Maybe one Zuma will #paybackthemoney

2015-03-08 15:00

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The fate of Aurora Empowerment Systems directors and consultants might be decided in court later this month

The president’s nephew Khulubuse Zuma this week lost his latest bid to escape liability for the Pamodzi-Aurora disaster.

Now the showdown deciding his fate, along with that of his co-directors at Aurora Empowerment Systems and their consultants, Solly and Fazel Bhana, is set to be decided in a week-long court hearing starting on March 23.

Zuma launched an application to challenge the R1.5?billion claim that Pamodzi’s liquidators have instituted against Aurora. That application was dismissed by Judge Eberhard Bertelsmann this week.

Zuma claimed he was also a creditor of Aurora – he allegedly sank R30?million into the company to keep it afloat.

Being a fellow creditor would allow him to question the validity of competing claims. His claim, however, came about three years too late – the standing claims were proven in February 2012.

Zuma’s legal team later issued a statement saying this forced him “to face a demand that he pays upwards of R1.5?billion to settle a ‘debt’ whose basis has never been outlined and in circumstances where he will not be allowed to question its very existence or validity”.

“This state of affairs offends the principles of natural justice and the right to a fair trial,” Zuma said.

The looming hearing at the North Gauteng High Court is about holding Zuma, Zondwa Mandela, Thulani Ngubane and the Bhanas personally liable for Aurora’s debt on the basis that they were negligent and dishonest directors.

That includes the R1.52?billion, which explains Zuma’s last-ditch effort to challenge it.

Aurora itself is in liquidation and has no assets. The directors are one of only two sources that repayment could realistically come from after the saga has dragged on for almost five years.

By now, the interwoven liquidations and series of court actions around Pamodzi and Aurora are becoming hard to follow.

The Aurora mine – which stopped paying its employees 18 months ago – is in liquidation. Khulubuse Zuma (inset) this week lost his case to escape liability for the disaster. Picture: Muntu Vilakazi

Here is a guide to how things stand.

Pamodzi Gold

The mining company went into provisional liquidation in 2009. Its creditors are still being left in the lurch, including former employees who are owed retrenchment packages, the Industrial Development Corporation (IDC) and German funder HypoVereinsbank (HVB).

HVB alone is owed about R800?million.

There is little chance of that money being recovered.

The provisional liquidators of Pamodzi have proven a claim of R1.52?billion against Aurora. It’s made up of missing gold and the replacement value of destroyed mining infrastructure. If they can recover some of that from Aurora, they can repay HVB, the IDC and the workers, to some extent.

Aurora Empowerment Systems

Aurora is also in liquidation. It is broke and there are no assets. It has its own set of creditors, among them the Pamodzi liquidators with their R1.52?billion claim. Other creditors include workers still owed wages from 2010 and 2011, as well as service providers such as Copper Eagle, the contractor that brought the liquidation application against Aurora after not being paid.

The Aurora liquidators have two plans for getting some cash in to pay creditors.

The first plan is to pursue the Bhana family and the “Indian investors” who apparently channelled money into Aurora – and then were paid back R35?million.

Among the targets are friends and associates of the Bhana family, including Enver Motala, who had originally been a liquidator of Pamodzi and then was kicked out of the profession for his actions there.

This is being done in two “tranches”, said the Aurora estate’s lawyer, John Walker.

The first R16?million was already won against the Bhana family last year, but they are applying for a rescission. That means they challenge the finding against them on grounds of court procedure, not necessarily the facts.

Aurora’s liquidators aim to defend their R16?million win at more or less the same time as the coming 424 application.

The second plan is the one that goes to court on March 23: to hold Zuma, Mandela, Ngubane and the Bhanas personally liable for Aurora’s debts. This is called a section 424 application, referring to a section in the old Companies Act.

Since Aurora has no assets, the liquidators hope to squeeze additional millions out of the five.

If the case succeeds and survives appeals, the sheriff will start seizing their assets.

Considering the size of the debt, including the R1.52?billion, this would probably mean them losing all assets that can be tracked down.

Despite the size of the claims, the liquidators don’t realistically expect to get more than R50?million out of them.

There are all sorts of other clues concerning large sums extracted from Pamodzi via Aurora, but at the moment there is neither enough evidence nor the resources to pursue them.

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