Fraud probe as Amalia collapses
06 Mar 1998 00:00 | Staff Reporter
Mungo Soggot and : Andy Duffy
A fraud and theft docket has been opened against the financial director of a South African mining company that sat on crucial information about its dismal performance on the Johannesburg Stock Exchange. The JSE suspended the listing of Amalia Gold on Thursday as details of the company's woes began to leak out.
Its share price tumbled more than 90% in the past year, while shareholders were kept in the dark about the company's main deal: an exclusive right to develop the mineral resources of the devastated West African country of Liberia. The deal was cut with the government of Liberian President Charles Taylor.
There are fears that shareholders could have fallen victim to one of South Africa's biggest ever scams.
The company was recently given a one-month ultimatum to get cracking in Liberia or find itself in breach of contract for not doing anything.
Angry shareholders - including members of the Free State Rugby Union who last week stormed Amalia's Sandton office to express their concern about the share-price collapse - were not informed of the problems the group is experiencing in Liberia.
The Office for Serious Economic Offences, apparently acting on a tip-off from a disgruntled Amalia shareholder, stopped finance director Peter Trickey at Johannesburg airport last week, and confiscated his passport. The company says Trickey recovered his passport earlier this week. Johannesburg police were unable to give details of the fraud investigation, but confirmed that a docket had been opened.
Amalia's directors have also failed to keep the JSE informed of the situation in Liberia, but told JSE officials last week that hostile bidders for the company engineered the share-price collapse to take over the company.
Amalia's directors claim its former allies in Liberia and employees in this country are running a smear campaign, as part of an elaborate conspiracy to wrest control of the company's assets. The company says it has been under attack for at least six months, but that it only informed the JSE earlier this week as the share price plummeted.
The directors' opponents, who include its former lawyer, allege that the company's executives have systematically pillaged Amalia, using a string of companies in South Africa and overseas in which they are beneficiaries.
The company was valued at more than R290- million on the JSE little more than a year ago. It was worth less than R16-million when its listing was suspended this week.
JSE president Russell Loubser says the exchange is now investigating what the company has been doing.
Amalia's story has all the elements of a tale of speculative mining. It pinned its hopes firmly on Liberia, informing its shareholders last year that it had wrapped up an exclusive deal to tap the country's mineral wealth.
Amalia even established a joint-venture company with Taylor's government, called Liberesco, and claimed it had tied up international financing worth $7,5-billion. But the company has yet to dig a hole in Liberia. Its main achievement instead seems to have been to establish plush offices in Sandton and Monrovia.
Liberia's mines minister, Jenkins Dunbar, confirmed this week he gave Amalia one month to get cracking in Liberia, or face breach of contract for non-performance. He said he granted the company a 14-day stay of execution at the beginning of this week, as a gesture of good faith. "They have done nothing," the minister said.
The man who helped cut Amalia's deal, Niko Shefer, has instead approached Dunbar, saying the company needs new management so that the mining project can get off the ground. "We believe that the circumstances surrounding the present board and management staff at Amalia are such that they may have little choice to accept such a coup d'tat," he told Dunbar in February.
Shefer, an Israeli, is Liberia's former honorary consul to South Africa.
Amalia has also fallen out with many of its associates, including its legal adviser, Andre Thomashausen, and financial controller, Brennan Nelson. Thomashausen, a former adviser to Mozambican military group Renamo, helped mastermind Amalia's Liberian contracts.
Amalia, meanwhile, has drafted in a former apartheid military intelligence operative, Stuart Sterzel, to handle its fight-back strategy. Sterzel is trying to cut a deal in which a Singapore-registered mining group, Ivanhoe, will help fund the Liberian project.
Thomashausen estimates Amalia has been insolvent for three months, and has recommended it apply for liquidation. He adds that the company which helped it survey possible mining operations in Liberia has not been paid - one of a string of creditors banging on the company's doors in the West African country.
Thomashausen says Standard Bank pulled the plug on Amalia's overdraft last year. The company took out a new overdraft at Nedbank, which is now exposed to the tune of about R1,8-million. It is unclear whether Nedbank knew of Standard's decision to ditch Amalia.
Since Amalia was listed in 1995 it has raised about R270-million from its shareholders, the majority of whom are farmers from the North West province, home to the company's only functioning mining operation.
Amalia was formed by Welshman Andrew Cecil, who is chair of the group. Traditional investors and mining analysts have shunned the company, taking fright at its suspiciously complicated cross-holding structures. The only visible expenditure incurred by the company is the construction of its headquarters in Sandton and its office in Liberia.
"I am not sure where the rest of the money has gone," Thomas-hausen says.
Thomashausen claims he is still owed $32 000 by Amalia's sister company, Commonwealth Gold, which was listed in London.
The company, however, dismisses Thomas- hausen's claims. Director Gerhard Potgieter says Amalia is suffering from a cash-flow problem, triggered by the campaign against it. He adds that Thomas-hausen is party to that conspiracy, along with other former employees.
The company says it has recruited a private intelligence company - run by a former military intelligence operative who is also advising Amalia on its West African business interests - to find evidence of this conspiracy.
The Amalia empire, which includes a sister off-shoot in London, is an immensely complicated web of cross-holdings and associate companies, the majority of which are fronts for the main Amalia players. Sources close to the group say it frequently changes the names of the various companies, making it even harder to unravel its structure.
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