Alec Hogg (01:35) Well, two days ago, David Shapiro and I were giving you some insight as the news broke about a crack in the six, the campus six, who had taken on Judge Denise Fisher's scathing judgment. The owners, the Japanese multinational NTT, which bought the whole of Dimension Data some time ago, did not like the deal. They took it to court and, well, what's emerged is a blot on corporate South Africa, or so it seems.

When we spoke two days ago, David and I were really taking the freshest information that was around. In a way, I suppose we were also giving our thoughts and spitballing a little. But the anti-NTT four, so the four of them left, are now quite cross about some of the issues. And they sent through a detailed reply through Neil Lazarus SC. Neil says it's not his reply, it's the four of them. And we've published that on BizNews. Some of the points they make do land.

Doc Watson, one of the six, although he isn't named by the confessor, Jason Goodall, is not in Australia. Dave thought he was. Well, he isn't; honest mistake. He's in South Africa. In fact, he's got his own legal counsel. We found out about that quickly and addressed it. Goodall's $17.5 million was not a pension; it was mostly long-term incentives. That's what we're now told by those who are inside the camp. And they say that the six of them had put in R70 million in equity capital.

It's a complicated story, and it's one that has got orange overalls hanging on the side, as we heard yesterday from Paul Hoffman, that could be filled by some incredibly wealthy individuals. So there's a heck of a lot at stake here. David Shapiro's back, though, to pick up on whether Goodall's confession, which they are now saying wasn't made under oath, is actually admissible in any way. Because it wasn't made under oath, no one's tested it, they say. It hasn't been before the appeal court. So is it a confession or a settlement term? That's really what Jeremy Ord, Lazarus and that group are arguing.

David Shapiro (04:12) It's very interesting. First of all, Neil's not the advocate for them. I think he's just a consultant on the outside, Neil Lazarus.

Alec Hogg But he's an advocate, though, isn't he?

David Shapiro He is an advocate, but he's not acting for them in the court case.

Alec Hogg (04:27) So why does Jeremy Ord tell me to talk to him, David?

David Shapiro (04:30) I'm not going to go down there, but he's not the advocate for them in this case. Anyway, the one thing that I want to point out, and this bothers me: Jason makes this confession. The reply that we do get from [Dimension Data], sorry, from the four or five, is that this contradicts what he said under oath in the admissions given to Denise Fisher in the case.

There's another point that's quite interesting, which is that it was never a case that was argued in court. Everybody signed an affidavit and submitted it, and the decisions were made based upon this. Now, Jason has given a statement under oath, and now he contradicts it.

I'm just interested in where this goes. That's what I keep asking. If he stands by the statement that he made to NTT in London, well, how does this affect the case? How does it affect the admissions that have been made to Denise Fisher? And how does the court approach it? That's why I said I would have liked... Paul did kind of speak about where this can go afterwards.

Alec Hogg (06:04) Paul was clear, David. Paul was clear. He said that what Denise Fisher, the judge, found in the civil case... Remember, that's not criminal. And for those who don't know the difference, civil means that you can't go to jail; criminal, you can go to jail. What the judge found there, Paul said, was that they had committed fraud.

So now what's being argued by the four, Ord's team, let's call it Team Ord, is that no, no, Goodall has changed his mind because he wanted to do a deal, out of self-preservation. Do you think it really was self-preservation?

David Shapiro (06:42) Well, I don't know. I'm also going into his mind. He writes this letter to them and he says, "I'm sorry. I'm really sorry. I've sold you down the river, but I hope you're okay. I hope you're all good." And I'm reading it, and honestly, I can't get into the minds of... Do you understand what I'm saying? He writes this letter: "Dear David, I've run away with your best friend, but I did leave a pie in the oven," or something like that. You know what I'm trying to say. Here he is, he's sold them down the river, he's made this confession, and yet he's still trying to act as friends. And I know he made it... the arbitration took place without anybody being there.

