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The Industrial Development Corporation insists that there was no exchange of cash between itself and a trust set up by one of its subsidiaries in order to buy shares for black employees.
Last week City Press reported that Foskor’s Kopano Employee Share Ownership Scheme (Esop) Trust, valued at about R350 million, had collapsed, leaving the dreams of more than 1800 employees in tatters. The IDC is the main shareholder in Foskor, accounting for 59% of the fertiliser and chemicals manufacturing giant.
Documents obtained by City Press show that in 2010 the IDC lent the Esop Trust about R147 million in order to acquire 6% of Foskor’s shares on behalf of the 1800 employees. However, the IDC’s spokesperson Zama Luthuli said no money had exchanged hands between the IDC and the Esop Trust. At the time Foskor was valued at about R3.5 billion and a 6% stake in the company was worth R210 million.
Read: Foskor's R350m BEE scheme collapses
“Yes, it was a loan, but we did not give them money or transfer it into their account. The money was used to buy the shares at Foskor and we gave them the shares. And the agreement was that the Esop Trust would repay the loan through dividends they receive from Foskor. The whole thing worked like how it would work if you borrowed money from the bank to buy a house. The bank will not give you hard cash, they will pay over the money to the seller. In this case, the seller was Foskor and the money was paid to Foskor.”
Documents received by City Press reveal that the deal had a 10-year lifespan and that the agreement was that if Foskor listed on the JSE, the employees would become direct shareholders in the company. Alternatively, the parties had agreed that if Foskor failed to list, employees would receive cash payments. At the end of March last year Foskor failed to list but the employees weren’t paid.
Foskor’s spokesperson Frans Mokhondo said this was because the shares sold to the Esop Trust were linked to the company’s performance.
“The company has not made money in the recent past. It is not a secret that the company is struggling financially and there was no money.”
The company has not even finished repaying the IDC, he said.
Mokhondo also insisted that the scheme had not collapsed and that it was being “restructured” following the failure to meet targets.
This was despite having told employees in a memorandum in April that the scheme had collapsed due to Foskor’s non-profitability.
Employees downed tools for six weeks in March and demanded a R25 000 cash payout each, claiming the money was due to them following the maturing of the share ownership scheme in March last year. To end the strike, Foskor paid an ex gratia amount of R7000 to each employee.
In the agreement with the National Union of Metal Workers of South Africa, Foskor said: “The parties acknowledge and agree that the current and future demand on the on the defunct Esop scheme shall henceforth cease to exist. The payment is not in lieu of the Esop, but a settlement of mutual interest meant to stabilise the business and promote peace and stability in the operations. The company undertakes to consult the union when a new scheme to replace Kopano is developed.”
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