For most of 2011, it didn’t look like ‘Please Call Me’ inventor Nkosana Makate had any chance of beating Vodacom in the legal case. He was broke, had been through a succession of lawyers, and a debarred advocate who reviewed his case file branded it with a four-letter acronym deeming it ill-conceived.
But the now-deceased Christian Schoeman didn’t give up and signed an agreement with Makate in November 2011 to fund his case, alongside plotting out a new legal strategy ahead of what would go on to become a decades-long battle. Makate and Vodacom settled the long-running matter on 4 November last year for his 2000 invention of the ‘Please Call Me’ service.
Early funder, Errol Elsdon tells ITWeb that when Schoeman, struck off the roll in 1999, first reviewed Makate’s court papers, he returned the file with the acronym “FUBR” written in red, bold letters on the front page. He also explains what it stands for, which, in the name of decency, ITWeb is explaining as ‘Fouled Up Beyond Repair’ – less polite variations are available.
“That would have been the end of the matter, however after consideration, Schoeman came up with a new strategy which involved withdrawing Makate’s claim and re-issuing new proceedings on a different course of action, formulated by Schoeman,” says Elsdon.
White knight
Schoeman signed the 2011 funding agreement “in his capacity as authorised representative of a company ‘to be nominated’”, a deal recorded in several court papers. Elsdon says this was so he could secure the agreement of Kevin Jenkins, Tracey Röscher, lawyer Wilma Lubbe and advocates Cedric Puckrin and Reinard Michau to be early investors.
(Biographies of the key players are detailed here. Those who aren’t germane to this particular series have not been included.)
Elsdon tells ITWeb that he first encountered Makate at a meeting “arranged by Chris Schoeman at the Midrand Protea Hotel in October 2011”. Schoeman disappears from the legal wrangling after August 2018, with his death confirmed in various court documents, though the date and circumstances are not recorded in the papers ITWeb reviewed.
The company Schoeman later nominated turned out to be Black Rock, on 18 July 2013. Today, the British Virgin Islands-registered Black Rock is represented by Elsdon – described in the media and various court cases as a major businessman with interests including litigation funding. He’s also described variously as both a ‘director’ and ‘former director of Black Rock who can nevertheless act on the company’s behalf’.
Game changer
Back in 2012, under the new strategy, and just months before hearings started in the Johannesburg High Court, Makate’s legal team amended his claim. In the new pleadings, he argued that Vodacom had agreed to negotiate a fair amount with him and, if they couldn’t agree, then-CEO Alan Knott-Craig would decide the amount, or that Makate would be paid no less than 15% of the revenue.
According to court papers from the case in 2013, Makate and a series of lawyers had previously put forward that he was entitled to a fixed 15% share of the revenue generated by ‘Please Call Me’.
The new legal approach also saw Masilo Attorneys, Makate’s representation at the time, replaced by Wilna Lubbe from Stemela & Lubbe Inc. (The full court battle between Makate and Vodacom will be unpacked over the coming weeks.)
Court rolls and media reports show that Makate’s case was heard between May and August 2013. During those hearings, Makate testified that “he became depressed,” that his lawyers “got tired” and that he “ran out of money,” Johannesburg High Court Judge Coppin wrote in the 2014 decision.
The fight with Vodacom had started in 2007 when Makate sent his first letter of demand in May. That was followed by further correspondence in July 2007 and January 2008, before instigating court action in the Johannesburg High Court in July 2008.
Millions here, thousands there
Elsdon says in one of the court documents that he raised an initial sum of R500 000 “through investments made by myself, Mr Schoeman and Ms Tracy (sic) Röscher. This amount was paid to Ms Lubbe in respect of Mr Makate’s fees.” Schoeman’s unnamed ex-wife is also at times recorded as an early investor.
Lubbe told Elsdon in July 2013 that additional funding was required because the R500 000 had been “exhausted”, Elsdon states. Elsdon’s solution was to source funding from offshore companies through Black Rock.
“I raised £250 000 (approximately R3 750 000 at that point in time) from a London investor, the Global Distressed Alpha Fund III represented by its agent, Simba Capital VIII Sàrl… In total, an amount of R4 390 000.00 was raised and applied to fund the litigation.”
(Based on ITWeb research, Global Distressed Alpha Fund is based in Bermuda, but we will explore this part of the story in the next instalment.)
Elsdon, who instigated a legal bid to freeze Makate’s payout late last November, claims that R2 400 000 was paid by his company to Stemela & Lubbe “in respect of fees and disbursements, with the balance applied to counsel, expert witnesses and litigation expenses”.
International expertise
Among the witnesses Makate’s legal team called in 2013 was Lazarus Muchenje, previously a senior Vodacom finance executive, after Elsdon, Schoeman, and Röscher travelled to the Isle of Wight to consult with him. John Masilo – the attorney who directly predated Lubbe – was also called on a technical issue.
US-based expert witness in telecommunications and internet technology, Ivan Zatkovich, also took the stand for Makate. Zatkovich describes himself on his website – which currently has an expired security certificate – as having “28 years of experience in computer science, computer networks and software engineering”. He testified on the technical aspects of ‘Please Call Me’.
However, following the Vodacom settlement last year, Makate and his legal team say Black Rock never provided any funding towards his litigation.
Makate has told ITWeb that he had to carry the cost because Black Rock Mining never existed, apart from on paper and had no money.
This assertation is also contained in Makate’s answering court papers to Elsdon’s bid to freeze the payout that “on 5 December 2014, Schoeman paid the paltry amount of R7 853 towards Makate’s legal costs… That is the last payment ever made towards Makate’s litigation costs.”
These papers add that “Makate has been dependent on the generosity of his legal representatives ever since”.
A luta continua
Elsdon lost his attempt to have the money frozen in late November last year. Undeterred, he is still claiming R400 million – 40% of a settlement he says is worth R1 billion – with the other early investors seemingly having fallen off the radar.
The final settlement between Makate and Vodacom has not been revealed publicly by either party, but Peter Takaendesa, chief investment officer at Mergence Investment Managers, has estimated the settlement at around R660 million.
This contentious battle between Makate and Black Rock has recently been playing out in the media, with a case to be set down in which Makate aims to prove that the British Virgin Islands-registered company had no assets, never traded and lacked the means to honour the funding agreement it signed.
Because Makate has also called Elsdon a fraud, the Black Rock man has filed a defamation suit. Elsdon tells ITWeb that this relates to “comments made by Makate about Elsdon in the press,” while Makate says he is now “stepping away from the media”.
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