Pamodzi liquidators mine ‘greedy’ R43m

2011-04-02 13:38

Unions are demanding to know why liquidators, led by insolvency ­kingpin Enver Motala, involved in the Pamodzi liquidation were paid more than R40 million in a ­controversial ­transaction.

At the heart of the dispute is ­whether the sale of Pamodzi’s Free State mines to Harmony Gold could be classified as the sale of a fixed ­asset, which would entitle liquidators to a 3% commission; or the sale of a ­going concern, which would ­allow them to charge 10%.

The sale brought in R439.6 million, and the joint liquidators fee was R43.2 million.

Motala and his colleagues billed for the sale of a going concern and scored some R30 million more than the other category would have earned them.

The National Union of Mineworkers (NUM) was shocked, saying this week that it was not even aware that the liquidation account had been filed, let alone paid.

“Looking at this account, it confirms our suspicions that the liquidators are intent on making as much money as they can,” said NUM spokesperson Lesiba Seshoka.

The first liquidation and distribution account in the protracted Pamodzi saga was filed with the ­Master of the High Court in Pretoria during the December holidays.

Experts this week criticised the ­account, saying the liquidators had incorrectly sold the mines as going concerns or movable property, ­rather than as fixed assets or immovable property. The Insolvency Act ­stipulates a fee of 3% on the gross proceeds of immovable property and 10% on the gross proceeds of ­movable property.

High-profile and controversial, Motala was arrested in 2003 on ­suspicion of fraud and corruption but no case ensued, and he was accused of having an improper relationship with the then justice minister, ­Penuell Maduna, who had allegedly promoted him irregularly.

Motala defended the Pamodzi Free State account, saying that the sale of assets of Pamodzi Free State to ­Harmony Gold was a sale of ­“business assets” for which the fees in terms of the Insolvency Act are 10% and not 3%.

“You seem to be confused between fixed assets and immovable ­property,” he said.

But forensic auditor Andre Prakke, famous for exposing business ­corruption, pointed out that the ­Insolvency Act does not even ­mention business assets, only ­movable and immovable property.

Prakke said the definition of fixed assets had been clearly defined in the sale agreements in this transaction, which he had examined.

He calculated that excess fees earned were in the region of R30 million, excluding VAT.

Harmony Gold this week confirmed that what it had bought was not a going concern.

Advocate Matthew Klein, a liquidator for 15 years before practising as an advocate, said there were so many items sold in the deal that the Master should have determined fees on each.

“In between everything is immovable property that attracts a 3% fee. The liquidators slipped up by not showing the purchase price per item, and the Master slipped up not questioning the fees,” he said, adding that it was now too late as a confirmation carried the weight of a court order.

Motala emphasised that the ­account had been lain open for public ­inspection at the Master’s Office “timeously and in terms of the ­statutory requirements”.

No objections were received and so the Master confirmed it.

The 4 000 workers who lost their jobs have been awarded about R67 million in the liquidation and distribution account.
Seshoka said NUM did not know the account had been submitted.

“We were not informed to inspect the account.

“It appears to have been done in ­secrecy,” Seshoka said after City Press sent him a copy of the account.

“They knew the complexity of this thing. We would need senior union management to look at it and take it to our lawyers, but we were not notified... and people were on holiday.”

Solidarity’s Gideon du Plessis said they also had no idea that an account had been submitted, despite often ­requesting updates.

Solidarity has laid an official ­request with the Master for an ­inquiry into the entire Pamodzi ­liquidation because there were too many things that had made them ­“totally uncomfortable”.

Acrimony between the unions and ­liquidators has deepened. NUM members last month demanded ­Motala’s head outside court when the long awaited finalisation of Aurora Empowerment’s bid for Pamodzi’s remaining assets was yet again ­postponed, this time to August.

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