Johannesburg - Irate Gold Fields shareholders are expected to take the company to task after it emerged that it had “bribed” Baleka Mbete, the ANC chairwoman, with a R25 million share allocation to keep her onboard its black economic empowerment (BEE) deal, an allegation it has denied.
The company made the allocation after Mbete’s representative threatened to sink the deal if she was not given a bigger stake, which is linked to the new order mining right at the South Deep gold mine, the Mail & Guardian newspaper reported on Friday.
The first to condemn Gold Fields on the basis of the revelations was Mehluli Mncube, a fund manager at Inkunzi Fiduciary Solutions, who manages investment in the company for Eskom Pension Fund, Sentinel Retirement Fund and the Mine Employees’ Pension Funds.
“This conduct will lead to a serious downgrade of Gold Field’s corporate governance rating and standing. We will be engaging Gold Fields aggressively along with other institutional investors.”
According to the newspaper, Gold Fields failed to act on recommendations by New York law firm Paul, Weiss, Rifkind, Wharton & Garrison, which advised that the company’s decision to increase payment to Mbete amounted to bribery and that it should “self report”.
Mncube said: “Disregarding the recommendations of Paul Weiss has serious implications on the ethics and corporate governance of Gold Fields. The way the board has handled these findings is not in line with the good corporate governance standards that they say they uphold”.
Peter Leon, a mining expert at Webber Wentzel, said Gold Fields might be subject to investigation and sanctions if found in contravention of legislation such as the US’s Foreign Corrupt Practices Act, which prohibits the payment of bribes to foreign officials to obtain or retain business.
The deal was made during Mamphela Ramphele’s term as chairwoman. She has spoken about how the Department of Mineral Resources forced Gold Fields to include certain people in the deal as a condition to maintain its licence at South Deep.
Gold Fields distanced itself from these comments.
Cheryl Carolus, the new chairwoman, denied Gold Fields had broken the law. “The board acted deliberately and appropriately and in full compliance with the law. The board does not discuss the advice of counsel and internal privileged discussions of the board,” she said on Friday.
Mbete is one of 73 shareholders of Invictus Gold, a part of the 2010 empowerment deal that was arranged by ex-convicts Gayton McKenzie and Kenny Kunene, who were appointed to help structure the R2.1 billion consortium.
Other beneficiaries of Invictus are Nelson Mandela’s grand-daughter, Zindzi Mandela, and Limpho Hani, the widow of assassinated struggle hero Chris Hani.
The company’s share price declined 0.70 percent to R52.53 on Friday even as a strike fizzled out.
Its shareholders include BlackRock, the world’s largest asset manager, and the Government Employees’ Pension Fund, which declined to comment.
The controversial Gold Fields deal indicated ongoing problems in mining empowerment deals, John Capel of the Bench Marks Foundation said on Friday. He called for communities and employees to be beneficiaries. - Business Report