Gold Fields vice-president resignation unlikely to affect BEE investigation
The US Securities Exchange Commission will continue investigating the BEE deal plaguing the mining firm despite Michael Fleischer's abrupt departure.
The abrupt exit of executive vice-president and legal chief Michael Fleischer from the mining house Gold Fields will not hinder a current investigation of the company by the United States Securities Exchange Commission (SEC).
Fleischer’s resignation comes four months after the company acknowledged that the commission was investigating a controversial 2010 black economic empowerment (BEE) deal for its South Deep mine.
Monday afternoon’s announcement that Fleischer will quit all his roles at Gold Fields by the end of the month has sparked much speculation about his reasons for leaving.
Some media reports have described his departure as the first "executive casualty" of the BEE debacle, leaving readers to assume that he might have been pushed out.
But a source close to the events has said that his departure was an objection to him and chief executive Nick Holland being treated as scapegoats for the dodgy R2.1-billion empowerment deal.
Controversy has surrounded the BEE deal ever since it was alleged that Gold Fields changed the original agreement to include a R25-million stake for ANC chairperson Baleka Mbete, supposedly in response to a threat by her legal representative.
At least R330-million will directly benefit the cronies of an ex-convict, Gayton McKenzie, who, with "sushi king" Kenny Kunene and Jerome Brauns, the advocate who represented Jacob Zuma in his rape trial, was hired by Gold Fields to help to structure the BEE deal.
Holland contended that the department of mineral resources had required that specific beneficiaries be included in the arrangement.
Fleischer, as former general counsel for Gold Fields, will now not be at the company if he is called on during the investigation.
Someone familiar with the matter, who asked not to be named, said that Fleischer’s departure could make Gold Fields’s defence in the SEC probe more difficult, because the company would no longer have a senior legal person at the company who had been integral to the deal.
The source said that it would have no bearing on the progress of the probe or Fleischer’s accountability.
"There will be no impact at all if the SEC go after Fleischer," said the source. "He is on the hook for what he did before he resigned."
The SEC can investigate the transaction because Gold Fields is listed in the US. But, according to the source, "the US Securities and Exchange Control is not the one to fear – it’s the US department of justice. I don’t mean to be melodramatic, but people have been arrested for [corrupt] activities."
The Gold Fields board, despite spending "millions of dollars" investigating the matter, decided not to make its findings public in August last year. Instead, it issued a statement conceding that the "implementation of the transaction did not consistently meet the high standards set by Gold Fields".
It "communicated its concerns" to Holland, who offered to waive his estimated R8-million 2013 bonus "in recognition of the concerns".
South Deep successor
The board makes no overt mention of the BEE debacle in the announcement of Fleischer’s resignation.
But it does say that Fleischer’s successor will be someone who can "help to implement the changes … related to the South Deep black economic empowerment transaction" that it noted in its August announcement – such as the need to strengthen "internal policies and procedures".
Fleischer would not comment on the reasons for his resignation. Gold Fields also declined to comment.
It is rumoured that Fleischer will take up a position as general counsel at a multinational telecoms company based in South Africa after he leaves Gold Fields.
The name of the company is known to the Mail & Guardian but the rumour could not be confirmed. The company declined to comment.