Gold Fields link to Duduzile ZumaOCT 2013 SOLE, TABELO TIMSE, CRAIG MCKUNE, STEFAANS BRÜMMER
President Jacob Zuma's daughter has declared that she owns or will own shares in the controversial mining company.
Duduzile and Phumzile Zuma during their joint coming-of-age ceremony at the Zuma homestead in Nkandla. Did Duduzile benefit from the Gold Fields empowerment deal? (Gallo)
Was one of President Jacob Zuma’s daughters cut into the controversial Gold Fields empowerment deal?
AmaBhungane has obtained an April 2011 declaration of assets by Duduzile Zuma, which included Gold Fields among shares that were “currently owned or to be acquired in the future”.
It is not certain whether Duduzile’s interest was through the company’s 2010 empowerment deal, though circumstantial evidence suggests it was.
Read: Zuma blood thickens hydro scheme
Gold Fields refused to comment and Duduzile did not respond to questions about her interest in the company.
In a written response, a spokesperson for Gold Fields said: “The company is not commenting on this matter.”
Duduzile, who is the president’s daughter with the late Kate Zuma, did not respond to phone calls or SMS messages, nor to written questions delivered to her office.
Gold Fields has maintained a stony silence about its multibillion-rand empowerment transaction since amaBhungane revealed last month that an independent investigation commissioned by the company had found evidence of bribery.
In a report suppressed by the company, investigators from New York law firm Paul Weiss suggested that the company violated anti-graft laws when it cut various connected people into the black economic empowerment consortium Invictus Gold.
Paul Weiss believed this was either a corrupt payoff for their alleged help in influencing government to grant a crucial mining licence, or Gold Fields management was guilty of “wilfully ignoring” evidence of corruption.
The Gold Fields board has repeatedly maintained that the company acted legally.
Duduzile Zuma is not listed as one of the beneficiaries in details about the deal that the company released in March after pressure from directors and shareholders.
However, the Paul Weiss investigation found at least one example of “fronting”, allegedly to hide the true scope of the beneficiaries.
The investigators detailed how top managers were informed that a front company was used to conceal shares awarded to Eric Lucas, then a leading member of Parliament’s mineral resources committee, and Musa Zondi, then a fellow MP and secretary general of the Inkatha Freedom Party. They have never responded to the claims.
A gift of shares to Duduzile would not be inconsistent with the known facts about the deal.
lPaul Weiss found that Gold Fields cut in a number of well-connected people, who had been identified for the influence they were perceived to wield.
lAmong those tapped as known beneficiaries were several people said to be close to President Zuma, including Dudu Myeni, the executive chair of the Jacob Zuma Foundation; Colonel Nkosana Ximba, an associate of crime intelligence boss Richard Mdluli – and someone who, according to Mdluli, was helpful to Zuma when he was charged with rape; and advocate Jerome Brauns SC, who represented Zuma during his rape trial.
lDuduzile is linked to the key architects of the empowerment deal: Gayton McKenzie (at the time part of a colourful business duo with Kenny Kunene) and Brauns, who leads Invictus Gold.
Duduzile, Kenny & Gayton
In her 2011 asset declaration, Duduzile indicated that she expected to obtain shares in an entity called ZAR Online.
In 2011, Kunene launched the ZAR Online entertainment website as an adjunct to the ZAR nightclub group he co-owned with McKenzie. They were awarded full media rights to cover Duduzile’s wedding in 2011 to businessman Lonwabo Sambudla – and both he and McKenzie attended the wedding.
McKenzie could not be reached for comment. Kunene told ama-Bhungane that he was not part of the Gold Fields deal and does not know whether Duduzile was approached: “I don’t know, I don’t know,” he said. “At the beginning of these transactions, lots of names are put forward. Not all of them are included in the actual deal – some are left out.”
Gold Fields has previously confirmed that Kunene did accompany McKenzie to “various meetings and visits”, but denied that Kunene was directly involved.
Kunene dismissed suggestions that Duduzile had been offered an interest in ZAR Online.
