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Rich in troubles, poor in substance

13 June 2013

By Mmanaledi Mataboge

This article is the copyright of the Mail and Guardian and was originally published in the 7-13 June 2013 edition and is reproduced by kind permission of the newspaper.

The Bakubung people are fighting for their money, but it is tearing their community apart

Residents of Ledig, a village outside Rustenburg, are theoretically wealthy, yet they don't have piped water or decent roads.

In five years' time Wesizwe Platinum Limited will extract minerals from the Bakubung Platinum mine, which is situated on their land, yet it seems unlikely that the Bakubung Ba Ratheo people will benefit financially from the mining production.

The Bakubung's shares in the mine, a whopping 33%, have been sold, but the community claims it has nothing to show for the money, that there are no developments funded with that cash or evidence of investments.

All they've ever heard from those charged with managing the money on behalf of the community, equity investment and advisory firm Musa Capital, and the community's two economic development vehicles, the Bakubung Community Development Corporation and Bakubung Economic Development Unit, is that the cash has been invested properly and will generate more in future.

Bakubung Platinum is Wesizwe's flagship project and is expected to produce 350 000 ounces of platinum- group metals a year, according to Wesizwe's predictions.

The IDC (Industrial Development Corporation -— the state's money- lending agency) and Deutsche Bank provided more than R500-million in funding, with Bakubung's 117-million shares as surety. This monetisation process, a transaction led by Musa Capital, was meant to allow the community to invest in cash-generating businesses that were not necessarily connected to mining.

Musa Capital has over the years maintained that the money raised from the sale of the community's shares, which the company said was R527-million, has been invested well. The office of North West Premier Thandi Modise last year put the monetisation figure at about R800-million after meeting Wesizwe about the matter.

It has been a tug-of-war for at least the past five years, however, with the community trying to get control of its assets and the provincial government appointing three administrators so far to assist the community.

The Bakubung royal family said it had spent R12.7-million since 2009 on battle to trace its people's riches.

"After a long and very expensive litigation case that the royal family initiated against Musa Capital and the former traditional council to force them to account to the community, we still don't know where the community's assets are," said the chief's uncle, Mokgwari Monnakgotla, in a presentation given at a community meeting on April 11.

Monnakgotla wanted to tell the community that the Bakubung no longer held shares in the mine, but was discouraged from doing that because "we were never sure what the reaction from the community would have been", he said. However, he printed out his presentation and distributed it anyway.

Executive director of Musa Capital, William Jimerson, told the Mail & Guardian that the issue of the Bakubung's shareholding in Wesizwe and the community's relationship with the mining company is multifaceted.

Jimerson said the matter involves multiple players, including the North West government, the department of mineral resources, the IDC, previous owners of Wesizwe, the mining company's current owners, and various factions within the community, both inside and outside the royal family.

"All have a vested interest in their own version of the Bakubung Ba Ratheo story," he said. "As a consequence, there is a stalemate regarding the community's development projects, despite the considerable amount of work [already done through money raised by Musa Capital]."

he said some of the money generated through the shares was used to renovate schools, upgrade infrastructure and issue scholarships to community members — and at least R60-million was spent on those projects.

But Wesizwe claims that all eight schools in Ledig were refurbished by the mining company without contribution from the other stakeholders. Wesizwe presented a report of the finalised project at the stakeholders' meeting two weeks ago.  After the community meeting in May, the Bakubung want Musa Capital to be fired as the community's financial advisers. The company has documentary proof that it was appointed by the traditional council, but the community and the royal family claim there was no mandate for that appointment.

Jimerson said Musa Capital would continue to serve the community because "our client [has] not sent us any notice of the meeting you refer to nor any correspondence terminating our appointment".

The community also wants the directors of the community's two economic development vehicles changed. The corporation was established by the traditional council to hold Bakubung's shares and the development unit was formed to empower the community through economic upliftment and employment creation projects.

Disele "DJ" Phologane, a member of both the traditional council and the Bakubung Community Development Corporation's board, said the community's shares in Wesizwe are "fully accounted for" and that the Financial Services Board has validated that the shares are accounted for. He questioned the involvement of royal family members who, he said, only began showing interest in the community's affairs later in the process.

Phologane claims the community currently has R850-million in cash, investments and shares in Wesizwe. He said the traditional council held information-sharing sessions with the community and distributed relevant documentation to those who attended.

In searching for the truth about Bakubung shares, the Monnakgotla royal family dethroned one of its own. Ezekiel Monnakgotla was relieved of his duties as acting chief after he was accused of poor leadership and mismanagement of the funds. His sister, Margaret Monnakgotla, is now acting chief.

The fight for Bakubung shares divided not only the royal family but the community as well. Although some believe they have been robbed of shares, another section believes investments made by Musa Capital will eventually benefit them. In addition, the royal house and part of the community believe the North West government is letting them down by failing to prioritise the dispute. Community members demonstrated their anger by torching the Moses Kotane local municipality building in Ledig.

That was done to "grab the government's attention", said Hendrick "PK" Mdluli, treasurer of the Ledig Concerned Group, which consists mainly of young villagers unhappy with the lack of development.

Jimerson said that as a result of the "destructive fight" for control of community assets "the shares have lost over 99% of their value since Musa made the transaction that provided the community with R500-million in cash".

"If the community had not engaged us and we performed our work, they would have shares with a paper value of less than R60-million compared with the more than R500-million in cash and assets."

Former administrator Abel Dlamini's 2011 report found transgressions by the traditional councillors and board members of the Bakubung economic development unit. Dlamini's report said the community's money was wasted.

