The Technology Innovation Agency (TIA) is seeking to recover millions of dollars from investors after the recent completion by a task team of a probe into the sale of the agency’s stake in Kapa Biosystems.
TIA argues that SA taxpayers lost out on millions of rands in the state’s sale of its stake in the company.
No ad to show here.
It comes after the then minister of science and technology Naledi Pandor set up a task team in 2016 to investigate the deal in which TIA sold its 49% stake to US shareholders for $4.93-million.
The company was subsequently sold to Roche for $445-million on 30 November 2015 (an amount which is disclosed in the Swiss pharmaceutical company’s 2015 annual report).
TIA’s executive manager of legal services Malesela Lekoto confirmed to Ventureburn last week that the task team had completed its work and that a determination was made that TIA has a claim to pursue against Kapa Biosystems Inc to recover the true amount that is due to TIA.
‘TIA has a claim to pursue against Kapa Biosystems Inc to recover the true amount that is due to the agency’
“The prescripts of the agreement are being followed in this regard and the matter is being adjudicated via arbitration. At this point in time, the matter is scheduled to be heard by the arbitrator on 25 May 2020,” said Lekoto.
He would not disclose the name of the arbitrator other than to say that the arbitrator is “a highly regarded South African senior counsel based in Cape Town with more than 20 years’ experience’.
Roche, former TIA head decline to comment
When Ventureburn contacted Roche’s Cape Town office, it was told that Kapa Biosystems founder Paul McEwan is no longer involved with the company. It is understood that he is no longer in the country. When dialed cellphone numbers from 2017 are no longer available on the network.
Karsten Kleine from Roche’s media division in Basel, Switzerland said the company would not comment on the case. “As a matter of corporate policy, we do not comment on ongoing litigation matters,” she added.
Former TIA CEO Barlow Manilal, who was dismissed by the board earlier this year, also declined to comment on the Kapa Biosystem deal.
TIA sold its stake in Kapa Biosystems just a few months before Manilal took office in 2015. Manilal, claimed to Ventureburn that he was dismissed because of his hard stance against corruption in the agency.
‘Taxpayers ripped off’
In 2016 a local investigative journalism news website uSpiked in 2016 published details of the deal, noting that the deal is also being investigated by US authorities. The three-year old site is run by African investigative journalist Mark Thomas (he declined to say where he is originally from).
When contacted by Ventureburn at the time, Thomas argued that South African tax payers were ripped off in the deal as hundreds of millions of dollars should have flowed to the TIA by the American investors instead of the less than $5-million the state agency accrued from selling its stake to US investors.
The deal is possibly the second biggest acquisition ever by a South African startup.
Editor’s note: This story and the headline was subsequently adjusted after an earlier version incorrectly referred to taxpayers being shortchanged by “$400m” when the figure is smaller, but still in the millions or rands.
Read more: Are these the 10 all-time biggest exit deals for SA startups? [Digital All Stars]
Read more: Task team’s investigation into $445m Kapa Biosystems deal drags on
Read more: Swiss medical company Roche to purchase Kapa Biosystems, bolster medical strength