Jacques Magliolo
THE National Union of Mineworkers has appealed to the Johannesburg Stock Exchange to halt the planned takeover of Randgold, saying it should first consider “certain ethical questions”.
The WM&G is in possession of a letter sent to the JSE’s Ethics Committee by NUM general secretary Kgalema Motlanthe, in which he says: “We would like to bring to your attention certain ethical questions which we believe apply to the proposed takeover of Randgold by a consortium consisting of Fraser Alexander, Time Mining, Aurora Mining and SC Warburg.”
Shareholders are due to meet to effect the bid on August 18. The consortium says it has secured 56 percent support for the takeover.
NUM believes Fraser Alexander will become responsible for the management of the company and that Peter Flack of Fraser Alexander will become the new chairman of Randgold’s board.
NUM’s concerns about the deal are outlined in the letter. They include:
* Fraser Alexander had the contract for maintaining slimes dams at Merriespruit’s Harmony Mine, which is owned by Randgold. The Department of Mineral and Energy Affairs has launched an inquiry into the slimes-dam burst, in which 30 people died, to establish its cause and who was liable. In dispute is the degree of responsibility of the respective parties in relation to the disaster.
* In the event that either party is held liable for the disaster, they will face huge claims for damages.
If the liable party is underinsured, or insurance is conditional, this would have significant financial consequences for the company concerned.
* In this context, a central player in the consortium to take over Randgold could thus face claims for damages from the company it seeks to take over.
* As a potential consequence, Fraser Alexander could exert undue influence in relation to possible claims against it. In the scenario NUM says is envisaged by Fraser Alexander, it is possible Flack could — as chairman of Randgold — be faced with deciding whether to pursue claims that could put his own company out of business.
* Furthermore, it is understood that Fraser Alexander currently has contracts for slimes-dam maintenance at all Randgold mines. If found liable for the disaster, it would be expected to lose these contracts; yet a change in ownership of Randgold could unduly influence such business decisions, with adverse effects on safety and effective rehabilitation of the mines.
In addition to NUM’s attack on the proposed takeover, the WM&G has ascertained that Randgold is to launch its own counter-attack against Fraser Alexander and will advise shareholders not to touch the deal.
A spokesman for Fraser Alexander said the NUM letter “came as a complete surprise” and that he could not comment.