/ 24 October 2014

Aurora fight casts light on the Bhanas’ suspect dealings

Aurora Fight Casts Light On The Bhanas' Suspect Dealings

Members of the controversial Bhana family return to court next month in a bid to stave off a R15-million debt judgment flowing from their involvement with the ill-fated Aurora Empowerment Systems, chaired by Khulubuse Zuma. But a much bigger claim relating to Aurora’s disastrous Pamodzi Gold mining venture awaits them in March next year. Will creditors succeed in pinning them down? Sally Evans traces the history of what is known about the Bhana family

The reverberating crack of the gates’ release signalled the race was on. Hooves pounded along the Turffontein racetrack, amplifying the battle between the 16 colts galloping inches from each other towards the finishing line.

Surprisingly, it was Fallon, a two-year-old with long odds that took the 2003 South African Nursery Grade 1 title and a R470000 prize.

The colt belonged to the controversial businessperson, Solly Bhana, whose lifelong passion for the track is seen to reflect both his taste for the high life and his alleged love of gambling.

“Solly used to have a serious bet. He always wanted to do things big. He could never just have one horse; it would have to be 10. He was a big punter,” a former racing colleague told amaBhungane.

Gambling might be seen as a metaphor for Bhana’s business style: for the past 15 years he, his son Fazel and other family members have left in their wake a trail of seemingly questionable ventures that have collapsed with sometimes far-reaching and destructive consequences.

Despite their allegedly pivotal roles in many of these doomed ventures, it never seems long before Bhana and his family bounce back, with accusations that they are surreptitiously pulling the strings behind the scenes of another scheme.

Among their most notorious endeavours is the failed and controversial mining investment company, Aurora Empowerment Systems.

This month it will be five years since Aurora took control of two gold mines from the liquidators of the Pamodzi Gold Group. 

The culmin­ation of Aurora’s 18-month gambit – it was evicted in early 2011 – includes damages claims to the assets totalling nearly R2-billion and ­millions in outstanding mineworkers’ wages.

Family ordered to repay Aurora estate
But Bhana and his son Fazel, who are among those being legally pursued for liability of the destruction caused to the Pamodzi assets, deny responsibility.

The father-and-son team, although not directors of Aurora, emerged as key players behind its bid to run and later buy the gold mines in Gauteng and the North West from the liquidators.

On August 26, Pretoria high court Judge Eberhard Bertelsmann ordered Solly Bhana, his wife Zobeida, their son and their two daughters Feroza Theba and Sham­illa Essay, as well as several of the family’s associates, to pay back R15-million to Aurora’s liquidated estate.

The same day Bertelsmann dismissed an application from the Bhanas’ lawyers to appeal against the ruling. 

Their lawyer, Amod Ahmed, previously told amaBhungane they would petition the Supreme Court of Appeal for permission to appeal against Bertelsmann’s ruling.

Despite the order, the family, using a string of technical legal arguments, is fighting back. On October 1, Bhana, his son and daughter Shamilla launched another application to have the high court ruling rescinded. 

In this application, they deny any liability for unpaid workers’ wages. Bertelsmann’s ruling in August had offered some hope to more than 5000 Pamodzi employees.

This matter, brought by Aurora’s liquidators, is one of two legal cases the Bhanas are facing for their allegedly pivotal role in the collapse of the two mines.

Liquidators want Aurora’s directors to cough-up
The second, set down for March next year, was brought by Pamodzi’s liquidators against Solly and Fazel Bhana and Aurora’s directors, KwaZulu-Natal businessperson Thulani Ngubane, Khulubuse Zuma (President Jacob Zuma’s nephew) and Zon­d­wa Mandela (grandson of Nelson Mandela).

The liquidators want the five to be held personally liable for almost R2-billion in damages to the assets under Aurora’s control, including gold sales of about R120-milion, which were allegedly never accounted for.

