Basil Read's BEE partner Metallon is trading out of shares that were acquired from Bouygues Travaux Publics. After funding costs it's likely Mzi Khumalo will walk away with R40-million. With Basil Read chief executive Marius Heyns

LINDSAY WILLIAMS: A BEE deal that potentially leaves a bad taste in the mouth - the Business Day newspaper headline this morning is: "Mzi Khumalo in new BEE share-sale controversy." Controversial businessman Mzi Khumalo's Metallon has made an "estimated" profit of more than R70-million in eight months - that's not bad! The unhappy saga leaves Basil Read with a diminished black shareholding and is bound to reignite questions over the ethics of BEE deals while focusing attention on how much specific individuals - Mzi Khumalo being one of them - have made from empowerment.

Late this afternoon Basil Read came out with an announcement on the newswires saying it had come to the directors' attention that Metallon Ventures Limited has entered into agreements with Amabubesi Investments and other BEE parties for the disposal of its remaining interest in Basil Read.

The basic story here is that the BEE partners - that many people thought were locked into the Basil Read shares - have sold them out at enormous profit. Let's find out if that's true or false. Marius, did you get a bit of a shock when you picked up your paper this morning?

MARIUS HEYNS: No, not really. I was asked by the paper to comment. It's really a fact what's happened, but we will look forward and try our best to recover from the situation.

LINDSAY WILLIAMS: You're putting on a brave face. It's taken hours to put together an announcement on the newswires that says: "Following this disposal by Metallon black economic empowerment parties will hold an approximate 36% interest in Basil Read." It seems to me that somebody has ripped somebody off from reading the newspaper? I'm not an expert on the situation, but it says here that Metallon and Amabubesi got the shares for

82 cents, and were understood to be tied into a lock-in clause - and then they sold them around R5. How does that work? Was there any lock-in?

MARIUS HEYNS: The agreement was with Bouygues and Metallon - so we weren't privy to that agreement to confirm or deny that. Certainly Bouygues'

management assured us at the time that there was a lock-in, and that either the shares should be sold back to Bouygues, or to another black shareholder.

LINDSAY WILLIAMS: Clearly the shares haven't been sold back to Bouygues. Who do you think they've been sold to?

MARIUS HEYNS: Obviously Basil Read became aware of it when more than 10% of the shares held by Metallon were sold on the open market - obviously we tried to stem the sale at the time. Metallon is a normal business - they've invested and the share has been doing extremely well, so certainly anybody would be selling - but that's left us in a very difficult position.

LINDSAY WILLIAMS: Even I would buy shares at 82 cents and sell them at R5 if I were give the opportunity to do so! It seems as though with every winner there's a looser - it seems to me that BEE is a really big loser here, what do you think? Where do we go from here?

MARIUS HEYNS: I would like to defend these guys to a certain extent - Basil Read wasn't in good shape at the time when they were negotiating with Bouygues. The deal took a long time, and obviously had to go to the competition authorities as well - they had some guts to buy at 82 cents as well because nobody knew what the share was going to do, because the company was not in good shape. So they took some risk as well - so on that side I have to defend them. I think the fact that they've sold without informing Basil Read management - because we submit tenders on a daily basis, and we've been happily submitting that we are 51% black-owned - now obviously we have to backtrack, and that makes our lives a little bit more difficult.