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Countless delays and six years later, the Aurora lawsuit has finally been concluded. And while Khulubuse Zuma has to pay R23 million in damages and the Bhana family members have been sequestrated, the liquidation of Aurora will take years to conclude. And it will be the workers that suffer the most. Solidarity’s Gideon du Plessis also says more people are expected to be sequestrated, including Thulani Ngubane and Zondwa Mandela. Du Plessis, who is general secretary at the trade union looks at how the six year saga played out, and says the systems suit those corrupting but works against the workers. Another well crafted piece. – Stuart Lowman
By Gideon du Plessis*
The Aurora saga started in September 2009 when the Pamodzi Gold liquidators transferred control of Pamodzi’s Grootvlei and Orkney mines to politically bound businessmen Khulubuse Zuma, nephew of President Jacob Zuma, Zondwa Mandela, grandson of Nelson Mandela, and the controversial Bhana family’s Aurora Empowerment Systems. The consequences a year later were theft of gold worth R122 million; damage to stripped mine assets valued at R1.7 billion; service providers who went unpaid; thousands of kilolitres of untreated acidic mine water were discharged into the East Rand’s Blesbokspruit; not a single prescription of the companies act was complied with; all relevant mining regulations were violated; workers’ pension and unemployment insurance contributions were stolen; and 5 300 employees were paid only between 10% and 20% of their salaries for eight months. Moreover, the bid document utilised by Aurora to acquire the Pamodzi business was found to be false in its entirety. And apart from the corrupt document, Aurora had already been in a state of insolvency at the time of its appointment.
Even though Aurora was already liquidated in October 2011, resulting in numerous legal actions and criminal investigations, the Aurora directors and the family members concerned – thanks to their powerful political ties and legal teams who shared their unethical values – could frustrate legal processes and ignore binding rulings. Some lied under oath throughout. Yet, a modicum of justice shone through during the past week when a R23 million agreement for damages was reached with Zuma. In addition, Solly and Fazel Bhana as well as Yaseen Theba were sequestrated. Two other members of the Bhana family, plus Thulani Ngubane and Zondwa Mandela, who also benefited from the scam, are to be sequestrated shortly.
Aurora mine liquidators on the hunt for Khulubuse Zuma’s hidden riches
— simaxis (@simaxis) September 15, 2016
Because of the foregoing, former Aurora employees may at last hope to receive a part of their unpaid salaries – unfortunately, the insolvency act caps employee payments at R28 000 and Zuma’s R23 million settlement falls far short of covering the workers’ full remuneration. According to my sources, however, the sequestration of those involved in the saga should yield a further R30 million from the sales of their assets and the possible payout of a R5.5 million claim againt the Reclamation Group, the company that stripped some of the assets on behalf of the Aurora directors.
It is also good to bear in mind this proviso of Zuma’s settlement: if he is caught out having failed to declare all his financial interests in his wealth statement, he can be held liable for damages to the full extent of R1.7 billion. It is a strong possibility because, to my view, he presented the truth highly circumspectly during negotiations and pleaded poverty (unbelievable that “poor” Zuma could afford R5 million as a first instalment, to be followed by monthly repayments of R500 000!).
The Aurora liquidation will take years to conclude. Funds must be raised to pay a part of the workers’ outstanding salaries, the business interests of the sequestrated parties must be investigated, and criminal investigations of the Bhanas and co. are yet to start (this, while the NPA has been in possession of the files for years). Nevertheless, several lessons can already be learnt from the Aurora saga:
- Section 38 of the insolvency act, which regulates workers’ termination of employment during liquidation, must be amended. Short-term relief for workers of a liquidated company means access to unemployment insurance and pension money, but the current process in law is tiresome and prevents workers from obtaining fast financial relief.
- Compulsory exit medicals are problematic during a liquidation in a mining environment and prevent mineworkers from securing alternative employment.
- After a liquidation, employees are normally left with an endless battle to sort out their affairs with the South African Revenue Services (SARS) since neither the liquidated employer, or liquidators tend to take responsibility for issuing the final IRP5.
- It is also not acceptable that SARS should receive preferential treatment ahead of employees when it comes to the payment of outstanding monies during a liquidation.
- It is furthermore an extremely onerous and cumbersome process for a worker to proof his/her salary claim.
- Court rules should not allow rulings to be ignored (with minimal consequences) and tolerate delays in legal processes through various devious devices.
- Aurora initially enjoyed the protection of the Department of Mineral Resources because the company was treated as a black empowerment group; however, the lesson to be learnt from this is that a mining licence should only be issued to a company with a proven mining track record and qualified mining specialists.
- The appointment of liquidators should be based on merit and specialist knowledge. Surely, it must have been easier to get rid of a controversial Pamodzi liquidator like Enver Motala (or Enver Dawood, his real name) whose Bhana connection had a substantial share in the Aurora controversy.
- A person like Enver Motala managed to obtain a presidential pardon for 92 convictions of fraud in the midst of the Aurora fiasco; this implies improper political influence in the pardoning process, especially because the application enjoyed the support of Winnie Madikizela-Mandela.
- Finally, the focus of the Department of Labour’s well intended but impracticable training/layoff scheme should be shifted towards assistance for workers affected during liquidation and business rescue processes.
The workers have paid dearly for the Aurora corruption, yet the pain can be assuaged if, apart from judicial consequences for the Aurora thugs and salary repayments, worker-friendly statutory and regulatory amendments could result from this saga.
- Gideon du Plessis, General Secretary, Solidarity
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