Business Hijacking

[desA]

Originally Posted by desA
By attempting to use the few to prove the many (specific cases to prove the general case), you cannot sustain an argument.

Greg pronounced
Ironic, considering that you constantly reference your singular experience of injustice as proof that our entire legal justice system is broken.

My experiences in SA are plural & over the course of my lifetime. The recent hijacking is the apex of this trajectory. It is arrogant to presume that your perceptions are fact.

[desA]

Back to the topic at hand - Business Hijacking in South Africa.

[Greig Whitton]

Back to the topic at hand - Business Hijacking in South Africa.

We obviously have very different worldviews, but I do genuinely appreciate your willingness to share your experiences so that the rest of us may learn from them. And I hope that those who stole everything that you worked so hard to build are brought to justice, if only eventually.

[desA]

^ Greg, thank you so much for your kind comment. If this thread protects at least one person in SA, it will have achieved its goal.

SA desperately needs each & every business - in order to survive & grow. If these businesses are not adequately protected by common law & fair business practices, it will have an extremely negative effect in the long run. It has to.

A feature of many countries is to encourage arbitration & conflict resolution, either in place of, or preferentially to civil action. In the case of a Business Hijacking, the aggrieved party/ies would lodge a complaint with the local arbitrator, who would sit with both sides & find resolution. In some Nordic countries, the business license would be issued conditional to following these conflict-resolution mechanisms. Anecdotal cases exist of a local arbitrator seizing assets, liquidating them & settling the claim - no court entered. Most Non-Disclosure Agreements in Europe settle by Arbitration, with no mention of civil court whatsoever.

I had an interesting experience in developing an international Non-Disclosure Agreement in SA - the only resolution mechanism offered was the High Court, or above. Arbitration was unheard of. The NDA writer had to research mechanisms for international NDA's & in fact, at last writing, had still not thoroughly resolved these mechanisms. I provided a number of templates as examples. In other words, SA is still leagues behind many first world nations in their conflict-resolution mechanisms.

This (outdated) business culture in SA allows Business Hijackers to thrive, asset strip & plunder, with little recourse by the (dis-advantaged) aggrieved party/ies. Once the plunder of assets begins, the hijack-specialist fleecer tilts the bias in favour of the hijacker & keeps it that way until the business is pushes into liquidation.

[desA]

Let the exposure begin. Names modified for discreteness.

History of the technology
Some 38 years ago, a new, novel heat-exchanger technology was introduced to South Africa, by a Swiss-German inventor, who had been manufacturing in South America. Three patents had been registered internationally, as well as in SA. The concept was radically different to anything else on the market - & still is. The original design concept was kept secret & was embodied in protected calculation programs, which ran on a Texas Instrument calculator. Very little was really known about the design equations, or hidden technology. For some reason (unknown), the developer never advanced the design program into the more modern age of personal computers. We'll call this company TransX.

A British engineer/entrepreneur brought this technology to SA & launched it as TransH. At some point, I assume he ran out of cash & was taken over by R&L, which was a large equipment trader/supplier - with an extensive dealer network.

Further on, R&L realised that TransH was not core business & that heat-exchangers were not a commodity - they required a skilled sales-force who could identify application opportunities & provide workable, reliable solutions.

R&L then spun TransH off into a management buyout. TransH operated reasonably successfully as SA grew industrially & ended up supplying thousands of heat-exchangers around South Africa. The main technology focus was the Gold Mining industry, where SA was world leader at that time. TransH purchased worldwide rights to the TransX brand name/trade mark for some R300k, in 2005, from the Swiss-German developer. The TransX brand name/trademark was retained by TransH as its flagship brand.

In 2008, G&B, a huge industrial distributor in SA & sub-saharan Africa purchased TransH & the TransX brand name/trademark - with intention to enter the heat-exchange business in SA. TransH became a division of G&B.

The business had come full cycle in terms of being absorbed by a large industrial trader/supplier.

(cont).

[desA]

(cont).

G&B era
TransH was operated as a division, within G&B from 2008 until end 2012. The unit never quite settled into G&B's corporate philosophy. The manager retained independence & played the CEO into allowing him to operate the unit as he chose. At a certain point, G&B decided to integrate TransH more tightly into corporate think. In the end, the unit was on a perpetual go-slow & was costing G&B a great deal of cash-burn & pain. The director of the G&B side was a chap called Rickland.

My involvement
I came to TransH in 1988/89 out of a background in the Petrochem industry. I loved the design game & was passionate about the challenges heat-transfer offers. Promise had been made of potential share-ownership, over time - even though the initial remuneration was abysmal. When I arrived, a fairly rudimentary computer program was run on a legacy HP computer (before the days of the PC). I needed a working tool & so wrote a full design program in compiled Basic on the whizzbang 386 of the day - some 16,000 lines of code. Developed the optimisation models for gold-processing economiser/heater sets. (These rules were used to design most Gold-Mine Elution systems in SA). I reviewed & evaluated the original proprietary program's results & developed my own parallel models. With no share-ownership emerging, I decided to move off into consulting, with the stated intent of one day returning to operate, or own TransH.

