Investor wants to sue Nkosana Makate for defamation over fraud allegations

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British investor Errol Elsdon, who wants 40% of “Please Call Me inventor” Nkosanna Makate’s payout from Vodacom, says he has instructed his attorneys to institute defamation proceedings against Makate.

This follows Makate’s allegations that Elsdon forged his signature in a document the investor was relying on to claim a share of Makate’s settlement.

Elsdon, who claims to have funded Makate’s claim against Vodacom, says the allegations are false, malicious and defamatory.

“Please Call Me” inventor Nkosana Makate is heading to court — this time to fend off a claim for 40% of his multimillion-rand settlement with Vodacom. Private company Black Rock Mining (BRM) has filed papers in the Johannesburg high court arguing it has an agreement with Makate entitling them to 40% of his compensation. The case will be heard on Tuesday on an urgent basis. The dispute earlier went to arbitration, where the claim was dismissed. The company’s director, Errol Elsdon from the UK, claims a company he was also a director of — Raining Men Trade (RMT), which no longer exists — entered into a contract with Makate 15 years ago. The agreement provided that the company would pay Makate’s legal fees in his battle with Vodacom and, in exchange, would receive a percentage of an eventual settlement. Makate has rubbished the company’s claims and labelled Elsdon’s court action a “disgrace” and an “extortion” attempt. Last week Vodacom settled with Makate out of court for an undisclosed sum, believed to be about R700m. The deal was the culmination of a 17-year legal battle. In court papers, Makate describes meeting Elsdon and his business partners as the greatest “misfortune of my life”. He has also said they are “dishonest fraudsters”. Now, simply because there’s a settlement, the matter is back in court. For me, these are [the actions of extortionists] Yesterday Makate told the Sunday Times he was happy the matter was now before the court and could be dealt with once and for all. “This [legal action] doesn’t give me sleepless nights because they don’t have a case. They are entitled to nothing,” Makate said. “When we were [having discussions] with [Vodacom CEO] Shameel [Joosub], they wanted to have a seat in the room. I also had to fend them off by getting a judgment against them saying I had exclusive rights.” He said BRM needed to be stopped by the court. “I had to get a court order to stop them from meddling with the negotiations [with Vodacom]. It looks like that’s their attitude — they always get stopped by courts. They don’t listen.” Makate said BRM had “unconditionally” removed its matter from the court roll in 2024. “Now, simply because there’s a settlement, the matter is back in court. For me, these are [the actions of extortionists]. Legally, they know they are entitled to nothing.” SN Mnguni Attorneys, representing BRM, wrote a letter to Vodacom stating that Makate’s lawyers were refusing to pay them a 40% “entitlement of the award”. Makate disputes any such agreement, claiming it was fraudulently entered into. “[BRM] already owes me costs from previous matters they lost against me in court and arbitration. They are just chancers. I am happy this [matter] is now before court,” Makate said. In his legal papers, Elsdon argued RMT’s late director, Christiaan Schoeman, and another business partner, had raised an initial R500,000 and paid it to Makate’s attorneys. He further argues that in 2013 he raised R3.7m from Global Distressed Alpha III and paid R2.4m of that amount to Makate’s attorneys. However, Makate has challenged Elsdon to show him a single payment that contributed towards his litigation costs in his battle with Vodacom over the last 14 years.

Makate wants the NPA to prosecute Elsdon for forgery or grant him a nolle prosequi certificate, as he intends to prosecute the investor privately if the state decides not to.

Elsdon, a former director of Black Rock Mining, said the dispute between him and Makate is now before the high court and that he intends to challenge the inventor’s allegations through the legal proceedings.

“I was willing to be called many things when I agreed to fund this case… a criminal was never one of them. I will not be branded a criminal for honouring a contract, and I will answer that accusation where it belongs: in court,” Elsdon said in a statement.

Makate said it was “strange” that Elsdon stated that he wanted to sue him for defamation.

“The fraud ruling was long declared by an arbitration ruling of Advocate Mabena that as directors of Raining Men, they forged my signatures; this fraud is the subject of a criminal case that has been pending for years,” Makate said on Wednesday.

Makate said the Black Rock case now before the high court was “about the perpetuation of fraud which was committed under Raining Men”.