But I can't get into the minds of all the characters involved. It's still a bother to me why they would have tried to do something like this. In their positions of power, they're big businessmen, they're running big business. Why do you want to try and deceive NTT? That, to me, is still a big bother: what was in the minds of these people? What did they have to get away with?

Alec Hogg (08:05) This guy, the confessor, talks about a legal bill of R150 million. Seriously? R150 million that he has now coughed up. Where do you get R150 million in your back pocket to pay for a legal bill? Plus he's giving R200 million of his incentives to NTT. He is signing away R350 million. There's got to be a bloody good reason for doing that. I'm sorry. It doesn't matter how rich you are.

David Shapiro (08:43) Look, he was under pressure. He was under pressure of hell, whether it was health pressure, or whether it was "I just want to get this over with. I want to live a normal, in inverted commas, life. I want to get on with it. I want to get on with my family as well."

Look, Alec, it's something I don't understand about these kinds of... I don't want to call it a crime as yet, because it's still up for appeal. These kinds of deals is a better way of putting it. Why do these deals? When is enough enough? I'm trying to get my head around why anybody would go this route. What more do you want? What power do you want?

We received the reply, and I think their whole defence is based on the fact that NTT, or the executives, the Japanese, knew about it. I think that's where their defence is going to be based. They knew about it, and they're not admitting that they knew about it. And they've got to prove that they knew about it. They haven't denied that they were part of the deal. That they haven't denied. But I think the whole proof is around whether they can convince the appeal judges that, listen, the Japanese knew about it, we were not guilty.

Alec Hogg (10:06) Now they're saying their one-time partner, Jason Goodall, got it wrong, is lying, is switching sides, et cetera. And they're going to continue to fight this. But remember when I asked you this question: "Well, how would they respond?" Do you recall? In our conversation you said, "Well, they'll say he's lying." Because what other defence do they have?

David Shapiro (10:32) Well, he's lied somewhere along the line. He's either lied in his affidavit or he's lied there. But Alec, where does this go to? I couldn't work out what Paul says.

Alec Hogg (10:44) It's a shocker. Where does it go to?

David Shapiro (10:46) Let's say they apply the judgment. This is only a civil case. In other words, they'll have to pay back whatever money they made out of this, the four of them or five, whoever it is, and they'll have to settle something. Will NTT now come with further cases against them? That's the issue.

Alec Hogg (11:10) David, I've got to ask you something else here. Judge Fisher found they had a secret financial benefit, the six of them. And that was where I got myself all confused with the costs and everything else. So the six of them are now claiming that they put in R70 million. They put in R70 million; they didn't have any financial benefit. So why did Goodall then go and sign away R200 million?

David Shapiro (11:40) That's because the cases were not related. This was a claim. He paid this as a claim against that $17 million. I think this is a separate case. It's got nothing to do with the main case. That's what it is.

Now the question is, as Paul mentioned last night, there were certain allegations against Jason over his administration of NTT, because he was global head. So I think these were claims against him. So I don't know whether he laid out R200 million, or whether he's not going to get that R200 million and he's already laid out R150 million.

Alec Hogg (12:29) So let me understand this. Jason Goodall is the CEO of Dimension Data, then becomes CEO of NTT, you say worldwide, based in London. Now he perjures himself either in the Denise Fisher judgment, or he lies to get some of his money back after spending R150 million defending himself through lawyers. Come on, David, that doesn't add up. How could a guy get to that huge position of power in the corporate world if he is bent one way or the other?

David Shapiro (13:12) That's why I'm saying this whole thing is so intriguing, and the personalities involved.

So that's him gone. Okay, now what happens after that? He's gone, he sails into the sunset. I still think that he's perjured himself somewhere along the line. This has to come out.

But now let's go back to that R70 million. We need to find out what the structure was. According to the answers in the reply, this gave them some kind of power. What they were nervous of is that if the buildings went to the empowerment company, they could be pushed out. Because the properties are now owned by the empowerment company, they've got no say in what the empowerment company does with the property. It could basically say, "Okay, boys, pack up and go." So they believe that having an equity stake, or some kind of stake, would allow them to prevent this happening. Now, what we've got to find out, and I think this is where there's a bit of a gap: there was a vendor loan by NTT.

