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A tale of lies, self-enrichment and back-stabbing is slowly unfolding in light of the stalemate regarding the reopening of Lily and Barbrook gold mines in Mpumalanga.
The mines’ owner, Vantage Goldfields (VGO), locked horns with Siyakhula Sonke Corporation’s (SSC) subsidiary, Flaming Silver 373, in the Mbombela High Court when their sale deal failed.
The SSC has been blaming business rescue practitioner (BRP) Rob Devereux for the fiasco.
Devereux started the business rescue process after the entrance to Lily Mine collapsed in February 2016, but was later joined by Daniel Terblanche, when his relationship with Flaming Silver’s CEO, Fred Arendse, came to an end.
The mineral resources department ordered the immediate closure of the mines after three workers were buried in their container office. To reopen the mines, a total of R310 million had to be raised. Until then, 900 workers are still without jobs.
Flaming Silver made a startling allegation about Devereux and Terblanche revealing what precipitated the collapse of its deal with VGO.
It blamed the BRPs for failing to intervene in the dispute and adopting a hostile attitude to the company in favour of VGO.
SSC has lodged an appeal in the Supreme Court of Appeal to reverse an Mbombela High Court decision, which found the sale agreement was null and void.
This case has affected VGO’s sale deal with Real Win Investments which cannot reopen the mines.
City Press has seen the October 10 correspondence from Flaming Silver chairperson Kgabo Moabelo, which says Devereux refused to meet Flaming Silver’s investors until he received an amount of R10 million.
“He, in fact,” said Moabelo, “demanded such before he supported our transaction with two credible, internationally listed mining and processing companies that committed to the transaction and provided proof of funds at the start of the year.”
He said: “This portrays ill-intent and is contrary to the provisions and intentions of chapter 6 of the Companies Act, which imposes a statutory duty on rescue practitioners, which cannot be discharged with self-interest and enrichment, but must be discharged in the best interest of creditors and affected parties.”
Read: Are Lily and Barbrook assets being stripped?
Moabelo said Devereux met Arendse and on September 26 2017 requested Flaming Silver to agree to enter into a relationship with Phoka Resources to form a joint venture to pursue the transaction with VGO.
Ferdi Dippenaar, Phoka’s director, had a fallout with Flaming Silver’s directors and he was instrumental in having the Mbombela High Court declaring the sale agreement between VGO and Flaming Silver null and void when Flaming Silver was trying to get an application to force the mine owner to hand over share certificates.
Devereux allegedly said that Phoka had raised R50 million, but that turned out to be untrue.
“We categorically blame the BRPs for this introduction [to Phoka] and the damage that we have suffered as a result. We could have found better and more active partners that could potentially have contributed to the venture,” Moabelo said.
- In August 2018 Devereux blatantly lied when he published, for approval, a Barbrook business rescue plan on a nonexistent gold loan from Pan African Resources and assured Arendse and creditors that there was a valid and binding agreement between Vantage and Pan African Resources. However, Dippenaar intervened in the case and told the court about a board meeting that took a decision about a fourth addendum that the sale agreement was not properly constituted. Arendse discovered this after questioning Pan African Resources;
- Devereux authorised expenses without any contract and/or with unlawful and invalid contracts, approved expenses signed for by VGO’s CEO, Mike McChesney, for his personal company (Cheston Minerals) and paid for by SSC without its consent with the post-commencement funding that they provided to the entities;
- The BRPs allowed VGO to continue funding the previous regime, without any consideration for the impact on the majority, including the black employees and communities. He acted recklessly and inconsistently in his role as the BRP by failing to direct expenses to the entities and by enriching certain individuals who were coincidentally, predominately white;
- Devereux authorised massive senior management salaries to accrue for a long time to the detriment of the company, which is without any legal basis and lacks the required paperwork, which substantiates such abnormalities; and
- Devereux had instructed VGO management not to file and pay tax – actions that are unlawful and could render them criminally liable.
Moabelo warned that Flaming Silver had received a credible threat that the community of Louisville, where the mines are, had threatened to burn them down.
“Therefore, the continued involvement of Devereux has become the biggest threat to the company and, in the interest of all creditors, ex-employees, the community and the three affected families, serious and urgent action has to be taken.
“It is within this context that we write this final letter of complaint to you, and offer you the opportunity to discharge your duties as required by law,” he said.
Devereux said that the BRPs could not be blamed for being unable to do anything. “Arendse is in litigation with everyone and as BRPs there’s nothing we can do,” Devereux said.
“The reply to this letter by ourselves is under review by our attorney and is a rigorisation of previous matters raised and are denied in its entirety.
This is a continued effort by SSC and Flaming Silver to have the practitioners removed. They continue to litigate with Vantage SA on all fronts, accuse the practitioners of delays when in fact the cause is the litigation outside the business rescue entities which is not as a result of the BRPs.”
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