Makate Battles Ex-Funders Over Vodacom Please Call Me Windfall

Nkosana Kenneth Makate is fighting to retain his Vodacom “Please Call Me” winnings as former litigation funders, Black Rock Mining, claim a 40% stake in the payout. The Gauteng High Court will now determine if the funding agreement is invalid, following allegations of fraud and corporate deregistration.

This dispute highlights a critical vulnerability in high-stakes corporate litigation: the “funding trap.” When a plaintiff leverages third-party capital to sustain a decade-long battle against a telecommunications giant, the subsequent payout often becomes a secondary battlefield. For the corporate world, this underscores the necessity of rigorous corporate law firms capable of auditing the legitimacy of funding partners to prevent predatory clawbacks during the settlement phase.

The BVI Shell Game and the Validity of Capital

The current legal offensive by Makate targets the very existence of his former backers. At the heart of the matter is Black Rock Mining, a British Virgin Islands (BVI) entity that Makate asserts “never existed, except on paper.” The financial architecture of the claim is precarious; Makate alleges that Black Rock failed to register as an “external company” as required by the Companies Act.

The timeline of the entity’s corporate status is the primary weapon in this litigation. According to court papers, Black Rock was deregistered on April 30, 2014, and remained in that state until December 2020. The restoration of the company to the BVI register occurred via an ex parte application—a move Makate claims was executed without his notice. From a fiscal perspective, a company that is deregistered generally lacks the legal capacity to enter into or enforce contracts.

The conflict centers on a written funding agreement signed in November 2011 with the late Christiaan Schoeman. Schoeman was tasked with nominating a company to cover the legal expenses of the “Please Call Me” (PCM) litigation. Black Rock Mining was that nominated entity. Now, Black Rock and businessman Errol Elson—whom Makate identifies as the “controlling mind” of the operation—are seeking a 40% share of the confidential payout from Vodacom.

What we have is not merely a contractual disagreement; it is a question of jurisdictional arbitrage. Using BVI-registered entities to fund South African litigation is a common tactic to shield identities and optimize tax efficiency, but as this case demonstrates, it creates a transparency vacuum that can lead to catastrophic legal failures.

“The rise of third-party litigation funding (TPLF) has turned legal disputes into a distinct asset class. However, when the funders operate through offshore shells with opaque registration histories, the risk of ‘funding fraud’ increases. We are seeing a trend where the funder becomes a larger liability than the original defendant.”

The Fiscal Impact of Contingent Liabilities

While the specific amount of the Vodacom payout remains confidential, the scale of the PCM saga is a case study in the cost of prolonged litigation. For a company like Vodacom, which operates as a dominant player in the African mobile market, such disputes are often categorized as contingent liabilities on the balance sheet. The unpredictability of the final settlement can create volatility in projected cash flows, affecting how the firm manages its dividend payouts and capital expenditure for 5G infrastructure.

For the individual claimant, the 40% claim by Black Rock represents a massive erosion of the “windfall.” In the world of litigation finance, a 40% success fee is aggressive but not unheard of. The problem arises when the funder’s legal standing is compromised. If the Gauteng High Court declares the agreement invalid or properly terminated, Makate retains the full sum. If not, a significant portion of the capital exits the local economy and flows toward a BVI entity.

Companies facing similar multi-year disputes are increasingly turning to forensic accounting services to perform deep-dive due diligence on their funding partners. The goal is to ensure that the entity providing the capital actually exists in a legal capacity throughout the duration of the trial.

The Boardroom Fallout: Lessons in Due Diligence

The “Please Call Me” saga serves as a warning to C-suite executives regarding the “controlling mind” theory of corporate liability. By targeting Errol Elson directly, Makate is attempting to pierce the corporate veil of Black Rock Mining. This strategy is designed to hold the individual architects of the funding agreement accountable, regardless of the entity’s deregistration status.

From a market perspective, this case illustrates the dangers of “ex parte” restorations. When a company is restored to a register without notifying the counterparty to its primary contracts, it creates a legal ambush. This lack of transparency is exactly why institutional investors now demand higher standards of governance for firms involved in protracted legal battles.

The financial stakes here are not just about the 40% share. They are about the precedent of “funding validity.” If Makate succeeds, it will embolden other litigants to scrutinize the corporate health of their funders. If Black Rock prevails, it reinforces the power of offshore funding structures to claim a piece of domestic settlements, even after periods of corporate dormancy.

To navigate these waters, enterprise-level firms are integrating risk management consultants into their legal strategies. The focus has shifted from simply winning the case to ensuring that the victory isn’t cannibalized by third-party financiers who operated in the shadows during the trial.

Market Trajectory: The Future of Litigation Finance

The PCM dispute is a harbinger of a broader shift in how corporate law handles litigation funding. We are moving away from “handshake” funding agreements toward highly structured, transparent financial instruments. The era of the “paper-only” funder is ending, as courts become more rigorous in demanding proof of registration and operational existence.

As the Gauteng High Court deliberates on the validity of Black Rock’s claim, the broader market is watching the intersection of BVI corporate law and South African contractual obligations. The outcome will likely dictate how future litigation funding agreements are drafted in the region, with a heavy emphasis on “continuous existence” clauses to prevent the very gap Makate is now exploiting.

For businesses looking to protect their assets from similar predatory claims or seeking to structure their own legal recoveries, the priority must be vetting. The World Today News Directory provides a curated gateway to the world’s most reliable B2B partners, from top-tier legal auditors to international corporate strategists, ensuring that your corporate windfall remains yours.