Alec Hogg (14:23) But so what if they were worried that they were going to get kicked out? That's irrelevant. You can't play like that.

David Shapiro (14:29) It was R70 million that they laid out, which they're not going to get back. It hasn't been repaid to them. They've handed the property back to NTT; the property's gone there. So the Japanese have got their money back, but there's still the R70 million. But what was the power of that deal? I don't know. That could be in the affidavits that we haven't seen. What were they going to get from that R70 million, other than this small stake to say, "Listen, you can't do what you want with the property"? These are questions that I'm still asking and that need to be covered.

Alec Hogg (15:12) So are they now saying, "Okay, we were fronting"?

David Shapiro (15:16) I think this is probably what they claim the Japanese knew about, that they were involved. And this is where the debate lies, and this is probably where their defence lies.

Alec Hogg (15:29) So why would the Japanese, a big multinational corporation, stake everything on something that they know they're going to lose?

David Shapiro (15:38) I don't know. These are the questions that we keep asking. The two sides are completely apart. Completely apart. There's no meeting in between at the moment. And I think that's what the appeal court will decide upon, and we'll see where it goes from there. But it's an intriguing situation.

Alec Hogg (16:07) David, have they tried to mediate?

David Shapiro (16:09) You know, I don't understand Japanese culture. I don't understand Japanese firms. Whether, if you've hurt them or they've got any suspicion, boy, it becomes very, very tough to sit round a table and put your side across. I don't know. It's difficult to decide upon that. I've never had any dealings with Japanese companies at all, so I don't know what the culture is and how they would view something like this.

Alec Hogg (16:39) Well, we've had dealings with Toyota. They're a pretty legitimate operation.

David Shapiro (16:42) That was the Wessels family. They had a very good relationship.

Alec Hogg (16:48) And the Financial Times of London, our partner in London, is Japanese owned. They've been extremely honourable in everything that we've done with them. So it would surprise me to see a Japanese multinational take a chance in this way. It just isn't what I've found.

But let's get back to Paul and what Paul said yesterday. Because you've been talking to the other side, as it were. They were cross with you because you're a highly credible person. What you say, people listen to, and everybody knows David Shapiro doesn't play sides. He tells the truth and he tells it as it is. That's why we've worked together for so many years, Dave, because you're a rarity in South Africa. So now they're talking to you.

And where I'm trying to get to here is that Paul Hoffman, who also doesn't play sides, says the four of them are up against it. That's what he said in the interview yesterday. He says it's fraud, in his opinion as a senior counsel, no question about that. And he spoke about section 75 of the Companies Act, and he also said that he could anticipate a possible state witness deal for Mr Goodall. If you were on the other side, on the Ord side, wouldn't you be trying like heck to discredit this Goodall fellow? Because if he turns state witness against you and he's got a shred of credibility, you're in trouble.

David Shapiro (18:20) I think so. I think that is a defence. But the problem is that nobody was in that arbitration to understand what took place, and also to understand where Jason is at the moment in his life. But he's obviously a state witness... he could be. Will they call upon him? And what's he going to do? These things will unfold as we go along. This is going to be very interesting. And where does Doc Watson come in?

Alec Hogg (18:52) That's a good point. How does he come into all of this? Because he's kept separate.

David Shapiro (18:56) It's completely separate. There's been no mention of him, nor has he made any kind of statement. Which suggests, and I'm going to say suggests: "Hold on a sec, I wasn't really part of it. I was brought in without really knowing what I was doing." Maybe. But he would have put in an affidavit to Denise Fisher. I'm sure he would also have signed an affidavit.

Alec Hogg (19:23) Might have signed an affidavit, yeah.

David Shapiro (19:25) So I think there are a lot of things that will unfold in this particular case. But Alec, I still don't know. I deal with so many people in business, and I still cannot understand why. It's like an insider trade. You mentioned Jim Jones.

