Aurora: Zuma, Mandela await their fate

2015-03-29 15:00

R1.5bn - The amount the liquidators of Pamodzi mines are seeking from the directors of Aurora. The collapse of the mining operation also led to the loss of more than 5?000 jobs.

The liquidators, creditors and former employees of Aurora Empowerment Systems are waiting to hear if the directors of the ill-fated gold mining company will have to pay them.

A section 424 application at the North Gauteng High Court in Pretoria was concluded on Tuesday afternoon after taking up two of the five days set down for it. Judgment was reserved. In terms of section 424 of the Companies Act, directors can be held personally responsible for the mismanagement of a company.

The liquidators of the Pamodzi mines, which fell into ruin under Aurora’s care, are pursuing a claim for R1.5?billion, which they say should be paid by the directors of Aurora. The directors include Jacob Zuma’s nephew Khulubuse Zuma, Nelson Mandela’s grandson Zondwa Mandela, Thulani Ngubane and their investors, Suliman and Fazel Bhana. This week’s case was about proving the five were negligent or dishonest as directors. This will allow the R1.5?billion claim to be pursued against them personally.

The massive sum includes alleged illegal gold sales and asset stripping at the Pamodzi mines.

The crux of the argument against Zuma and the others is that they lied about their company’s finances and track record to convince the liquidators of the mines to award them a management contract as a precursor to them buying the mines out of provisional liquidation.

Aurora told the liquidators they had purchased Redwood Timber Merchants and 71% in JSE-listed Cenmag Holdings.

Both those deals failed to materialise.

Aurora directors said a Malaysian investor, Dato Zainal Rajah Shah, had agreed to provide the funding in December 2009, but had pulled out.

Advocate Louis Hollander, representing Mandela, Ngubane and the Bhana father-and-son team, argued that they could not have known the funding would not materialise.

The counterargument is that the funding was never nearly as secure as Aurora made it out to be.

Pamodzi had two mines, the Springs operation in Gauteng and the Orkney mine in North West.

Aurora’s failure to keep the mines financially viable resulted in more than 5?000 job losses, with some of those mine workers still waiting for money owed to them from 2010.

Affected mine workers protested outside the court this week while the case was being heard.

Labour federation Cosatu joined the protests after releasing a statement accusing Aurora directors of attempting to “run away” from the case.

“Poor mine workers are waiting for this court to make a ruling, which will affect their lives and that of their children, who have not been able to go to school due to brutal abuse by Aurora directors,” read the Cosatu statement.

Judge Eberhard Bertelsmann grilled the Aurora directors on how they had planned to fund the mines when they took control in October 2009.

He pointed out that the Malaysian investor’s funding was only to be secured in December 2009.

Hollander claimed the directors had invested their own money to get through to December 2009.

Advocate Cedric Puckrin, representing the liquidators, said the liquidators were lied to numerous times. They were constantly told “the cheque is in the mail”, he said.

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