assertion that they have a valid claim against Mr Makate emanating from the funding agreement concluded between the parties.”
Elsdon has also disputed Makate’s claims in various court documents. He has, as a “former director” litigated on behalf of Black Rock, stating in his November affidavit that he is “duly authorised on behalf of Black Rock to instruct attorneys, depose to affidavits, and generally do all things necessary to prosecute this application to finalisation”.
Having been deregistered in 2014, Black Rock was restored to the British Virgin Islands register in 2020 and is still currently lawfully registered, Elsdon says. In addition, he argues that Black Rock continued to remain “actively engaged in the litigation funding” and Makate was not only aware of the “temporary deregistration” but also continued to accept funding.
READ NEXT: To get more background on the various players in this story, read ‘The Please Call Me millions: The cast of characters’.
* Next week, ITWeb will delve further into the funding arrangements as we continue to detail this tangled web.
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