Vodacom’s “Please Call Me” originator, Nkosana Makate, has initiated a legal challenge in the Pretoria high court to scrap a contract that entitles UK investor Errol Elsdon to 40% of his multimillion-rand payout. Elsdon, a former director of Black Rock Mining, registered in the British Virgin Islands, has a decade-long dispute with Makate, claiming his company had a contract to fund Makate’s litigation with Vodacom and, in return, would be entitled to 40% of the payout. Makate entered into an agreement with the late Christian Schoeman to nominate Black Rock to pay for all his legal costs in 2011 in his 17-year battle with Vodacom to pay him for the incorporation of its “Please Call Me” (PCM) service. The litigation puts the spotlight on the legal rights of companies in high-stakes litigation-funding contracts and seeks to answer whether a company’s legal rights stand if it runs into cash flow troubles. In court papers, Makate’s legal team argue the company breached the contract from the start because it never had the money to fund the litigation. “Black Rock never had, and would not have, the financial means or legal standing, and they never employed nor would they employ adequate financial and administrative management to enable it to perform as envisaged by the purpose of, and the obligations under, the impugned funding agreement,” Makate’s papers read. The relationship between the parties soured in 2015 when Black Rock was deregistered and experienced cash flow troubles. The contract stated the company would fund all legal costs and expenses reasonably necessary to prosecute the claim instituted by Makate against Vodacom. Makate accuses Elsdon and his associates, Schoeman and Tracey Roscher, of fraud in failing to disclose crucial information about Black Rock and its financial standing before the contract was signed. “As a result of Schoeman, Elsdon, Roscher and/or Black Rock’s fraudulent, alternatively, negligent, further alternatively, innocent misrepresentation and nondisclosure, Makate was entitled to cancel the impugned funding agreement,” the papers read. “Makate acted on these false and fraudulent misrepresentations and nondisclosures and entered into the impugned funding agreement and the impugned nomination agreement, to his detriment, in that he has had to bear the costs of the entire PCM litigation since at least January 2015 and the concomitant risk of adverse legal costs orders.” Elsdon, in a failed urgent application before the high court in Johannesburg, argued his company paid an initial R500,000 and a further R2.4m towards Makate’s fees before there were cash flow issues, and a dispute over the legality of the contract ensued. Elsdon disclosed to the court that he took out a loan to fund some of Makate’s litigation when his company had a cash flow problem. The company was deregistered in April 2014 after failing to file financial statements. When Black Rock was deregistered, the agreement was transferred to another company, Raining Men Trade, also owned by Elsdon. That process was found to have been fraudulent, with an arbitrator finding that the only valid agreement was with Black Rock. Makate cancelled the contract with Raining Men, giving rise to a dispute that Black Rock’s legal rights still existed when it was registered again. His lawyers contend: “Throughout the duration of the impugned funding agreement, read with the impugned nomination agreement, Black Rock has not performed any of its alleged obligations thereunder. Consequently, Makate has no obligation to tender any restitution of performance.” Makate seeks an order declaring that the funding agreement was cancelled by agreement on or about January 12 2015, with retroactive effect as of November 7 2011. “In these premises, Makate is entitled to an order declaring that the impugned funding agreement, read with the impugned nomination agreement, has been cancelled, alternatively, terminated,” the court papers read. The case is still to be heard by the court.

“There is no need for Mr Elsdon to sue me; the fraud matter is already before the high court assigned to Judge Lenyai; all he must now do is respond in person to those court papers as a respondent,” Makate said.

Makate also disputed Elsdon’s claims that they funded his case against Vodacom and labelled Elsdon’s bid for payment as a fraudulent attempt to extort him.

Elsdon further argued that Makate did not have the financial means to pursue the litigation when they first met and that the funding arrangement was instrumental in enabling the claim to proceed.

“I do not begrudge Makate a cent of his success,” Elsdon said. “But it did not come from nowhere. It came from a reworked case, a legal team, and money put up by people who were prepared to lose every cent of it.”

Elsdon also rejected suggestions that attempts to enforce the funding agreement amounted to extortion.

“Extortion is a demand for something you have no right to; a funding agreement is the opposite: a contract, freely signed, under which those who take the risk share in the result.”

The businessman said the court proceedings will provide an opportunity for the evidence surrounding the funding arrangements to be tested in a public forum.