He said: “We spoke to her husband Lonwabo about exclusive coverage of the wedding and did photography and video, which we got paid for.”
Duduzile & Jerome
AmaBhungane has been told that, in late 2009, Brauns ordered the purchase of a shelf company that became known as Attractive Move Investments. Just days later, Rich Cove Investment – the entity that would become Brauns’ main vehicle in Invictus Gold – was also registered.
The timing suggests that both entities were conceived in relation to the Gold Fields project.
On October 1 2009, three people were introduced as directors of Attractive Move: Duduzile Zuma and two other women, Mpho Litha and Sophie Ndaba.
Litha was at the time a human resources manager at Central Rand Gold, a mining company in which Brauns, Kunene and McKenzie were all involved.
Litha told amaBhungane that she was shocked to hear that she was listed as a director for Attractive Move: “I don’t know anything about that … that is literally news to me … I literally have no knowledge of what you’re asking me about.”
Ndaba, an actress and star of the Generations TV series, also expressed complete ignorance of her inclusion as a director of Attractive Move.
Ndaba recalled that she met Litha perhaps in 2010 and said she had met Duduzile on several occasions at various events, but added: “We are not friends. I don’t even have her number.”
Invictus Gold was registered with Brauns as the founding director on April 16 2010. On May 3 2010, the registered address for Attractive Move was changed to reflect the address of Brauns’ chambers in Durban.
On May 10 Gold Fields announced that the department of mineral resources had in principle approved its mining right and that a deal was being put together to comply with BEE requirements.
The Gold Fields empowerment share allocations were made in December 2010. Duduzile made her declaration of the shares less than five months later.
Brauns did not respond to emails or messages requesting comment.
* Got a tip-off for us about this story? Email amabhungane@mg.co.za
________________________________________________________________________
SEC Probes Gold Fields on South African Black-Ownership Deal
By Kevin Crowley - 2013 2:23 PM GMT+0200
Gold Fields Ltd. (GFI) said the U.S. Securities Exchange Commission is investigating an ownership deal that helped the South African producer of the metal secure a mining license. The shares fell to the lowest in a month.
The SEC is probing the transaction associated with the grant of the mining permit for the South Deep operation near Westonaria, 55 kilometers (34 miles) southwest of Johannesburg, Gold Fields said today in a statement.
In 2010, Gold Fields agreed to issue 600,000 shares to a black-owned group and allowed it to buy 10 percent of South Deep. South African law requires mining companies to sell at least 26 percent of their local operations to black citizens, with transactions that benefit workers, communities near sites and trusts for the poor being favored.
Last year, the company denied a news report by Johannesburg-based Carte Blanche that the deal benefited influential people who helped it win the license needed to continue operating the mine.
“Given the early stage of this investigation, it is not possible to estimate reliably what effect the outcome this investigation any regulatory findings and any related developments may have on the company,” Gold Fields said.
The stock dropped for a seventh day, losing as much as 2.4 percent to the lowest intraday level since Aug. 8 and trading 0.6 percent lower at 51.95 rand by 2:06 p.m. in Johannesburg. Before the announcement, the shares had gained as much as 1.2 percent.
Gold Fields’ primary listing is on the Johannesburg Stock Exchange. U.S investors can trade the stock through American depositary receipts.
To contact the reporter on this story: Kevin Crowley in Johannesburg at kcrowley1@bloomberg.net
To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net
-----------------------------------------------------------------------
Investigators: 'Gold Fields bribed Mbete'
2013 00:00CRAIG MCKUNE, STEFAANS BRÜMMER
US investigators have conclude that a R25-million share handout to Baleka Mbete constituted corruption by Gold Fields, which then buried the findings.
ANC national chairperson Baleka Mbete's share allocation was raised by a whopping R25-million following an alleged threat made by her representative. (Sunday Times)
Gold Fields has buried a New York law firm's finding that a R25-million share allocation to ANC chairperson Baleka Mbete constituted bribery.
The law firm, commissioned by Gold Fields itself, found that the South African mining house had hugely increased Mbete's cut in a contentious 2010 empowerment deal in response to an alleged threat by her representative.
