Durban — America’s wealthiest black man, Robert Smith, has cut ties with software giant IBM, while local SA partners allege exploitation and tax evasion.
Smith, whose net worth is over $12 billion, is the founder, chairperson, and CEO of Vista Equity Partners, the Private Equity Fund with substantial stakes in Apptio, Tibco, and Citrix. His shares in IBM were worth $5 billion.
Following one of the largest tax evasion schemes in US history, Smith negotiated a tell-all settlement with the Internal Revenue Service (IRS), avoiding prison time for racketeering and tax evasion. The Wall Street Journal article wrote that Vista’s Robert Smith had a bigger role in an alleged tax fraud than previously known with documents showing that the settlement reached was for $139 million on the original $200 million.
While Smith’s negotiated settlement clearly states that his business operations must remain above board, Tibco, one of Vista’s portfolio companies, is being accused of conducting similar practices in South Africa. Local partners of these firms in South Africa were initially excited to work with a firm owned by the reborn philanthropist, who has donated hundreds of millions to charities and universities largely focused on uplifting the black community in the US.
Brian Mpono, group corporate affairs executive in the local software company Techsoft, said his company has expressed disappointment that even after several attempts to make direct contact with Smith (including a trip to the US), he has failed to respond. He said that in the meantime, more than one court case in South Africa against the Cloud Software Group (Tibco) is being litigated for the unlawful cancellation of TechSoft’s contract, adding that the pending court proceedings are allowing Tibco to continue its hostile takeover of TechSoft business, its revenues, and customers – which amounts to billions of rand and hundreds of job losses.
“Unfortunately, it doesn’t seem Vista’s portfolio companies share this same passion of goodwill and continue operating, as Smith did prior to the settlement with the IRS.
“Tibco, a US software company, is currently in the courts and will likely be deemed liable for major tax evasion in addition to contravention of abiding by the country’s BEE codes of good practice. If Tibco is found guilty, records show it could be on the line for close to R1 billion of its “deemed profits” which had been disguised as management fees, which would have brought hundreds of millions to SARS and maintaining the infrastructure of South Africa,” said Mpono.
He said Tibco’s actions had greatly disenfranchised its local BEE partner DynaTech (2006-2018), which was used for its “black owned” credentials, resulting in the partner losing millions due to Tibco’s unfair business practice and records show that the BEE issues and alleged tax evasion were brought to Tibco’s notice, but the company chose to ignore the findings of KPMG and by an independent company tasked to appraise its business conduct.
Mpono said Tibco’s recent action against TechSoft, its black empowerment partner initiative since 2018, remains to be litigated for an unlawful cancellation of the contract, adding this resulted in major job losses for black employees.
This paper has reached out to Tibco and the spokesperson for Smith who refused to reply to the questions posed.
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