British Virgin Islands-registered Black Rock Mining – which businessman Errol Elsdon says funded Nkosana Makate’s fight against Vodacom – ceased to exist in 2014 amid what an arbitrator later found was a fraudulent transfer of its claimed right to 40% of Makate’s winnings to a new entity: Raining Men.
In addition, Raining Men, the arbitration ruling and company records show, has as directors early funder Tracey Röscher as well as Elsdon. (Biographies on various players in the Please Call Me saga can be found here.)
These details of the 18-year Please Call Me case − a legal battle Makate finally confidentially settled with Vodacom last year on the basis of having invented the service − are contained in a 2020 ruling by arbitrator advocate Andrew Mabena.
The arbitration itself was brought about by disbarred advocate, the since deceased, Christian Schoeman, and Raining Men, aiming to prove that Raining Men now held Black Rock’s right to benefit from Makate’s funding agreement.
Having started the arbitration process in 2015, Schoeman subsequently withdrew his claim in November 2018, and the process continued without him, with Raining Men represented from 2019 by its business rescue practitioner, Thomas Hendrick Samons (more about this aspect of the convoluted case in later weeks).
Paper claim
Mabena says Black Rock’s nomination “is clear from the written agreement, which was entered into between Simba Capital, a Luxemburg company, Black Rock Mining Limited (with Elsdon signing on its behalf in his capacity as director), Elsdon himself in his personal capacity, Schoeman and [Wilna] Lubbe, acting on Makate’s behalf as his attorney in the litigation against Vodacom,” the ruling reads.
(ITWeb covered the Simba agreement as well as the ins and outs of various associated companies last week in The Please Call Me millions: The Bermuda Triangle. Under this deal, Elsdon claims to have secured £250 000 – some R3.75 million in 2013 – from Bermuda-based Global Distressed Alpha Fund III via its agent, Simba Capital VIII, to fund the fight.)
Ghost company
Mabena writes that as Black Rock Mining ceased to exist when it was deregistered in the British Virgin Islands (BVI) at the end of April 2014 – one of the key aspects of Makate’s defence against Elsdon – Elsdon and Schoeman had to find a workaround to ensure they still had a claim to some of Makate’s potential future winnings.
“It is not clear when they realised Black Rock was deregistered in the BVI, but it left them with a dilemma: the entity which had been entitled to a share in the proceeds of the litigation had dissolved and no longer existed,” the arbitrator writes.
Elsdon, the court papers show, also confirmed that Black Rock ceased to exist, with Mabena writing: “He [Elsdon] confirmed that Black Rock was finally deregistered in the BVI on 30 April 2014 and that the company as an entity had ceased to exist as from date of such deregistration.” This detail is located in paragraph 6.3.2 of the ruling under the section dealing with Elsdon’s testimony.
Mabena also notes that neither Elsdon nor Schoeman told Makate that Black Rock was deregistered in the self-governing British Overseas Territory in the Caribbean, as they “were clearly not concerned about his exposure, having divided the proceeds of funding obtained from third-parties amongst themselves”.
Money trail
To diverge: Makate has separately claimed that Elsdon diverted some of this £250 000 for his own personal gain, directing attorneys representing the fund to, in July 2013, transfer £75 000 each to Cyprus-based Delcay Holdings Limited and his own Cyprus bank account.
At the time, each of the £75 000 allegedly transferred to himself by Elsdon – £150 000 – was worth R2.25 million based on the South African Reserve Bank’s historical exchange rate of R15 to UK Sterling.
Elsdon, on his part, has accused Makate of defaming him in the court of public opinion, threatening to sue him for defamation, a threat Makate has brushed off. A detailed article on Elsdon’s alleged enrichment is in Makate accuses ‘Please Call Me’ funder of diverting R2.5m.
The 2020 arbitration ruling also refers to this transfer of case with Elsdon, during cross-examination, conceding that the Black Rock agreement didn’t provide for a raising fee for himself, Röscher and Schoeman, “but he believed that the litigation against Vodacom only needed £100 000 and that they were entitled to the remainder of £150 000”.
Written in ink
Returning to the nub of the arbitration decision, Mabena found that Black Rock’s deregistration left Elsdon and Schoeman needing another entity, without explaining the switch to Makate. Their problem, Mabena writes, was that Makate had signed a document naming Black Rock as his funder – and any amendment needed his signature.
The solution, according to Mabena, was to replace the deregistered Black Rock with another company in the form of Raining Men through an addendum. “The only way to have achieved it, was to rely on a document which had Makate’s signature on the last page and to change the first three pages to allow for Raining Men’s nomination.”
It is this document, purportedly signed on 24 April 2014, that Mabena found to be fraudulent. The arbitrator noted that, based on the testimony of expert handwriting analyst, Jannie Bester, pages 1, 2 and 3 were forged.
“Bester’s expert opinion was that the writer of the collected specimens (Makate) was not the writer of the questioned initials on pages 1, 2 and 3 of the addendum to the Payment Rights Agreement,” writes Mabena. “Even the untrained eye can see that the initials were peculiarly made over the type-written parts,” writes the arbitrator.
Shelf life
Yet, the company to which the nomination was transferred, Raining Men, didn’t seem to exist in April 2014, two points Mabena made indicates. The first was that an attorney, Mr Smit – a founder of Fourie, Smit & Associates having assisted with preparation for the Makate fight against Vodacom while doing articles at the inventor’s law firm of Stemela & Lubbe – was at a meeting with Lubbe, Schoeman, Röscher and Elsdon.
Smit’s recollection, writes the arbitrator, was that neither Schoeman, Röscher nor Elsdon mentioned the name of a company Raining Men. “He [Smit] heard the reference to Raining Men for the first time before the offices closed in December 2014.
“If Raining Men had really been nominated by Schoeman (with Makate’s consent) on 24 April 2014 as the addendum would reflect, they would surely have referred to the agreement reached and signed by Makate in April 2014 already? The only logical deduction which I can make is that it still hasn’t existed at that stage but was created soon afterwards,” Mabena wrote, accepting Smit’s evidence.
The second point Mabena makes as to Raining Men’s existence is that Companies and Intellectual Property Commission (CIPC) records show that Elsdon and Röscher “were only appointed as directors at CIPC on 13 November 2014”.
Recent company records, accessed by ITWeb on Sunday, show that Röscher and Elsdon are listed as current Raining Men directors, and that the change history lists both Elsdon and Röscher as being added as directors on 12 December 2014. The records also show that the company has been in business rescue since 22 January 2019.
Elsdon himself testified that he obtained Raining Men as a shelf company on 15 April 2014, in conjunction with Röscher, in a bid to formalise a nomination agreement with Schoeman.
“Elsdon was also at a loss to explain why the change of directors of Raining Men was only lodged at CIPC on 13 November 2014,” says Mabena.
ITWeb unsuccessfully attempted to contact Mabena using the cellphone number on the covering note to his ruling, which no longer appears to be his, to ask a question left unresolved by the award: if Black Rock ceased to exist on 30 April 2014 and the purported transfer to Raining Men, whose directors are Elsdon and Röscher, was invalid, what became of Black Rock’s claimed contractual rights?
* Stay tuned: The further falling out between Elsdon and Schoeman – and Schoeman’s various conspiracy theories – is the subject of next week’s piece.
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