/ 19 August 2011

Zuma’s cronies linked to new Aurora mine deal

President Jacob Zuma’s family and other intimates are suspected of ­having close links with the new owners of the embattled Orkney mine, which was formerly under the control of liquidated Aurora Empowerment Systems.

The Mail & Guardian has seen a letter written to the liquidators by the Orkney managing contractors expressing concern that the directors of Aurora are involved in the new deal to buy the mine. The directors include Khulubuse Zuma, the president’s nephew, and Michael Hulley, his lawyer.

The M&G has also learned that Robin Lee, chief executive of SSC Mandarin, the Chinese partner that took control of Orkney this week, met President Zuma before sealing the deal in South Africa. The meeting took place on June 20, in the same week that SSC Mandarin submitted its proposal for the Orkney mine. A photo of the two men at the meeting is posted on the company’s website.

The consortium’s empowerment partner, Elias Khumalo, is a well-known Zuma confidant and adviser. An offer of R150-million by China African Precious Metals, a consortium comprising Khumalo’s BEK Resources, former PetroSA boss Sipho Mkhize, Free State ­businesswoman Hettie Fourie and SSC Mandarin was approved recently by the liquidators, subject to certain conditions.

Lee and the presidency did not respond to questions this week.

Khumalo has been a Zuma aide since the Nineties. A former trade unionist, he made his money in a medical supplies business. Although the Orkney mine is his first gold mining acquisition, he has interests in diamonds as the empowerment partner of SSC Mandarin’s subsidiary, SSC Joy Spring, which owns the Loxton Dal and Frank Smith diamond mines near Kimberley.

One company in the BEK Resources consortium, Stappen Investments, is owned by Sipho Mkhize, who was fired last year as chief executive of PetroSA. No reasons for the dismissal were given, but it followed a string of reported allegations of corruption and mismanagement.

While the transaction between SSC Mandarin and the joint provisional liquidators was taking place, a group of Orkney contractors raised concerns that the Aurora directors were involved in the new deal.

Their representative, Johan van den Berg, wrote in a letter sent to the liquidators: “We as managing contractors and workers feel that the connection between Mr Khumalo and the presidential Zuma family still hold ties with the old Aurora company.”

A source close to the liquidators said he shared their concerns.

But Khumalo denied that any Aurora directors were involved in the new deal. “The concern was raised by Standard Bank, the preferred creditor,” he said.

“The unions also raised the same question. We did engage Aurora to try to embark on a joint venture with them, but the memorandum of understanding never materialised. At the moment I can assure you that no Aurora directors are part of this transaction.”

Consortium partner Fourie said she had been in talks with the Chinese partner since March last year to join her in taking over the Pamodzi mines. “SSC Mandarin brought Elias Khumalo to the table this year,” she said.

Fourie refused to be drawn on the question of whether any of the Aurora directors were part of the deal. “I’ve been instructed by my ­lawyer not to answer that.”

The mismanagement of the Orkney and Grootvlei mines became evident shortly after Aurora took control in October 2009. By March last year the workers had downed tools because their wages had not been paid and the mines stopped operating.

Over the next 12 months there were persistent allegations of asset-stripping, gold theft and illegal mining. Several illegal miners were shot dead by security personnel towards the end of last year.

Head liquidator Enver Motala was removed from his position in May this year and Aurora was stripped of control shortly afterwards. The directors are now in court for a liquidation hearing aimed at apportioning accountability for the mines’ mismanagement.