Aurora sold gold and kept proceeds

2011-11-19 10:06

Aurora’s directors and managers sold R122 million worth of gold from the Pamodzi mines and paid themselves and their families with the proceeds instead of paying running costs and staff.

In papers filed in the Pretoria High Court this week, Pamodzi liquidators said the Master of the High Court inquiry into the Pamodzi-Aurora deal had heard evidence of how the money was illegally diverted into an account controlled by Aurora.

The money was then paid to directors, managers and their family members instead of being used to pay creditors – as was agreed with the liquidation team.

The startling disclosure was made by liquidator Deon Botha on behalf of the joint provisional liquidators in response to an application by Aurora director Thulani Ngubane to narrow the scope of the inquiry in terms of section 417/418 of the Companies Act.

Ngubane had gone to court to prevent the inquiry from subpoenaing documents – including bank statements and Aurora’s founding documents – and pursuing questioning. He claimed this was beyond the inquiry’s permissible ambit.

Ngubane had made the application after he, fellow directors Zondwa Mandela and Khulubuse Zuma, and Aurora managers Solly Bhana, his son Faizel Bhana and Yaseen Theba had failed to present the financial records demanded by inquiry chair Wayne Gibbs.

These records included Aurora’s memorandum and articles of association, its minutes book, its bank account statements, and those of its directors and managers.

In his affidavit, Botha said that while the evidence at the inquiry had been kept secret to protect witnesses who were being intimidated, the liquidators had secured the Master’s permission to disclose the evidence, but not the identity of the witnesses who had provided it.

Botha said the Aurora directors had repeatedly failed to provide financial and other records despite agreeing to do so.

The inquiry appointed by the Master in June had only seen Aurora’s bank statements for the period February 2010 to April 2010, despite the empowerment company having controlled Pamodzi’s assets from October 2009 until May 2011.

He said that despite Aurora signing an agreement that it would deposit all revenue from gold sales into a nominated account, “various sums of money generated from mining activities’’ were illegally paid to a company called Merloni Marketing, a firm co-owned by Mandela and Theba.

“Evidence was presented that...Aurora designed a scheme in terms of which substantial revenue generated from the gold sales was not all deposited into the nominated account, but channelled from an account of Rand Refineries (which refined the gold) into an account controlled by Aurora,’’ Botha said.

From there, “substantial disbursements’’ were made directly into the accounts of Mandela, Zuma, Ngubane, Theba, the Bhanas’ and their family members.

The inquiry heard evidence that between October 2009 and March 2010, gold sales generated R112 million while a later “gold clean-up’’ generated R10 million.

The directors and managers – except Faizel Bhana, whose creditors received a payment – received substantial amounts of money, despite initial denials by the Aurora team that they had received any such payments.

However, Faizel Bhana later testified that R4 million was paid to Theba in repayment for money he had raised in the local Indian community to finance the Pamodzi deal. Other payments were made to Faizel Bhana’s mother, his sister and his brother-in-law, despite there being no evidence that they had ever done any work for Aurora or Pamodzi.

These payments, Botha said, were made at a time when Aurora had failed to protect Pamodzi’s assets, failed to meet any of its obligations to the liquidators, failed to pay workers and failed to account for money generated through mining.

Botha said it was imperative that banking records for the Aurora directors and managers were presented at the inquiry to find out why payments were made in violation of the original agreement with the liquidators, and why payments were made to family members who clearly had no role in the business.

Ahmed Amod, the lawyer for the Aurora directors and managers, refused to comment on Botha’s affidavit, saying his clients would do so when the application was heard in court.

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