They recommended that Gold Fields "self report" the matter to the authorities. But the company's board disregarded the advice – and instead decided not to have the findings written up.
The law firm made no finding against Mbete, whose complicity would depend on her actions and state of mind.
Mbete referred comment to Gold Fields chairperson Cheryl Carolus, who answered on behalf of the board only. She insisted it had acted "in full compliance with the law".
The Gold Fields black economic empowerment (BEE) transaction has already drawn controversy for the way it channelled benefits to connected individuals assembled by a presidential lawyer and two ex-convicts.
The latest allegations are likely to increase concerns about the abuse of mining sector opportunities to extend patronage to a small elite.
Mineral resources's requirement
The deal dates to Gold Fields's 2010 struggle to secure a new-order licence for its South Deep mine and the department of mineral resources's requirement that the company find an empowerment partner.
At the time, Gold Fields appointed President Jacob Zuma's one-time lawyer, Jerome Brauns, and ex-convicts Gayton McKenzie and Kenny Kunene to help to structure what became a R2.1-billion consortium.
One leg of this, the entity Invictus Gold, included a number of politically connected people, Mbete and Brauns among them. This led to a public storm of controversy.
Both Gold Fields chief executive Nick Holland and former chairperson Mamphela Ramphele have said in news reports that the department was prescriptive about who to include in the BEE structure.
Gold Fields has consistently denied wrongdoing but, in December 2012, its board commissioned the United States law firm Paul, Weiss, Rifkind, Wharton & Garrison (Paul Weiss) "to determine the facts and to provide recommendations to the board".
During the course of this year, the investigators gave two slide presentations to the board.
Sources with direct access have described the contents of key slides to amaBhungane. One said the full findings were "devastating" for Gold Fields.
October meeting
The findings relate primarily to an October 2010 meeting between Brauns, as chief architect of the deal, and Brian Mosehla, who acted as Mbete's "representative" to discuss her shares in Invictus.
Recently, Mosehla courted controversy over his alleged links to the disputed award of a state contract for the distribution of social grants. He was previously a finance head in Tokyo Sexwale's Mvelaphanda group.
By August 2010, two months before the Brauns-Mosehla meeting, Gold Fields announced that the department of mineral resources had given Gold Fields its South Deep licence and that the terms of its related BEE transaction had been finalised.
Early that October, Gold Fields detailed the empowerment consortium's structure in a public prospectus. According to this, one sub-group would be led by Mbete, ANC veteran Thandi Shongwe and Limpho Hani, the widow of struggle hero Chris Hani.
Brauns was to co-lead a different entity called Rich Cove Investment, holding a much larger 53% stake in Invictus.
Threat
But, according to Paul Weiss investigators, when Brauns and Mosehla met about a week after Gold Fields's announcement of the structure, Mosehla "threatened to scuttle" the deal unless Mbete was given a bigger stake.
It is not clear how Mbete or Mosehla would have had the power to sink the deal. However, it is understood that the department retained the right to cancel or suspend the South Deep licence if the empowerment deal was not successful.
It is likely that it was perceived that Mbete, as ANC chairperson, would have been able to influence department officials.
In any event, investigators referred to a subsequent, vaguely worded email from Brauns to Gold Fields, proposing to change the share structure to give Mbete a 10% stake in his company Rich Cove. Gold Fields complied.
Mbete's share was thus increased by about R25-million from a previously near-negligible value.
Violation
The Paul Weiss investigators found this to be a violation of the anti-bribery provisions of the Foreign Corrupt Practices Act in the US, where Gold Fields has a secondary listing.
These events may also have breached South African anti-corruption laws, as well as Gold Fields's own code of ethics.
Among Paul Weiss's recommendations to the Gold Fields board was that they should "self report" the evidence to the relevant authorities.
Approached for comment, Carolus said the board had "acted deliberately and appropriately and in full compliance with the law".
"We do not discuss the advice of counsel and internal privileged discussions of the board," she said.
Mosehla and Brauns declined to comment.