Someone will phone me up and say, "I want to buy this." I say, "Why do you want to buy it?" Some obscure company. And you know they've got inside information. I say, "Why are you risking a small deal like this? You want to beat the market?" And they do it for that. I say, "Just leave it alone." My acid test: if your daughter or your mother was the seller, would you buy these shares from her? In other words, if your mom was the seller, would you buy her shares? It's always a test with insider trading. And it's something in the makeup of people that I can't understand.

Paul, in a way, mentioned greed. I'm not associating greed with this situation, but I'm saying it's something about being in business. I always say I should never really have been in this business. I should have been an artist or a football player...

Alec Hogg Cartoonist.

David Shapiro Or a cartoonist, yeah. Because there are so many issues that I don't understand, and this is one that just eludes me. Why are you doing this? Why would you even test something like this? Why would you even try something? I don't know. In a way I'm saying that's why maybe there is a case, and I'm not [protecting them] in that. They would have gone to the Japanese and said, "Okay, we want to do this," or something like this, which is obviously not how the Japanese see it. So Alec, we're going to talk about a lot more cases to come over the years, believe me. There are going to be a lot more issues like this.

Alec Hogg (21:38) Two more things before we go, David. The one is that Paul was guessing that Doc Watson would join Team Goodall. In other words, he would also crack. Now, you said that where there are six people (a bit like the prisoner's dilemma, I guess, a very well-known concept), if it isn't the truth, then someone will crack. Now, if one is gone, and if we presume that Goodall is not a complete lunatic, that what Goodall has done has been right for Goodall, the rational decision, then if you're sitting in Doc Watson's shoes, surely it's just a short skip and a jump to join him, as Paul suggests.

David Shapiro (22:29) His silence is pointing towards this. That's how we're reading it. The others say they're still very friendly with him and they keep in contact with him, but he hasn't said a thing. He hasn't appeared, hasn't said anything, even in mitigation, or made any statement around this. So I don't know what that suggests. But he might have been a silent partner or a distant partner who said, "What have you boys got me into?" And very troubled.

And there might have been, after the Fisher case, a strong view that they would get off on appeal. But suddenly things are turning around with the confession, or the statement, from Jason Goodall. Right or wrong, whatever it is, it's really caused a lot of uproar. We'll see. Where we are now, on the ninth or tenth, I think the case comes out in two weeks' time. We'll be [back] again.

Alec Hogg (23:37) The good relationship with Doc Watson would probably have [mirrored], until last week, a good relationship with Jason Goodall, given that his WhatsApp to them at the end said, "I hope you guys are all okay," as though he hadn't just sold you down the river. So clearly they weren't fighting with each other, for him to even send a WhatsApp in the first place.

David Shapiro (24:01) No, that's the whole friendly nature of the reply. "Sorry, boys, I've sold you down the river. I've admitted everything, but I hope you're okay."

I think they were a bit shaken by what he said. I think they were really, really shaken, and it came out in their statement. I think it's something they were not expecting. You can see that from their reply, which was sent straight away after our interview, and which came through to you as well.

Alec Hogg (24:28) Three or four hours later.

David Shapiro (24:30) Okay. But I mean, they were dismayed by what he said, and I think that was a bit of a shock. Sure. Simply because it contradicted everything he had said before in the affidavits that he had presented.

Alec Hogg (24:43) How the mighty have fallen, huh? Extraordinary.

David Shapiro (24:51) And then you've got the lawyers in between.

There's one thing that I want to bring up before we go, which is that I do owe Jeremy an apology for my outburst on the sale of his shares, when we started off the conversation that way. And I think he had a point, and I think you covered it. I had said that he had sold shares at the top of the market. I said that they were listed in 1987, they were the darlings of that. This happened at the end of 2000 and in 2001.

Alec Hogg (25:26) So they were in the 1987 boom. They then listed in London in 2000. They sold shares months before a massive profit warning. That was the problem. The problem wasn't that they sold the shares. They said they sold the shares because they had share options they wanted to buy, et cetera. No, you sold the shares a few months before you put out a profit warning, which knocked the share price down by 30% and then knocked it all the way down. It went down by, I don't know, 95%, 98%. I can't remember the exact number. That was the issue.