Zuma, Mandela, Ngubane and the two Bhanas are accused of managing “the affairs of Aurora recklessly, with the intent to defraud” the liquidators and creditors of the Pamodzi companies. The five deny personal liability.

After the names of Solly and Fazel Bhana were first linked with Aurora in early 2010, information about the two men and some of their family members’ previous exploits in South Africa, and later Dubai, slowly emerged.

In 2001, the Bhanas’ listed company Amlac became the focus of an insider trading investigation by the JSE’s financial regulator, the Financial Services Board (FSB).

Amlac was a paint-distribution company before it turned to importing oil, after a plan by the Bhanas to process oil locally fell flat. Amlac was delisted and liquidated by the end of 2003.

The insider trading directorate, a division of the FSB, was interested in whether the hundredfold increase in the company’s share price was usual..

Five of Amlac’s directors were investigated over specific trading transactions in Amlac’s shares between July 2000, when the Bhanas’ family trust acquired 68% of Amlac, and September 2000. 

During those months, the company’s share price reportedly skyrocketed from four cents to R5.28.

Fines and arrests
Bhana’s brother Mohammed and Bhana’s son Fazel, who was Amlac’s managing director, his son-in-law and two non-family members settled with the FSB and agreed to pay a R12.2-million fine.

Bhana, Amlac’s chairperson, “bound himself as surety and co-principal debtor” for the directors. The fine did not amount to an admission of criminal wrongdoing.

In early 2002, just before Amlac settled with the FSB, Solly, Fazel and two other Bhanas were arrested on charges relating to a R19-million VAT fraud. 

The two Bhana men and Solly’s son-in-law, Feroz Essay, were ordered to pay R5-million before the court would release them on bail.

The tax-related fraud charges brought against the family were dropped, however, after Essay and a revenue service staffer pleaded guilty.

In mid-2003, Essay received a suspended sentence and was ordered to pay the South African Revenue Service R17-million, plus a R3-million fine. 

Dubai business ventures not so clear
Solly and Fazel Bhana moved to Dubai shortly after Essay was sentenced. 

The nature of their business activities in the Gulf state remain vague, although there were claims that the family had money and assets there.

AmaBhungane has a copy of a report stamped and issued by the Dubai police headquarters: department of criminal investigation in 2008, which alleges that Solly Bhana is linked to the theft of 22-million dirhams (R65.8-million).

The document carries a South African passport number allegedly for Bhana, and his photograph.

Asked for an explanation, the Dubai Public Prosecution said the case number was incorrect but refused to respond to further inquiries, saying that the reporter had to appear in person to explain her interest. Solly Bhana failed to respond to questions about the police document.

There can be no denying the negative impact from some of Bhana’s commercial gambles.

His former horseracing colleague described him as “kind” and “generous”, particularly to “the guys on the ground, the lowly workers”. 

So, he said, he had been floored when the racing enthusiast’s name was linked to the Aurora debacle, which deprived thousands of mineworkers of their livelihoods.

Bhanas reject responsibility for unpaid mineworkers
But in their court application lodged three weeks ago the Bhanas argue that Aurora cannot technically be held liable for any monies owed to mineworkers.

They claim that the interim trade agreement signed in late 2009 between Aurora and Pamodzi’s joint liquidators to operate the gold mines did not automatically replace Pamodzi with Aurora as the mineworkers’ employer.

In 2012, the liquidators moved against Solly and Fazel Bhana, other members of their family and two of their associates, aiming to recoup millions of rands meant for mineworkers but allegedly paid to the Bhanas and others.

Both Solly and Fazel Bhana are accused of repaying themselves, members of their family and associates up to 100% interest on alleged “investments” the two Bhanas obtained to keep Aurora going during 2009 and 2010.

But the liquidators claimed the investments were, in fact, personal loans the father and son took, which they then lent to Aurora.

Although the Bhanas are usually described as consultants or business growth experts to ventures such as Aurora, the nature of their professional expertise remains unclear.

