Former state mining boss banned from SOEs after R1bn bid for Gupta mine

A former chief executive officer (CEO) of a state-owned mining company who was implicated in a controversial transaction to buy a liquidated Gupta mine for a whopping R1 billion, has, after a disciplinary process, been banned from occupying any senior positions at state-owned enterprises (SOEs).

The former African Exploration Mining and Finance Company (AEMFC) head, Sizwe Madondo, has been found guilty on several charges, including dishonesty, nepotism and failing to act in the interests of the company.

The ban was imposed last week by Advocate Nazeer Cassim SC, who was chairing the disciplinary hearing.

“These findings [should] be forwarded to the relevant authorities to ensure Madondo is not given a position as a senior employee in any other SOE, otherwise there is no deterrence to wrongdoing,” Cassim said.

Cassim also recommended that Madondo be “summarily dismissed”, adding that AEMFC should consider a “disgorgement action against Madondo to retrieve whatever benefits he may have derived from the transactions … in which he preferred the interests of others ahead of his employer”.

One of the transactions cited in the findings involves a private partnership with a mining company owned by lawyer Themba Langa to buy a stake in Anglo American in a private partnership with Khololo Mining.

One of Langa’s other companies, Mwelase, was found to have been appointed to supply coal to Eskom without following proper procedures.

Mwelase, which is owned by Langa and his wife Anna, was to supply 150 000 to 250 000 tons of Eskom-certified coal to the power utility’s Kendal Power Station near Ogies in Mpumalanga.

Some of the coal it supplied was substandard.

The disciplinary report read: “You engaged in negotiations with Themba Langa [Mwelase and Khololo Mining] and Anglo regarding the purchase of the east, west and south blocks from Anglo, as well as the formation of the Mzimkhulu joint venture, without authority from the board to do so.

The board only granted its approval for the commencement of the negotiations with Anglo and the authority to make a nonbinding expression of interest of a 26% shareholding in the joint venture on May 24 2016.”

Cassim criticised the relationship with Langa, saying: “It is clear to me that the relationship between Langa and Madondo predated this transaction. Secondly, Khololo Mining was not registered when the initial offer was made by Anglo.

It was only registered on March 30 2016 and Langa was appointed as a director on January 2 2017. Thus, Madondo did not make an effort to enquire as to the legal capacity of Khololo because he left matters in the hands of Langa.”

Madondo was also found to have appointed his personal tax consultant to work at AEMFC and had authorised another private mining company, Lurco, to use his electronic signature in a bid to buy the Gupta-owned Optimum mine.

An investigation by Gobodo Forensic Investigative Accounting that predates Madondo’s disciplinary hearing found that, while the board had instructed Madondo in December 2018 to conduct due diligence on Optimum’s assets, he allegedly not only signed the bid for the mine, but committed the company to buying the mine.

These revelations are contained in a report stemming from an order by the board for a forensic investigation following Madondo’s suspension by AEMFC in June.

Madondo faced several charges, including one of gross “insubordination by continuing to sign a consortium agreement knowing that there had been noncompliance with the board resolution that the agreement first be circulated among board members”.

The 234-page report from Gobodo, which City Press has seen, shows that Madondo brought the Optimum deal to the board’s attention on September 7 2018. In the deal, AEMFC would partner with Lurco for an equal stake in Optimum.

According to the report, on December 10 2018, the board instructed Madondo to submit a draft agreement that had to be circulated among the board members, who would then discuss it.

Madondo was also tasked with finding a company that would conduct “due diligence on the assets for sale, business in all aspects, consortium parties, capital raising, and advisory and deal structuring services at the indicated shared cost”.

But this didn’t happen.

Instead, on January 18 last year, he signed the partnership deal with Lurco and signed the bid for Optimum with the business rescue practitioners dealing with the Gupta family’s assets.

Lurco made headlines when it emerged as a successful bidder for the Gupta-owned Koornfontein mine in Emalahleni, Mpumalanga, in October.

However, the company failed to raise the required R500 million within the agreed period and the bid was handed to the second preferred bidder.

Several attempts to reach Langa and his wife for comment came to naught this week.

Phonecalls and SMSes to Langa’s listed numbers went unanswered, and several attempts to reach Madondo were fruitless.

Jacky Mashapu, the spokesperson for the state-owned Central Energy Fund, the holding company for AEMFC, confirmed the findings.

Abram Mashego Senior journalist | City Press

+27 11 713 9001 abram.mashego@citypress.co.za Media Park, 69 Kingsway Road, Auckland Park

Rise above the clutter | Choose your news | City Press in your inbox

City Press is an agenda-setting South African news brand that publishes across platforms. Its flagship print edition is distributed on a Sunday.