Johannesburg - A nephew of President Jacob Zuma, a grandson of Nelson Mandela and three others are liable for the cost of the destruction of mining assets they gained control of, a judge found.
Khulubuse Zuma and Zondwa Mandela were among the directors of Aurora Empowerment Systems, and are personally liable for its failure, according to a ruling handed down by Judge Eberhard Bertelsmann in the High Court in Pretoria on Thursday.
Through Aurora, Zuma and Mandela gained control of the Pamodzi Gold Ltd mines around Johannesburg in 2009 when its previous owner was placed under provisional liquidation. When Aurora failed to raise the required funds to get the mines up and running, they fell into disrepair and were ravaged by illegal miners. More than 5 000 employees lost their jobs and were left without pay.
The directors were “indisputably reckless”, Bertelsmann said. Assertions contained in Aurora’s bid documents for Pamodzi’s Orkney mine were a “figment of an overactive imagination”, he said.
The liquidators for the Pamodzi mines, who agreed to sell them to Aurora, accuse Zuma and Mandela of misrepresenting its finances during the sale and then of stripping the mines’ assets to sell for scrap. Pamodzi’s creditors will now start the process of preparing claims, John Walker, the liquidators’ lawyer, told reporters in Pretoria. The claims amount to about R1.7 billion ($140 million), the liquidators said in court documents.
Zuma, who was chairman of Aurora and said he didn’t have an executive or operational role in the business, is jointly liable for all losses incurred after December 1, 2009, Bertelsmann said.
Zuma “has a strong basis for an appeal” given that the judge recognised he should be treated differently from the others, Vuyo Mkhize, his spokesman, told reporters at the court. Zuma engaged in a genuine effort to ensure alternative funding, paying R35-million of his own money to try resolve Aurora’s problems, he said.
In court submissions, Mandela, Zuma and their fellow directors denied they were responsible for the mining venture’s failure, saying they never had full control of the assets.
Aurora agreed in 2009 to take over the mines from the insolvent estate of Pamodzi, which is controlled by liquidators including Johan Engelbrecht of Icon Insolvency Practitioners (Pty) Ltd.
The company said it would pay R605 million for the two operations and invest a further R350 million in them. Aurora never came up with the money, it is alleged in court documents.
Pamodzi’s liquidators, including Engelbrecht, brought the claims against Aurora’s directors, alleging they removed the mines’ assets and left the operations in an unworkable state.
Bloomberg