Directors of Aurora Empowerment Systems – including President Jacob Zuma’s nephew, Khulubuse Zuma – have been found personally liable for damage and unaccounted-for gold production at two mines under their management.
But the sense of victory felt by unpaid mineworkers after the Pretoria high court’s judgment in the matter is likely be short-lived, as the settlement of their claims remains some way off.
Judge Eberhard Bertelsmann made a declaratory order against Khulubuse Zuma, fellow directors Zondwa Mandela (Nelson Mandela’s grandson) and KwaZulu-Natal businessperson Thulani Ngubane, and the father-son team of Solly and Fazel Bhana, finding them jointly and severally liable. He did not put a monetary value on their liability.
The liquidators of Pamodzi Gold, who brought the application in terms of section 424 of the Companies Act, estimate the value of unaccounted-for gold production owed by Aurora to the Pamodzi Group at R122?million and damage at R1.7?billion.
Aurora took over two Pamodzi mines in October 2009: one in Grootvlei in Ekurhuleni, east of Johannesburg, and the other in Orkney in the North West province. The company was nominated as the preferred bidder by Pamodzi’s provisional liquidators.
Zuma wants to appeal
Khulubuse Zuma, Aurora’s chairperson, received slightly lighter treatment from the court on the grounds that he was unaware of the daily operation of the mines, was not directly involved in negotiations with liquidators and was only informed of the state of affairs at the mines from time to time.
But the judge said his “failure to act once he knew of the dire state of affairs is clearly a reckless disregard of his duties as a director”. He found Zuma liable “for all losses … incurred on or after 1 December 2009”.
Speaking on Khulubuse Zuma’s behalf, Vuyo Mkhize told amaBhungane that the president’s nephew would ask for leave to appeal.
He said that the court had found him reckless, “despite the fact that it is accepted that he contributed R35?million of his own funds in a bid to rescue the situation when he became aware of it. He also went to look for funding after it became clear that funding from AME [the initial claimed investor] didn’t materialise.”
Mkhize added that Khulubuse Zuma was happy that the court found that “he was not party to any fraud or dishonesty. Actually, it is the opposite; he lost R35?million instead of making anything.
“Whether or not there is a debt, and the extent of the Aurora debt, is still to be determined. The process is going to vindicate our position that there is no underlying debt whatsoever. The liquidators were wrong to have proven debt of R1.7?billion against the Aurora estate,” Mkhize said.
Aurora was reckless and ‘wilfully deceptive’
Bertelsmann was unsparing in his criticism of Mandela, Ngubane and the Bhanas, finding that they were all guilty “of wilful deception by presenting the bid documents containing numerous false assertions to the liquidators”.
“They are further guilty of reckless management of Aurora’s affairs from the inception of the interim agreements to the date of cancellation thereof,” he ruled.
After Aurora signed an interim trading agreement with Pamodzi’s joint liquidators, they agreed “to ensure that Aurora would keep proper accounting records, and that it would maintain all operating equipment and keep it insured”. The judge found that they failed to honour these agreements.
Bertelsmann found Aurora’s “entire project”, which he called a “pipe dream”, to have had “disastrous consequences for many individuals who depended upon the fulfilment of the promises the respondents made”.
He said that Aurora, after it left the mines in March 2010 following a strike, had “abandoned and left [the workforce] destitute”.
Reacting on Thursday, Solidarity’s Gideon du Plessis said that, “while nothing can compensate [the mineworkers] for the losses they have suffered, and although further legal processes have to follow before the money can be collected, this judgment at least brought justice for them”.
David Swartz, representing the Bhanas, said it is “too early to tell” whether they will seek leave to appeal. He said they first need to go through the judgment.
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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.