MONEYWEB: It’s a warm welcome to Robert Gumede, the chairman of Gijima AST. Well, your share price moved nicely today, Robert. It seems as though the court case, which appears to have gone in your favour – but you need to take us through exactly what’s going on there – had a positive impact amongst investors?
ROBERT GUMEDE: Good evening, Alec, and good evening to your listeners. I think the share price is very heartening to see move, but I just want to remind you, Alec, when I last had an interview with you last year, you said the deal with AST was sort of like a fish swallowing a whale. And I think we have seen the results – that the fish has a stronger jaw than the whale’s.
MONEYWEB: It certainly does. Well, it’s taken a while for you to digest it though, Robert.
ROBERT GUMEDE: Ja, only a year, if you really look at it. The deal was done only in May last year, so this is our first full-year result, and we are happy but there is still a lot of work to be done.
MONEYWEB: But you have been getting support from the institutional investors, as we saw earlier this week the RMB Emerging Companies Fund, which is the top unit trust in the country at the moment, has bought into Gijima AST in the last quarter, and of course Allan Gray are a big supporter of yours as well. So I guess the people who really matter are buying the story?
ROBERT GUMEDE: Yes, sure, no, we are very happy with the support that we have already received from the likes of Allan Gray, RMB, Coronation. And really it’s a vote of confidence, but we are saying it’s just the beginning. Let’s say we still have a lot of work to do, and hopefully in the near future we will be able to get our loyal shareholders to receive some dividends in the future. And we are hopeful that things are going to turn around for even better.
MONEYWEB: Robert, what about this court case that you issued a statement on today?
ROBERT GUMEDE: This court case, as you know, Alec, is something that has been going on. If you really go back in history, in 2002, I was personally attacked, and so was Gijima who today is called Guma, with serious allegations levelled against me and the company. Your previous guests spoke of “serial entrepreneurs”, and I was faced with this serial accuser of note, who really has gone out of his way to commercially and personally assassinate my character in the past three years or so.
MONEYWEB: Johannes Sterenborg and his wife Elizabeth. When did you meet them, or when did you actually have dealings with them?
ROBERT GUMEDE: I dread the day. It was in 2000 when I first met Dr John Sterenborg.
MONEYWEB: Now what happened that led to the unpleasantness?
ROBERT GUMEDE: The long and the short of it is our [indistinct] and, if you remember, in 2000 there were very few BEE companies that could afford to write a cheque of R20m cash without a bank or financial institution providing the funding. And we invested all R30m to acquire 26% in the smart card company, then called “Applied Card Technologies” which is ACT. And, as you know, we have been involved in the Home Affairs national identification system, and the government has since then been talking about issuing a tender for smart cards. We wanted to venture into smart cards so that we could make sure that those cars are not imported from France or Germany – and that’s when we were introduced to Sterenborg and we did a deal and we paid him cash. And obviously there were several non-disclosures and misrepresentation to my advisers at the time – KPMG as well, who conducted a limited due diligence and valuation of the business. And Sterenborg gave us profit warranties in terms of that first tranche of sale of shares. And subsequent to that, a year later, after realising that there was no business being conducted in ACT, we gave him an option to either buy Gijima out and return the R30m that we gave him, or we were to acquire him. We finally bought him out for R5m – and you will ask me why I paid R30m for 26%, and you paid R5m for 74%? It was because of the things that we found in the business – that there were no clients in the business. They just had a once-off contract with Vodacom, one of our major network operators. And little did we know that even the 400 000 cards were supplied by Boer [?], which was a smart card operator in front.
MONEYWEB: So is it all over now after the court order today?
ROBERT GUMEDE: The court order is – if you remember there is currently a 417 insolvency enquiry that Sterenborg initiated, and parallel to that he really embarked on a malicious attack on Gijima or Guma and myself, and we didn’t take kindly to that but we also decided not to play on his hands where he was really utilising a section of the media to really attack us. And I decided that we needed to focus on the legal system, and we initiated in 2003 an action where we were claiming R52m against the profit warranties that he gave us for a period of three years, which obviously what we found in the company, that the company was insolvent to start with, and the money that we brought into the business, he took it out himself. And we then applied to court, you know, to get the money from him that we had paid. It has taken us that long and finally the Supreme Court gave us judgment of about R40m against Dr Sterenborg and his wife.
MONEYWEB: Robert Gumede, a happy Robert Gumede from Gijima AST, proving that the system really does work – sometimes you just have to give it time.