More than R1-billion in empowerment deals funded by Brett Kebble’s JCI are in the balance as auditors pore over the company’s books to determine what actual value underpins the maze of transactions undertaken while Kebble was at the helm.
Key investments by JCI in black empowerment companies include Matodzi Resources, Orlyfunt Investments, Inkwenkwezi, Lembede Investments and Masupatsela.
But some of the beneficiaries stood firm in the face of the company’s possible collapse, maintaining that any agreement they have with the groups will be honoured and that it will be ‘business as usualâ€. JCI has a stated empowerment strategy in which it ‘made significant advances to empowerment entitiesâ€.
This was designed to ‘create independent capital bases, until such entities can stand aloneâ€.
Sello Rasethaba brushed aside any suggestion that JCI’s woes would adversely affect either of the associated companies he heads, Orlyfunt and Matodzi Resources. According to Matodzi financial statements, the company’s liabilities exceeded its assets by R263-million. Rasethaba noted this to be ‘an accounting statementâ€, otherwise the company would have to be liquidated.
He is looking forward to a Matodzi annual general meeting in November, in which debt owed to JCI will be converted to equity and will see JCI hold more than 50% in Matodzi. As for Orlyfunt, he noted that 70% of its assets are outside JCI. They include the Mediterranean Shipping Company and advertising agency Saatchi & Saatchi. On the 30% assets linked to JCI, he noted ‘agreements are in place†and he expected these to be honoured.
Andile Nkuhlu, of Inkwenkwezi and Itsuseng Investments, two JCI empowerment partners, reiterated his stance that he expected agreements to be honoured.
JCI’s annual report for 2004 records that the company had made R1,05-billion in funding to empowerment entities. It valued its investments in these entities at R1,5-billion, more than 50% of its R2,8-billion in assets.
Some of its key investments include a stake in the Letseng diamond mine in Lesotho, valued at R348 500 at the time, as well as claims in listed mining companies valued at R1,8-billion.
JCI spokesperson Brian Gibson told the Mail & Guardian that the new directors and management are currently familiarising themselves with all projects and transactions ‘including those that could be termed BEE initiativesâ€.
He said a decision will be made in due course using ‘sound business principles and acting in the best interest of the shareholdersâ€. He referred detailed enquiries to the 2004 annual report.
One company that stands to lose is Randgold & Exploration Company, from which Kebble was ousted in August. According to its Securities Exchange Commission F20 2003 filing in New York, Randgold has a loan owing by JCI, which at the end of 2003 stood at $9-million.
At the end of 2003, Randgold also entered into a loan agreement with Masupatsela Investment Holdings, another of JCI’s empowerment partner, for $11,91-million.
Gibson said JCI’s new management had no knowledge of the company.