/ 5 August 2011

Aurora’s directors grilled on asset-stripping allegations

The egg dance of the politically connected directors of embattled mining company Aurora Empowerment Systems before the Master of the High Court this week may not be enough to save them from prosecution.

In May, Solidarity served a liquidation application on Aurora Empowerment Systems to force the miner to pay more than R3-million in outstanding wages to workers. Aurora had been managing the liquidated Pamodzi Gold mines in Orkney and Grootvlei on the East Rand since October 2009.

This week’s hearings were held behind closed doors but the Mail & Guardian understands Aurora came under intense pressure, especially over allegations that it had asset-stripped the mines. “The rule of law has now been tested to see if there is any concrete evidence for the National Prosecuting Authority and Asset Forfeiture Unit to act against the directors of Aurora,” said Gideon du Plessis, the deputy general secretary of Solidarity.

President Jacob Zuma’s former lawyer, Michael Hulley, testified, knowing he could be disbarred if proven guilty of any wrongdoing. Another director, Zondwa Mandela, the grandson of Nelson Mandela, apparently said he knew little about the operations of the mine.

Khulubuse Zuma, the nephew of President Jacob Zuma, did not testify this week because he was reportedly in Senegal, but the master could rule that he must testify in front of a magistrate.

This week’s testimony will help liquidators decide whether there are grounds for prosecuting Aurora and whether any damages can be claimed from the embattled company.

Some other liquidation hearings have been open to the public but the M&G understands the liquidators wanted to keep the sensitive Aurora case closed, to encourage full co-operation from Aurora’s directors.

The directors’ testimony was given in the same week the liquidators announced they might have found a buyer for Aurora’s Orkney mine. They have provisionally approved a Chinese consortium with a black economic empowerment partner which is apparently listed on the JSE.

Du Plessis said his union was worried about what was left of the mines.

Aurora stopped paying workers in March 2010 and shut down operations soon afterwards.

An M&G investigation last year revealed Aurora was violating its agreement with liquidators by selling off assets without the liquidators’ approval.

The newspaper reported that Aurora’s management had been stripping the mine of headgear and pipes worth millions of rands. Du Plessis said some of the shafts had been stripped to the ground, all the remaining headgear, winders and pumping equipment had been stripped and sold and illegal miners had removed all underground equipment.

Water pumps had also been sold off but, at the time, head liquidator Enver Motala said that was not a problem because “Aurora somehow needs to fund their care and maintenance”. Last year a senior source at the Orkney mine told the M&G Aurora wanted to sell off equipment to service its debts.

When the M&G visited Grootvlei in May the hostels were occupied by Mozambican immigrants, many of whom were surviving by selling scrap metal from the mines.

In June, the joint liquidators stripped the company of its control of the mines, a move unions believe came too late to save Grootvlei.