Aurora loses appeal, and...directors must pay

2016-05-15 15:00

President Jacob Zuma is not the only Zuma who may soon have to turn to friends and family for funds after an adverse court judgment.

This week, the Supreme Court of Appeal in Bloemfontein turned down a request by the directors of Aurora Empowerment Systems for leave to appeal a judgment ruling them negligent.

Khulubuse Zuma, who is the president’s nephew, and his fellow directors appealed to the country’s second-highest court after the North Gauteng High Court ruled the Aurora directors and their business advisers, the Bhanas, could be held financially liable for the destruction of Pamodzi Gold’s mines.

The high court judgment, handed down by Judge Eberhard Bertelsmann in June last year, did not specify how much each director would be asked to pay, but confirmed the principle that through their negligence (in Zuma’s case) and fraudulent actions (in the case of everyone else), they were liable.

In total, the liquidators want R1.7 billion in damages.

Thursday’s decision by the Supreme Court of Appeal was praised by trade unions Cosatu and Solidarity, which represent the 5 300 workers who were left destitute after the collapse of the mine.

“Cosatu wants all these directors to be criminally charged. If there is justice in this country and if we are a nation of laws, the best place for these directors is in prison,” said Cosatu spokesperson Sizwe Pamla.

Zuma’s spokesperson, Vuyo Mkhize, said his client would not comment on the judgment until he had met with his legal team to understand the reason for the Supreme Court of Appeal’s decision.

Meanwhile, City Press has established that Zuma’s team tried to reach a R20 million settlement with the liquidators shortly before last year’s high court ruling.

Mkhize confirmed to City Press last year that he had approached the liquidators to discuss a settlement, but declined to disclose details.

“I did have engagements with the liquidators on a confidential and privileged basis in an attempt to settle the matter ahead of the hearing,” he said.

“That attempt did not come to fruition ... The only thing I can confirm is that, yes, I did make such an offer and the offer was not responded to.”

Gideon du Plessis, the general secretary of Solidarity, which represents 180 of Aurora’s workers, confirmed that, as a creditor, it was approached about last year’s proposed settlement.

“I was not happy with it ... That would likely be the only money from the directors because the other directors would not contribute either because of poverty or their own disregard.

“I felt it was not sufficient to cover the amounts owing to the workers; it was a drop in the ocean,” Du Plessis said.

The Insolvency Act allows for a maximum preferent claim of R28 000 from each of the 5 300 employees, which could amount to as much as R148.4 million.

Although the workers are preferential creditors, the liquidators’ fees must first be deducted.

In addition to this, Du Plessis says the liquidators wanted to include a clause in the settlement that if, at any stage, it was found that Zuma’s assets exceeded the R20 million that he was offering, the settlement would be revoked.

When approached on Thursday, Mkhize initially denied that there had been any attempt to settle Zuma’s potential liability.

When asked about his previous statements on the issue, he said that any talk of a settlement had only been made before the North Gauteng High Court judgment and “that ship had sailed” after that ruling.

“He feels hard done by, by that judgment – his only option is to appeal that judgment. Unless he is presented with reasons that persuade him that the judgment is fair, just and proper,” Mkhize said.

John Walker, the lawyer for the liquidators, said he could not comment on the settlement discussions, but said that following Thursday’s ruling by the Supreme Court of Appeal, they would seek to sequestrate Zuma, his co-directors, including Zondwa Mandela, and the Bhanas.

“We will be launching applications for the sequestration of all the respondents in the next few weeks,” Walker said.

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March 29 2020