Johannesburg - Khulubuse Zuma, who is embroiled in a R1.7-billion court battle over the two failed Pamodzi mines, is turning on his business partners, who include Zondwa Mandela, grandson of Nelson Mandela, in a bid to recover R30 million he lost in the gold mines.
Zuma, Mandela and other directors of Aurora Empowerment Systems face a R1.7-billion claim from liquidators after the troubled Pamodzi Gold Orkney and Pamodzi Gold East Rand mines they were entrusted to run and save collapsed, leaving hundreds of people unemployed and destitute.
Emboldened by a report that has exonerated him and blamed fellow directors for fraud, embezzlement, theft and self-enrichment, Zuma, the former chairman of Aurora, is expected to launch a lawsuit, claiming in excess of R30 million from former executive directors Mandela, Sheshile Ngubane, Raja Zainal Alam Shah as well as Solly Bhana and Fazel Bhana, who effectively ran Aurora.
He has to wait, however, for the decision of the Northern Gauteng High Court, which will be hearing the massive claim against Aurora from March 23. The same court this week dismissed his attempt to have R1.5 billion of the total R1.7 billion claimed by the liquidators set aside.
Judge Eberhardt Bertelsmann dismissed Zuma’s application with costs on Tuesday, saying his interests were not directly affected. Zuma is contesting the validity of the massive claim. He has instructed his lawyers to “explore all available legal avenues to ensure his constitutional rights are protected”, said his spokesman, Vuyo Mkhize.
Had Zuma’s application succeeded, it would have scuppered efforts by liquidators of Pamodzi mines to hold him and the directors of Aurora personally liable for the larger amount over the stripping of the two mines’ plants.
Aurora were appointed by liquidators to manage the mines in Orkney and Springs in 2009, but instead allegedly stripped the infrastructure of the plants and sold them off as scrap.
Lawyers acting for Pamodzi had described Zuma’s application as a ploy to stop the court hearing their application that seeks to hold him and other directors personally liable for the R1.7 billion.
In his application, Zuma complained that effective control over Aurora, which was liquidated in 2011, had been unlawfully handed over to the Pamodzi liquidators.
Cosatu general secretary Zwelinzima Vavi welcomed Judge Bertelsmann’s dismissal of the application as a victory for workers and accused President Jacob Zuma’s nephew of trying to dodge responsibility to the suffering workers of Pamodzi.
Zuma has rejected Vavi’s allegations and similar ones by the National Union of Mineworkers. He said he was trying to protect his rights and could not be blamed for the plight of the employees of Pamodzi.
Mkhize, his spokesman, accused the trade union leaders of trying to distort the findings of a report that was filed by Advocate WW Gibbs, the commissioner tasked by the Master of the North Gauteng High Court to conduct an inquiry into the affairs of Pamodzi, in 2013.
The commissioner found that Zuma was never involved in any acts of fraud, theft or asset-stripping and did not benefit from such conduct.
Instead, said Mkhize, “Zuma used in excess of R30 million of his own money to pay workers at the Pamodzi mines (including NUM members) and service providers in an attempt to salvage the Aurora transaction.”
He said the attack on Zuma by Cosatu and the NUM leadership was “rendered even more bizarre by the fact that Zuma is not aware of any claim that has been lodged against Aurora on behalf of NUM members, whether in relation to unpaid salaries or any other entitlement”.
Mkhize said Zuma was planning to be in court on March 23 – if the liquidators’ case continued – because he hoped to use its outcome to sue Mandela and Aurora directors for the R30 million.
The commissioner, Gibbs, found that Aurora, which was subsequently appointed the preferred bidder for the mines by the then-joint provisional liquidators (JPL), led by Enver Motala, had submitted a fraudulent bid to acquire Pamodzi. He also found some of its directors embezzled assets belonging to Aurora and Pamodzi.
“If the directors had any control or were not part and parcel of the scam, one would have expected them, when it became evident that things were going very wrong, to bring the Bhanas to book, to take control, to disclose to the JPL what was taking place and, if necessary, to call for assistance,” said Gibbs.
“This never happened, and it appears that, with the exception of Zuma, the other directors merrily and without a second thought shared in the spoils of that which was being perpetrated,” he added.
“Although one has sympathy for Zuma, the fact that he trusted his associates (which explains his laissez-faire approach and lack of control), was allegedly also defrauded and lost millions of his personal wealth, does not exonerate him from his statutory duty of care towards the company and, to my mind, he was negligent in his approach, as envisaged,” said Gibbs.
“This failure of his, and perhaps the other directors, probably renders them liable to Aurora in terms of Section 77(2)(a) and/or (b) of the new Companies Act,” said Gibbs.
Sunday Independent