Mbete, who was in Liberia, said in an email: "Please refer all matters regarding Gold Fields to Ms Cheryl Carolus."
Elements of a cover-up
Gold Fields is "committed to the timely disclosure of information to its shareholders and the public which is full, fair, accurate and understandable", the company's code of ethics states.
And so, after appointing New York law firm Paul Weiss to probe its 2010 black economic empowerment (BEE) deal, it promised to do the right thing. It stated publicly: "Gold Fields will report further on this matter upon the conclusion of the investigation."
But the results, it seems, were too explosive. Instead of honouring its pledges of transparency:
The board resolved during a week of deliberations last month to terminate Paul Weiss's engagement, which reportedly cost tens of millions of rands without the findings being put in a written report.
Gold Fields chairperson Cheryl Carolus claimed last week that this was to avoid further expenses and because Paul Weiss had properly briefed the board. But the absence of a report arguably helped Gold Fields to avoid sharing its findings with the authorities, shareholders and the public.
At what appears to have been the same meeting, the board decided not to follow the Paul Weiss recommendation to "self report" to the authorities – a mechanism in modern anti-bribery laws through which companies come clean in exchange for leniency.
Sources familiar with the relevant exchanges claimed the board chose to heed local legal advice, which included that self-reporting would damage the company too much.
Following its meeting, the board released the promised public statement about the conclusion of the investigation. But, far from detailing Paul Weiss's findings of bribery and more, the statement stuck to generalities, including that "the implementation of the [BEE] transaction did not consistently meet the high standards set by Gold Fields".
The board put out a separate statement ascribing the departure of three foreign directors to "restructuring" necessitated by the "low gold price and high-cost operating environment".
But at least one of them resigned in anger, it appears, over the board's handling of the matter.
A day after the "restructuring" statement, the board issued another, cutting and pasting the same explanation but adding the contradiction that Roberto Dañino resigned "once it became clear that the board had concluded its examination of the BEE transaction".
Dañino, a former Peruvian prime minister, headed the board's ethics committee that oversaw the Paul Weiss investigation.
He said this week: "I thought it was my duty to stay at the board and ethics committee to see that the investigation was finalised and that the board had considered its findings. Once the board made a decision, I decided to resign irrevocably. That's all I can say and you can draw your own conclusions."
BEE deal in a nutshell
After Mamphela Ramphele resigned her seat as Gold Fields's chairperson and launched her political career earlier this year, she had strong things to say about the South Deep empowerment deal.
In an interview with Business Day, she said the government had "forced" Gold Fields to include certain people in the black economic empowerment consortium, otherwise the licence would be denied.
She said it was an example of what the government had done to destroy mining firms' credibility.
Gold Fields quickly distanced itself from Ramphele's statement, but earlier statements by chief executive Nick Holland painted a similar picture of official intrusion.
In 2010, Gold Fields was in a difficult position. It needed the department of mineral resources to grant it a new-order licence before it could exploit its valuable South Deep gold mine on the West Rand.
But because Gold Fields's original BEE partner, Mvela Gold, had recently sold out of the company, the department insisted it find new empowerment partners.
Holland told Business Day last year that, after struggling for some time with "certain [officials] who decided they had a lot of power and authority and they were going to wield it", the company hired a consultancy, owned by ex-convict Gayton McKenzie, to assist.
Working with advocate Jerome Brauns, who had represented Jacob Zuma in his 2005 rape trial, McKenzie helped to structure a consortium of 73 shareholders in an entity called Invictus Gold. Gold Fields provided vendor funding, in effect giving Invictus a 9% stake in South Deep and 1% of Gold Fields itself.
However, when Gold Fields announced this structure, it named only 18 of the Invictus beneficiaries. The political flavour of these names plus Gold Fields's refusal to share the full list of 73 with journalists aggravated the controversy.
A Carte Blanche probe uncovered evidence of political lobbying, which Gold Fields denied. – Craig McKune
* Got a tip-off for us about this story? Email amabhungane@mg.co.za
The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.
Read more from Stefaans Brümmer
Twitter: @StefaansB
No comments:
Post a Comment