Directorsof Aurora Empowerment Systems – including President Jacob Zuma’s nephew,Khulubuse Zuma – have been found personally liable for damage and unaccounted-forgold production at two mines under their management.
Butthe sense of victory felt by unpaid mineworkers after the Pretoria high court’sjudgment in the matter is likely be short-lived, as the settlement of their claims remains someway off.
JudgeEberhard Bertelsmann made a declaratory order against Khulubuse Zuma, fellowdirectors Zondwa Mandela (Nelson Mandela’s grandson) and KwaZulu-Natalbusinessperson Thulani Ngubane, and the father-son team of Solly and FazelBhana, finding them jointly and severally liable. He did not put a monetaryvalue on their liability.
Theliquidators of Pamodzi Gold, who brought the application in terms of section424 of the Companies Act, estimate the value of unaccounted-for gold productionowed by Aurora to the Pamodzi Group at R122-million and damage at R1.7-billion.
Auroratook over two Pamodzi mines in October 2009: one in Grootvlei in Ekurhuleni,east of Johannesburg, and the other in Orkney in the North West province. Thecompany was nominated as the preferred bidder by Pamodzi’s provisionalliquidators.
KhulubuseZuma, Aurora’s chairperson, received slightly lighter treatment from the courton the grounds that he was unaware of the daily operation of the mines, was notdirectly involved in negotiations with liquidators and was only informed of thestate of affairs at the mines from time to time. But the judge said his”failure to act once he knew of the dire state of affairs is clearly a recklessdisregard of his duties as a director”. He found Zuma liable “for all losses …incurred on or after 1 December 2009”.
Speakingon Khulubuse Zuma’s behalf, Vuyo Mkhize told amaBhungane that the president’snephew would ask for leave to appeal. He said that the court had found himreckless, “despite the fact that it is accepted that he contributed R35-millionof his own funds in a bid to rescue the situation when he became aware of it.He also went to look for funding after it became clear that funding from AME[the initial claimed investor] didn’t materialise.”
Mkhize addedthat Khulubuse Zuma was happy that the court found that “he was not party toany fraud or dishonesty. Actually, it is the opposite; he lost R35-millioninstead of making anything.
“Whetheror not there is a debt, and the extent of the Aurora debt, is still to bedetermined. The process is going to vindicate our position that there is nounderlying debt whatsoever. The liquidators were wrong to have proven debt ofR1.7-billion against the Aurora estate,” Mkhize said.
Bertelsmannwas unsparing in his criticism of Mandela, Ngubane and the Bhanas, finding thatthey were all guilty “of wilful deception by presenting the bid documentscontaining numerous false assertions to the liquidators”.
“Theyare further guilty of reckless management of Aurora’s affairs from theinception of the interim agreements to the date of cancellation thereof,” heruled.
AfterAurora signed an interim trading agreement with Pamodzi’s joint liquidators,they agreed “to ensure that Aurora would keep proper accounting records, andthat it would maintain all operating equipment and keep it insured”. The judgefound that they failed to honour these agreements.
Bertelsmannfound Aurora’s “entire project”, which he called a “pipe dream”, to have had”disastrous consequences for many individuals who depended upon the fulfilmentof the promises the respondents made”.
He saidthat Aurora, after it left the mines in March 2010 following a strike, had”abandoned and left [the workforce] destitute”.
Reactingon Thursday, Solidarity’s Gideon du Plessis said that, “while nothing cancompensate [the mineworkers] for the losses they have suffered, and althoughfurther legal processes have to follow before the money can be collected, thisjudgment at least brought justice for them”.
David Swartz, representing the Bhanas, said it is “too early to tell”whether they will seek leave to appeal. He said they first need to go throughthe judgment.