Liquidators seek to sue directors of Aurora

Samantha Enslin-Payne

The liquidators of Pamodzi Gold will pursue criminal charges against the directors of Aurora Empowerment Systems and its associates, as well as sue them in their personal capacity to recover hundreds of millions of rand after they allegedly misled the liquidators, neglected their responsibilities as directors, stripped mine assets and pocketed the money.

Johan Engelbrecht, one of four liquidators of Pamodzi Gold, said on Friday that “we have already laid criminal charges” against Zondwa Mandela and a lawyer for Aurora, Ahmed Amod. This was part of a two-tier approach, which included a section 424 application lodged in the North Gauteng High Court on Friday.

If successful, the section 424 application will allow the liquidators to sue in their personal capacity Khulubuse Zuma (President Jacob Zuma’s nephew and a director of Aurora), Mandela, (former president Nelson Mandela’s grandson and managing director of Aurora), Aurora commercial director Thulani Ngubane, and the consultants that allegedly ran Aurora, Suleman Bhana and Fazel Bhana.

Engelbrecht said: “We are not only ring-fencing the current respondents, we are preparing paperwork for the others.” This could include Michael Hulley, who is President Zuma’s lawyer and was appointed by Aurora to oversee corporate governance, court papers state.

Solidarity deputy general secretary Gideon du Plessis said further action could be expected against friends and relatives of the Bhanas who allegedly derived unlawful financial benefit from Aurora.

In 2009, Aurora concluded a deal with Pamodzi Gold’s liquidators to take over the Grootvlei and Orkney mines. However, after a string of broken promises, the liquidators cancelled the deal in May last year and launched an inquiry, where it emerged the liquidators, creditors and employees were “deliberately misled by the respondents” to believe Aurora was sufficiently capitalised to conduct mining operations, the section 424 application states.

Aurora was liquidated in October last year and Pamodzi has proved claims in the insolvent estate of Aurora of R122m and R1.7 billion.

In terms of section 424 of the Companies Act, directors can be sued in their personal capacity for money owed or lost due to reckless or gross mismanagement.

Zuma is being held liable due to his reckless conduct, including that he played no role in ensuring the commitments the company made were legitimate or were implemented.

The application states: “It is respectfully clear that Zuma was in complete dereliction of his statutory duties as a director of Aurora, that he sought to delegate all his functions and obligations to the Bhanas without satisfying himself of their bona fides and capabilities.”

Mandela and Ngubane are being held liable for, among other things, allegedly knowing the funding was not secure when Aurora bid for the mines.

The Bhanas are being held liable because they were in de facto control of Aurora’s affairs and finances and they fraudulently failed to disclose the existence of secret creditors, including family members, under circumstances where they had a duty to do so.

Engelbrecht said the papers lodged on Friday would be served on the respondents today.

Neither Zuma, Mandela, the Bhanas nor Hulley could be reached for comment.