The more than 20-year-old Erongo Sea Products Joint Venture is threatened by allegations that the South African shareholders are shortchanging their Namibian partners.

The JV in which South African Oceana Group holds a majority stake through its Namibian subsidiary, Erongo Marine Enterprises, could collapse, following an independent legal opinion indicating that several agreements were contravened in favour of the South African conglomerate.

Namibian shareholders are questioning how the joint venture is run, as they are not involved in the board, nor were there any annual general meetings held over the years where information about the status of the JV could be shared.

In an independent legal opinion, Cronje and Kie found that there were significant deviations from the joint venture agreements, particularly on quota and vessel usage fees to the Namibian partners.

The Namibian partners contributed their quotas and two vessels to the JV, but they alleged that they had not seen a fair distribution of profits. 

This is the crux of the current impasse between the various Namibian stakeholders in the Erongo Sea Products Joint Venture.

The JV established in 2001 consists of local companies Cerocic Fishing (15%), Arechanab (40%), Erongo Seafoods (27%), and Erongo Marine Enterprises (18%).

Erongo Marine Enterprises (EME) is a subsidiary of the South African Group Oceana. EME also has a substantial shareholding in all the local companies that are part of the JV, making Oceana the majority shareholder. On paper, they hold 51%, but according to the Namibian partners, this is not reflected in the sharing formula.

Joint ventures are a system introduced and supported by the government to encourage Namibianization in the fishing industry.

Often, the quotas allocated to right holders in a JV depend on the extent to which a JV has included Namibians and value addition.

The Erongo Sea Products JV rents or charters the vessels contributed by the Namibian shareholder to the JV to EME, who then catches, packages, and sells the fish on behalf of the JV.

EME pays the JV a quota usage fee of 15% of the ex-hatch price and charter fees. These were the conditions the parties allegedly agreed to in the charter and quota usage fee agreements.

Namibian shareholders have questioned how the partnership is beneficial if EME deviates from signed agreements over the years, which are supposed to be the documents guiding the partnership.

The shareholders say there were no annual general or shareholders' meetings where minutes and resolutions were recorded.

They claim exclusion until 2021/22, when information became apparent and they questioned why the charter agreement was not applied correctly.

The dispute then became about the shareholders' quota contribution to the JV and how much EME benefits from the quota. 

One of the shareholders, Phillip Munenguni, believes the locals were blindfolded and cheated by EME.

Another shareholder, Maria Dax, could not comment but confirmed that a draft legal report has been circulating and needs to be discussed with all parties. 

The local shareholders further claim the composition of the board of directors is also not in line with the shareholder agreement because representatives are either EME or Oceana employees, making them players, referees, and linesmen. 

In a statement in response to the nbc News inquiry, Oceana Group described the relationship and agreements as perfect over the past 20 years.

The statement indicated that in 2022, both parties selected attorney Cronje as an independent party to review mutual deviations from the agreements. 

Among other things, Oceana says the draft report found that the charter agreements and fees were consistently applied and the JV benefited; however, this is questioned by Namibian shareholders. 

EME, Oceana's operational company in the JV, is also being investigated by the Namibian Competition Commission over alleged price fixing and colluding with other big players in the industry to fix horse mackerel prices.

In the meantime, the Joint Venture has suspended its Namibian CEO, Dr. Martha Uumati, who has started questioning the relationship and treatment of Namibian shareholders.