24 years later, I was back in SA on an extended stay, to take care of family business. I initially assisted a spin-off company who was making a pirate version of the TransX system, using software & drawings purloined from TransH, by two ex staff members.

I explored re-consolidating the TransX family with G&B, with intention to prevent price erosion which had developed due to the presence of the pirate parts in SA, leading to damage to the TransX name. It also made sense to consolidate in order to launch a new phase of technology development & know-how. In the end G&B asked me to serve as a consultant in the TransH division, with aim of moving the design & marketing platform into the modern age. It turned out that TransH was still running the software I'd written in 1988/89 - with a few small code changes over some 14 years (ended up being 99.5% the same as the code I'd originally written).

In 2012 it became clear that G&B would be better served by completely outsourcing TransX manufacture & design to AN Other, & to merely provide the upfront customer connections & a product toll-way, from which they extracted their profit. A really nice, simple model.

A number of potential manufacturers were reviewed & evaluated & in early 2012. I connected Rickland to a company called SAXO, who were involved in the repair of heat-exchangers. I understood these folks to be honest & to potentially have the ability to absorb TransX technology. G&B then took the process with SAXO further & I stepped back to advise & facilitate, as required - maintaining as professional a relationship as possible. G&B then signed and NDA & MOU with SAXO to form a closer collaboration for the manufacture of the TransX range of heat-exchangers. With SAXO not complying with the requirements of the MOU, G&B unilaterally cancelled the agreement after some 45 days. G&B decided to get out of the heat-exchanger manufacturing business & closed the TransH division - retrenching all staff members. SAXO proved to be somewhat of an embarrassment in their not consummating the MOU. I still, however, felt that they had potential to manufacture the product, if carefully guided.

This left the TransX product in limbo, with the real possibility of it going out of production. G&B were rightfully concerned, as was I.

G&B expressed interest that I become personally involved, & find a way to both protect the TransX technology/know-how/IP - so called Technology Custodian - & to find a way to keep the TransX brand alive.

[desA]

(cont).

Topics to follow:
- Closure of TransH within G&B
- Who is SAXO?
- NuCo concept/structure/focus
- Relationship between NuCo & G&B
- Agreement for transfer of TransX IP, brand/trademark from G&B to NuCo
- Signing of Distribution Agreement between NuCo & G&B
- Internal arrangements within NuCo - member structure
- Trading begins for NuCo
- Questions arise wrt NuCo Trading Turnover after 4 months
- Financial fraud within NuCo
- G&B Distribution Agreement forgery
- Impasse
- The hijack fleecer enters
- Pressure builds on both sides
- Hijack is effected - method/fraud/stand-off
- ...
- Further review points right up to present.

I believe that the mistakes I made, as well as the modus of the hijackers will be beneficial to the overly-trusting members of our forum.

The hijackers should be aware, by now, that each & every business meeting was recorded on a hidden, high-power mic dictaphone. In addition I have initiated further activities via SAPS (to be reviewed in this thread), as well as proof of attempted insurance fraud to the tune of R150,000. Lots & lots to come out, over the next while. My reason for stating these aspects is that they were listed in my Response Affidavit in SA Court a few weeks back. These will be on public record, held somewhere in the Court records, no doubt.

[desA]

(cont).

Closure of TransH within G&B
G&B went through due process & closed the TransH business unit. Some 12 staff members were retrenched, with fair payout packages negotiated & fulfilled. In my view, G&B was as fair as possible, under the circumstances. It was sad, in the end, that the retrenched staff were not provided a send-off party. Some had as much as 25 years continuous service with the TransH business unit. The SA way, it seems - perhaps big corporate logic? Sad, anyway. G&B Director Rickland & his sidekick, DaVinci managed the closure process.

I assisted as consultant to assist in orderly closure & transfer technology, per agreement (see more later).

Who is SAXO?
SAXO consists of a single member - Teabag the Welder. Two people work for him : Mrs. Teabag (his wife) (accounts) & Gaboong (workshop) - a long-term sidekick - & a few workshop crew. SAXO's speciality is the repair of heat-exchangers. I had known Teabag the Welder for some years & had had good personal relations with these people. At some point, I has consulted to them for the design of heat-exchanger devices & systems. This capability allowed SAXO to bid on some large projects, one of which was very novel.

Teabag the Welder had a history of starting engineering businesses, stabilising them, then selling them off. In many ways, he appeared to be the Golden Boy in the heat-exchanger industry - someone apparently worthy of collaboration. I performed a background check on Teabag & he was said to honour his promises. (Later review showed a different picture however - many of the folks who purchased his businesses appear to have ended up in financial difficulties after a while. What emerged was a picture of a cunning con-artist who builds up potential purchasers, coaches them into the business & even assists them to set up an image with the bank, so that they can purchase his business).