In his answering affidavit in the R1.8-billion liability matter, Ngubane offers no further clarity. He notes only that Solly and Fazel Bhana are businessmen who “conduct business personally, not through entities”.

Political connections
But Ngubane does allude to Bhana’s political connections. He says that Bhana has known Zondwa Mandela “since he was a child”.

The young Mandela, the eldest son of Zindzi Mandela, was also previously in business with another of Bhana’s sons-in-law.

The trade union Solidarity, which represents some of the Pamodzi mineworkers, has previously claimed that Winnie Madikizela-Mandela, Zondwa’s grandmother, intervened on Aurora’s behalf when, owing to nonpayment, Eskom threatened to shut off the electricity at the mines.

It’s a claim Solly Bhana hit back at a few weeks ago when he demanded that the union apologise to “Mama Winnie”.

Not mentioned by Ngubane was that, in 2001, Bhana and Amlac were part of a consortium with the politically connected company Zonkizizwe Investments, linked to Umkhonto weSizwe veterans. 

The consortium had won the right to lease an oilfield in Indonesia but nothing came of it.

Ngubane, who says in his affidavit he has known Solly Bhana for about 12 years, does not refer to Bhana’s previous exploits.

Wheeling and dealing
Ngubane refers to a meeting in 2003 at which he discussed his interest in “trading between South Africa and Dubai” with them. 

Ngubane states that he and Khulubuse Zuma, who met the Bhanas in “approximately 2004-2005” during a holiday in South Africa, “had opportunities in Africa where big funding was required, and we sought funding from Suliman and Fazel”.

In May 2009, by which stage the Bhanas had returned to South Africa, “Aurora Empowerment Systems (Pty) Ltd was born”. Solly and Fazel Bhana and Mandela confirmed Ngubane’s version of events.

Bhana did not respond to questions about his alleged escapades while in Dubai, although amaBhungane has established that he and his daughter Shamilla owned several racehorses there. 

In March 2008, Bhana bought a five-year-old gelding, Red Duster, for $61000.

Diamonds, horses and bouncing cheques?
But a source, who is involved in the diamond industry and claimed to have worked with him, alleged that Solly Bhana “lost his horses up there. They attached them in Dubai.”

The source also alleged that Bhana was involved in a diamond-polishing venture in Dubai that ran into financial difficulties.

AmaBhungane has been unable to verify this and Bhana did not respond to questions about his alleged involvement in this venture.

In 2010, the Mail & Guardian reported that Dubai-based businessperson Faruk Roked had issued summons against Solly Bhana and another of his sons-in-law for R6-million in US dollars and Dubai dirhams, which he claimed to have lent them the previous year.

The two men allegedly signed an acknowledgement of debt in which they agreed to repay him in tranches of R35000, R50000 and R80000.

The M&G understands that the Bhanas attempted to pay Roked with cheques, which bounced. 

It is unclear what has since transpired, and whether this alleged dispute is linked to the Dubai police report. Solly Bhana did not respond to questions.

“Cash-flow problems”
Allegations were also levelled against Solly by a South Korean property developer, Sung Dol Kim, who claimed he supported Bhana financially in Dubai after his “cash-flow” problems started in early 2008. 

Kim’s company, D’seco, was involved in a development in the Al Helio Downtown in Ajman, about 60km north of Dubai, when the company went bust.

In a phone interview in late 2012, Kim told amaBhungane that “Mr [Solly] Bhana bought property in our development and then he lost all the money because the property market flopped due to Lehman Brothers’ crash”. 

He claimed that Bhana only managed the down payment and couldn’t pay the balance.

“We are a mass property developer; he is just one of the buyers. His business is diamonds, but our main business is construction and property,” Kim said. He claims to have lent Bhana $150000 in total, an amount he did not recover.

Echoing Faruk Roked’s claim, Kim told amaBhungane that “several cheques” that Bhana issued him had bounced”.

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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.