David Shapiro (26:09) I was in the market at that time, and I remember. What happened is that because they were listed in London, they were forced to disclose director sales there. They didn't disclose it here. And there was an uproar when we found out. I think Moneyweb, you were with Moneyweb [at the time], broke the story and said, "Hold on, there's been a sale of shares in London." And everybody here got upset. That was where the uproar was. And then, months later, the profit warning came out.

And look, it was a rough time, Alec. You remember that time. It was 2000, 2001; it was the internet bubble and so on. But to be fair, and I don't want to defend them in that, I remember the uproar, but I got it a little wrong when we opened the conversation. And I do owe an acknowledgement of what really happened, and maybe an apology.

Alec Hogg (27:10) Well, the timing was wrong, that's for sure. It wasn't '85. They listed in '85, they were around in '87, but it was 2000, 2001, and that was what everybody was angry about. You didn't have to disclose in South Africa that you'd sold shares as a director, but you did have to disclose it in London. And there was no simultaneous disclosure to the South African market after the sale of shares in London, which there should have been, even if you're going to say, "Well, we're doing it to pay for our share options," or whatever.

But I still get back to that R150 million in legal fees, and how the other part of society lives. They really do live differently.

David Shapiro (27:55) You don't want to get involved in legal issues, Alec. This is crazy. Those are crazy numbers. Those are absolutely crazy numbers. And he said in his letter that he would have been wiped out by what would have followed. If it had continued, he would have been wiped out, meaning those fees would have multiplied and the cost to him would have been higher. They compromised on R200 million. That was a compromise.

Alec Hogg (28:25) There was a whistleblower, and the owner of the company, NTT, was very unhappy about a transaction that was done with the six, the DiData Six or the Campus Six, as we call them. And they maintain the owner of the company knew all about this from the beginning. That's what they maintain. And they maintain that the guy who has now come and joined the owner's point of view was actually lying, because he put forward an affidavit under oath to say one thing, and he's now put out a statement not under oath to say something else.

I guess it all depends where he comes from, whether his oath actually means anything or not. But I wonder whether Jason Goodall had any idea of the implications that would follow. Something that's not helping us, David...

David Shapiro (29:07) Yep.

Alec Hogg (29:24) ...is that [Stein Scop], who are the lawyers for NTT here in South Africa, invited questions. They were not prepared to be interviewed, but they invited questions, and I sent them some comprehensive questions, quite a long list, and then they said, "We are not prepared to comment." So essentially what's happening is that NTT are now saying, "We will not fight this in the public domain. We will not fight this in the court of public opinion. We will just tell you what we want you to know."

The other side are saying, "At least here is our side of the story." Neil Lazarus spoke to you, David, as the consultant, and gave you what's happening on their side. So at least we're getting their side of the story, rather than "No, we're not talking either; wait until the court judgment comes out." For that you've got to give them credit. And there are always two sides to every story. As much as I've been jaundiced by my own personal experience (and that's quite clear, I have been), you and I have been around long enough to know that nothing is black and white. It's always grey, isn't it?

David Shapiro (30:36) I think that's right. But we're opening it up, and it's good to discuss it. It's good to put these stories out, particularly for people on the outside, to try and understand what's happening. Because it's not easy. Court cases and issues like this are not easy to understand if you're a non-lawyer. They're very, very difficult. It's a strange process, and the way it works is very odd.

Alec Hogg (31:02) And it's so easy to get caught up in emotion rather than fact. But the good news about all of this is that once the appeal is done with, Neil has said, through you, that he'll be very happy to talk to me, and through me to the business community. So that we look forward to. Again, that's actually showing a lot more understanding of the need for disclosure than the NTT guys are showing. Interesting. Two sides to every story.

David Shapiro, as always, I appreciate your wisdom and your insights, and that you always say what you believe to be the truth at the time, and are then quite comfortable saying, "Made a mistake."

David Shapiro is South Africa's favourite stockbroker. I'm Alec Hogg from BizNews.com.

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