I trusted these people - implicitly - it has to be said. Their modus was one of coaching & drawing in. I had absolutely no idea of what their true intentions were. These will emerge as we move through this expose. Grand con artists & liars.

Teabag is a dominant character with a dual personality. At times he can be an incredibly engaging fellow, but, his staff, Mrs Teabag & Gaboong are totally frightened by him. They appear incapable, in hindsight, of standing up for what is legally, or morally right & defer to Teabag's every whim. He appears to be an emotional abuser. In my initial relations, he had been the perfect gentleman - to his workshop crew, he could often be an abuser - screaming at them at the top of his voice. His workshop crew turnover was incredibly high.

It appeared at one stage that Teabag was attempting to coach me into purchasing his business at inflated price. A heat-exchanger repair shop was not worth the money he was pushing for - as without Teabag & Gaboong, little would be left, besides a few machines, stock & a smidgeon of good-will. I did not fall under Teabag's dominance, as I don't do abusers at all well. When I decided not to continue towards purchase of SAXO, Teabag began to change.

[Dave A]

Reminds me of an observation I once read somewhere -

The true measure of a person's character is the way they treat the people that aren't important to them.

[desA]

^ Excellent point, Dave.

This should have been my first wake-up call. I chose to overlook it & convinced myself that Teabag the Welder had a good side that would presumably dominate future business dealings. I weighted heavily the good side & almost discounted the bad side.

Have been reading an interesting series of books by Nassim Nicholas Taleb, author of The Black Swan (Fooled by Randomness, Antigragile). Taleb makes the point that true nature correlates more closely to a person's negative behaviour.

In other words, I should have weighted Teabag's negative behaviour more heavily & his good behaviour lightly. In the end, this view would have definitely approximated Teabag's true nature.

[Justloadit]

I have become aware of this double personality a few years back, and now use this in my decision making. It is quite amazing to find the number of double personality people in your day to day trading.

One very important point that comes across as a loud ring, is the manner in which the person you are dealing with handles his staff when something goes wrong with a product/delivery/repair what ever. If he shouts at his staff upon realization of the error in your presence, then it tells you his character, that he has no respect for anyone, and is being polite with you simply because his hands are inside your pocket, relieving you of your cash, and basically blames everyone else on the planet for his short coming. Let you come back and make a complaint about the product, and you will see the true character come out, the Jekyll in Mr Hide (Pun Intended).

[desA]

^ A very interesting post, Justloadit - very astute & bang on the money!

I remember the occasion with Teabag the Welder where they were bending a finned coil for a refrigeration system. His workshop supervisor, an artisan & labourer were working on the project. It was a very difficult bend & all were trying their utmost best. When Teabag went down to the shop floor from his office, all hell broke loose. His face went beetroot in colour & he began shouting at the top of his lungs. As one point he began pulling the workpiece out of the workmens' hands & became extremely abusive. I was extremely embarrassed & headed out of the factory - assuming he was having a bad day.

This behaviour was repeated on numerous occasions with workshop staff.

Ironically this fellow is on dictaphone as attempting to defraud his insurance company out of R150k. When they declined his application, he went ballistic, shouting at his wife & threatening to go to another company. This incident occurred a few months after NewCo had been formed (more on this later) & scared me to death. This was one of the principle reasons for me beginning to become wary of the relationship.

Interestingly enough, his own son refuses to work with his father (the old bastard - he is called by the lad). Again, I discovered this after NewCo had been formed. There seems to be only so much one can find out during due diligence, it appears.

Lessons learned.

[Justloadit]

I also find that they have 2 personalities, the social one and the business one.

The social one, they seem to be the nicest people on the planet, everyone loves them and wants to be around them, they are also very caring and giving. As business people they are ruthless, and will even take the proverbial sweet from a baby. A wolf dressed in sheep's clothing. The social behavior, is used to line up new victims.

When you warn people about them, they never believe you as they have always interacted in the social circle. When they become a victim they come and tell you about it, but alas too late.

I have also found on occasions, that these people, when they have a bone to pick with you, will go to very great lengths to make your life miserable, even fabricating and using false claims to get the law involved against you.

So the moral of the story is to do your homework before getting involved. Ask questions, speak to staff, speak to clients, and spend plenty of time at the business place if at all possible to learn your next business partner.

[desA]

^ Again, an incredibly astute post. You have the person pegged, absolutely & utterly.

The problem I typically have is that I am inherently trusting, by nature. This last incident has tended to make me rather cynical towards others in the business world.

Was I coached towards destruction - absolutely! Again, major lessons learned from Teabag the Welder.

[desA]

Once the end of this expose is reached, I am considering exposing the real names of the actors in this hijacking. This may be profoundly useful to other future potential victims, of this gang.

Will think through the pro's & con's of this, before making a final decision.