Liquidators appointed to wind up a mining company owned by Eskom chair Ben Ngubane and his wife, Sheila, are pressing ahead with a court application in which they accuse the couple of using “sham” documents to personally lay claim to the lucrative mining rights.
The Durban High Court application was launched by liquidator Neil Button against the Ngubanes last year, relating to the 2014 winding up of their company, Huntrex 305.
The application is supported by the provincial government-funded Ithala Development Finance Corporation which, along with Brikor, put up R50-million to finance the now failed quarry venture in Tugela, northern KwaZulu-Natal.
The only asset of value in the estate – which has debts of R80m – is the sand and stone mining rights held by two entities, Natal Sand Suppliers and Zululand Quarries, which the Ngubanes have laid claim to.
The matter has been set down for argument later this year.
In his affidavit, Button, supported by his co-liquidators, insists that Huntrex owns all the shares in the two entities and they should be put into the pot to the benefit of creditors and to make the company attractive to buyers.
Detailing the history of the matter, Button said in 2011 Huntrex bought Brikor’s Stanger-based businesses, including Natal Sand Supplies and Zululand Quarries for R50-million, with loans from Ithala and Brikor.
Both agreements stipulated that Huntrex could not sell any assets until the full amounts were repaid.
“The business (being run by Sheila) floundered and failed. The debts were not repaid and Ithala brought the liquidation application. When we (the liquidators) took control, Huntrex was hopelessly and commercially insolvent,” Button said.
Its assets were just short of R32-million, but its liabilities were more than R80-million.
Button said a potential buyer – who was prepared to pay R30-million, the bulk being for the mining licences – walked away from the deal when the Ngubanes laid personal claim to the licences.
Button said they had provided “questionable proof” for this and the so-called “share certificates” were instead “poor fabrications”.
“They are not authentic,” Button said, alleging they were incorrectly numbered, reflected changed values and, in one instance, referred to Zululand “Querries” instead of “Quarries”.
“We have done investigations but despite diligent searches we have been unable to locate the share registers. Auditors of the two companies say they do not have them and have never had them.”
He said there was also no evidence that the Ngubanes had paid Huntrex for the shares.
Beyond that, if they had been transferred, it was after the date of liquidation, contrary to the agreements signed with Brikor and Ithala, and contrary to the laws governing the issue and transfer of mining rights.
In his affidavit, Ithala executive Nkosinathi Hlangulela expressed “astonishment” at the claim by the Ngubanes.
He said the mining rights were always the most valuable asset in Huntrex “and played a pivotal role in the decision to provide the loan”.
The Ngubanes have only filed a “preliminary” response in which they raise technical issues and do not deal with the allegations.
They sought to join the minister of mineral and energy affairs in the application, which Button labelled a “delaying tactic”.
The minister has not filed any papers.
In an affidavit filed with the court in a related application in which he sought to stop Ithala from liquidating Huntrex, Ngubane said his public profile – including the fact that he was once premier of KwaZulu-Natal – was making litigation difficult for him.
He withdrew the court action, saying he was in an “invidious position” because as a past premier “I was seen to be acting against my own former ward”.
He had also by then been approached to take up a post at Eskom to assist in “turning around the ailing enterprise”.
Ngubane said the quarry business, which employed 150 people, floundered soon after he took over from Brikor during December 2011.
“The quarry was shut for December … there was no income but we had to meet the December payroll and bonus roll and pay salaries in January.”
The Ngubanes scrambled to get more time to pay off their loans.
Ngubane alleged that it was agreed verbally with Ithala executives that each time Huntrex could not pay a monthly instalment and proved it through documentation, it would simply be deferred to the date of the payment of the final instalment.
Things went from bad to worse, Ngubane said.
The entire management team resigned, staff members were stealing stock, they were putting in fake purchase orders (one built his own house on the quarry account), the main cement supplier withdrew all credit facilities, and a primary crusher plant failed.
He said both Brikor and Ithala agreed that they would not call in their loans or take legal action.
But then Wessel Jacobs, an Ithala board member, reputedly a “turnaround guru” who owns his own business, Jacobs Capital, approached him and after “winning my trust” duped him into signing an agreement through which he attempted to “steal” all their shares in Huntrex.
Jacobs, he accused, was running a “cottage industry” out of Ithala, preying on the misfortunes of its distressed debtors.
Jacobs, in his affidavit, said this was all nonsense.
He said Ngubane approached Jacobs Capital for help in raising working capital for Huntrex.
“He was fully apprised of the fact that there are considerable expenses in turning a business around. Jacobs Capital would bear those costs and, in turn for this time and money, would obtain equity in it, once certain success targets had been reached.”
Jacobs said he and Ngubane fell out because Ngubane insisted that his son, Linda, remain on as general manager.
“I was not willing to continue spending time and money on the business and terminated all involvement in it,” he said.
According to the court papers, at one time Ngubane promised to pay Ithala what he owed by selling shares he held in Richards Bay Minerals.
But this had never happened. – News24