South Africans seeking damages for medical negligence or malpractice, or from an unlicensed and uninsured driver responsible for a crash, or from a seller who has ripped out all the “fixtures” from their new house, know that justice is not blind. It’s not cheap. Too often, because of the prohibitive cost, it is simply unattainable. Only those with deep pockets seem to get justice. This is why legal insurance exists. Or why lawyers work on a “no win, no fee” basis. It is also why litigation funding exists. Litigation funding supports those engaged in complex, high-stakes cases against well-resourced defendants. It is not for the faint-hearted. Cases invariably take years to be resolved. It is a high-risk business, which is reflected in the fees agreed in the event of success: about 40% of the payout. Conversely, a loss invariably runs into tens of millions of rand for litigation funders. The funder loses the entire investment, in addition to having to pay any adverse cost orders imposed on the client. As far as litigation goes, none comes at higher stakes than Nkosana Kenneth Makate’s 17-year epic battle against mobile giant Vodacom. Today, Makate is South Africa’s newest multimillionaire, having secured an estimated R700m payout from Vodacom for his “Please Call Me” idea. But back in 2011 — three years after he launched his David vs Goliath battle — Makate was just a regular Joe of no special means or influence who was adamant he should be paid the 15% promised by Vodacom for his idea. Then, the basis of his claim against Vodacom was mired in procedural confusion and ineffective strategy. Crucially, he lacked the necessary evidentiary and financial support to win. But advocate Chris Schoeman read through the papers and saw merit in Makate’s claim. Schoeman approached me, recommending that Sterling Rand Litigation Fund take on the case. My London partners weren’t enthused, so Schoeman, Tracey Roscher and I agreed to fund the matter ourselves. It was decided that the matter would be housed in an offshore entity, Black Rock Mining, which is registered in the British Virgin Islands. We also appointed a new legal team for Makate: Cedric Puckrin SC and Reinard Michau SC, who would be briefed by attorney Wilna Lubbe of Stemela & Lubbe. Today, ironically, we find ourselves in the same situation Makate was: fighting for someone to keep their word Our agreement with the legal team was based on a contingency arrangement whereby they would earn half their usual fee but retain a 5% interest each in Black Rock. In return for our backing, Makate entered into a written funding agreement on November 7 2011 for financial backing in return for 40% of the proceeds from any victory or settlement. Schoeman immediately reformulated Makate’s claim, shifting the litigation onto stronger legal grounds, centred on breach of agreement. And we tracked down and persuaded Makate’s former manager at Vodacom — who had relocated to the UK — to testify on his behalf, which was the linchpin of Makate’s eventual success. We gave R500,000 to Lubbe in initial funding in 2013. A further £250,000 was raised from funders in Luxembourg that year, while Roscher transferred R500,000 from the Sterling Rand account in 2014. In addition to this legal funding, Black Rock also gave Makate R50 for fuel in one instance so he and a colleague, Mandla, could get home from a meeting; R3,000 on another occasion after he arrived unannounced at Schoeman’s house in Pretoria begging for money to feed his family; and R100,000 to see him through the high court trial in 2013. And Black Rock would have continued to support Makate were it not for a breakdown in relations with Lubbe, who deliberately sidelined Black Rock in 2014. Matters were, admittedly, not helped by our reporting Lubbe to the Serious Fraud Office in 2015, whose investigations are still ongoing. In the last decade, we have found ourselves up against Makate repeatedly in a bid to get him to honour the agreement he signed. The dispute was even referred to arbitration, which found in Black Rock’s favour. Today, ironically, we find ourselves in the same situation Makate was: fighting for someone to keep their word. The simple facts of the matter are that Black Rock believed in Makate when no-one else did. Black Rock committed to providing the financial resources he needed to take on Vodacom. Black Rock provided him with the initial capital, legal strategy and legal team, which helped him succeed. Black Rock are not opportunists trying to get more than our due. We simply want Makate to honour his word, to do what is right, to stand by what he agreed to … just like he expected Vodacom to do. Elsdon is director of Sterling Rand Litigation Fund

“For years, this story has been told in a single voice. Now the evidence and documents will speak for themselves.”

Elsdon also addressed questions that have been raised about Black Rock’s registration in the British Virgin Islands. He said a period of deregistration arose from an unpaid annual fee, but that was apparently later rectified.

“I helped a man who had nothing turn a stalled and unfunded claim into a landmark result,” Elsdon said, adding he asked only that their agreement be honoured.

Makate told the Sunday Times two weeks ago that he was not worried about Elsdon’s 40% claim, as it had no merit.

“I am not worried about this [claim]; it is just that institutions like the National Prosecuting Authority have been dragging their feet in prosecuting this fraud, hence the abuse of the civil court process by Errol Elsdon,” Makate said at the time.

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