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Khulubuse Zuma agrees to pay R23m to Pamodzi after six years of denying wrongdoing

Aurora Empowerment Systems director, nephew of the president and controversial mining investor Khulubuse Zuma has agreed to pay R23-million in a settlement deal with Pamodzi mine liquidators, R500 000 of which must be paid by the end of Wednesday.

The settlement brings to an end Zuma’s role in court action aimed at recouping R1.7-billion from the Aurora directors, which include former president Nelson Mandela’s grandson Zondwa, Thulani Ngubane, Solly, Fazel and Zubeida Bhana, and Yaseem Theba. The Bhanas and Theba were placed under provisional sequestration in the high court in Pretoria today after they failed to pay R59-million in damages, which they had agreed to earlier.

The settlement compels Zuma to make R500 000 monthly instalment payments until he’s paid off R21-million to liquidators. Thereafter, the instalment would be decreased to R100 000 per month, until the outstanding R2-million is paid up.

The settlement agreement will be brought before a high court judge on September 25, when liquidators will apply to have it declared an order of the court. But this depends on trade union Solidarity and the National Union of Mineworkers accepting the deal. This week both unions told the Mail & Guardian they would not object to it.

Zuma has already made a down payment of R5-million for the settlement. The deal follows a long-running court battle during which Zuma attempted to absolve himself of any blame for the deterioration of the Pamodzi mine, near Orkney in the North West, after its purchase by Aurora in 2009. The company’s five directors, Zuma, Zondwa Mandela, Ngubane and Solly and Fazel Bhana, are accused of stripping the Orkney mine in the North West of its assets and failing to pay 5 300 workers salaries and allowances, or save jobs.

“Solly, Fazel and Zubeida Bhana and Yaseem Theba have repeatedly failed to comply with the R59 million damages agreement and have consequently been sequestrated today – in spite of their legal representatives, continued efforts to postpone the court proceedings of today – as has been the norm in the past,” said trade union Solidarity general secretary, Gideon du Plessis.

The order handed down by the high court states that the Bhanas and Theba have until October 27 to motivate why they should not be placed under final sequestration. The union said, until then, the families’ assets would be sold off to pay workers, salaries and provide additional income.

“The employees will now receive part of their outstanding monies from the Zuma settlement and the income from the selling of the Bhanas assets. Righteousness has at last happened and Zuma’s and the Bhanas’ moment of penance has arrived,” Du Plessis said.

Included in the Pamodzi liquidators list of creditors are 5 300 workers, who are owed millions in salaries and allowances, as well as the South African Revenue Service and power utility Eskom. Zuma’s R23-million settlement also includes legal fees of around R5-million, according to one of the parties in the court action.

The value of the destroyed assets at Pamodzi was initially estimated at R1.7-billion by liquidators, who hoped to recover it from Aurora’s directors. But the lawyers have now admitted that the damage to the mine and the net worth of the directors makes this task nearly impossible.

“The matter with Mr Zuma has been settlement. I don’t think it is realistic to expect the recovery of that R1.7-billion. Considering that the mine was destroyed and looted, it would not have happened,” said the Pamodzi liquidators lawyer, advocate John Walker.

After taking control of the mine, the Aurora directors failed to raise R605-million for two mine shafts and an additional R350-million investment to get the mine up and running. The operation was subsequently overrun by illegal miners and workers were left to fend for themselves without any financial assistance. Last year high court judge Eberhard Bertelsmann found that Mandela, Ngubane and the Bhanas had lied about their ability to raise the money, whereas Zuma, who was not involved in the purchasing offer, showed “reckless disregard” as chairperson of Aurora.

“The entire project was and remained a pipe dream,” Bertelsmann said.

Bertesmann found four of the directors, except Zuma, personally liable for R1.7-billion owed to creditors. The settlement agreement means Zuma will now be absolved from that liability.

Lawyers for Mandela, Ngubane and the Bhanas said the liquidators estimate of R1.7-billion in losses incurred was “vastly exaggerated”.

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Govan Whittles

Govan Whittles is a general news and political multimedia journalist at the Mail & Guardian. Born in King William's Town in the Eastern Cape, he cut his teeth as a radio journalist at Primedia Broadcasting. He produced two documentaries and one short film for the Walter Sisulu University, and enjoys writing about grassroots issues, national politics, identity, heritage and hip-hop culture.

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