"It is clear that the community has been dispossessed of its primary investment asset whereby the community no longer has a direct shareholding in the company," Dlamini said in his final administrator's report, which was submitted to Modise. "This dispossession impacts the community's ability to effectively influence the operations of the mine in the future."

Dlamini had recommended that all the community's remaining money be transferred to the "D account" — a bank account held by the provincial government on behalf of mining communities — and that a new traditional council be elected. The election of the new council is scheduled to take place on July 6.

He also recommended that money that Musa Capital said it invested be recovered and that negotiations be held with the IDC and Deutsche Bank to buy back shares in Wesizwe's mine.

In its response to Dlamini's report, Musa said the Bakubung have enough money to buy back the shares in the mine.

The company said the community had received R412-million by February 2011, control of one of the largest shareholders in the mine — African Continental Resources Ventures (ACRV), of which the community was said to own 59.34% — and control of R100-million in cash, which could be used to acquire mining shares through ACRV. Some of Bakubung's Wesizwe shares were sold to ACRV, according to documents provided by Musa.

Musa added that at no stage did the company have "unfettered discretion to make investment decisions on behalf of the community", but that its mandate was determined by the traditional council.

Musa has produced five resolutions that were allegedly taken at the council meetings, which the community and royal family now claim are not genuine.

Musa said the mandate only extended to the assets under its management. "Any other money expended by the community was under the full control of [Bakubung's two economic development vehicles]."

Among the funds whose where-abouts are still unknown, to the community at least, is the R527-million that came from selling the shares, and an R11-million direct donation by Wesizwe. There is another R4-million from the sale of the former Tlhabane Sun hotel and casino, which was owned by the Bakubung.

Although the hundreds of millions of rands is at the centre of the tension in Ledig, unemployment and poverty seem to top the list of community members' concerns. At a stakeholders forum two weeks ago, about 50 representatives of community organisations raised unemployment and lack of development as big sources of unhappiness. Parts of Ledig don't have water and the village's roads are badly damaged. Wesizwe provides water for communal tanks supplied by the municipality.  Current administrator Jeanette Dibetso-Nyathi said: "The royal family and the community of Bakubung are in agreement that there's a need to recoup their shares and reinvest."

Dibetso-Nyathi said there have been several attempts to convene a meeting with the community development corporation and economic development unit  so they could give feedback to the community.  Jimerson said Musa Capital also wants the issue to be resolved: "We continue to hope that the vested interests will eventually sit down together around a table and work out a solution that benefits each man, woman and child living in Ledig."

Wesizwe's executive manager for corporate affairs and investor relations, Hamlet Morule, said the company supports the Bakubung in their quest to recover their wealth and buy back shares in Bakubung Platinum.

"Wesizwe's commitment to meaningful intervention ... was demonstrated through its funding of the litigation process through a loan accumulating to approximately R12-million," Morule said.  He said Wesizwe would continue to discuss the matter with Bakubung's administrator, the acting chief and the broader community to help them to "reacquire a substantial shareholding within Wesizwe, utilising whatever resources can still be salvaged".

The royal family claims the community's money continues to be withdrawn illegally from its trust accounts and, if the matter drags on longer, there will be nothing left by the time the case is resolved.

The players who have 'the community's best interest at heart'

Disele Johannes Phologane

"DJ", as he's popularly known, is accused of being the man behind many key decisions taken by the traditional council on the ­community's assets, some of which are being disputed by both the community and the royal family.

Phologane sits on the board of the Bakubung Community Development Corporation and is a member of the traditional council.  He is the former nonexecutive director of Wesizwe Platinum Limited on behalf of Bakubung. Phologane has consistently denied ripping off the community.

Ezekiel Monnakgotla

Ezekiel Monnakgotla was inaugurated acting chief in 2003 after his father's death. Monnakgotla was dethroned by his own family after allegations that he colluded with the traditional council to mismanage the Bakubung's finances.

This former acting chief's ­signature authenticated several transactions now regarded as unlawful by the community, who say that the Bakubung never gave such ­mandates. That includes the appointment of Musa Capital
as the community's financial advisers.  Monnakgotla initially fought the royal family together with the traditional council and Musa, but has since reunited with his family and the community to continue the fight to recoup Bakubung's assets. Said his uncle Mokgwari Monnakgotla: "The issue of the former acting kgosi [chief] being a signatory to most of the agreements is true. "However, from our own investigations, and also the other people who were in cahoots with DJ, [it seems] he was made to sign most of these agreements before he fully understood what he was signing. They concurred that they tricked him. He is currently working with us to try to recover the assets of the community."

Musa Capital

The firm was appointed by the Bakubung traditional council in 2007 as the community's financial advisors and to run the community's investments.

A forensic report by KPMG in 2010 said that Musa occupied a "central and pivotal position regarding the conduct and administration of the community's finances".  Musa's executive director William Jimerson said it was his company that "unlocked" the Bakubung's wealth by monetising the shares to the tune of over R500-million and that Musa still has the community's best interests at heart.  Musa told the former administrator Abel Dlamini that Bakubung's funds were "invested well and will ultimately yield good returns for the community", according to Dlamini's report.

Wesizwe Platinum

Wesizwe will mine the Bakubung land for platinum-group metals for an estimated 35 years. The Bakubung community originally owned 33% of the mine when an empowerment deal was structured in 2004, but the shares have now been turned into cash. Wesizwe says it's trying to help the Bakubung to buy back shares in the mining company. The mining company has supported the Bakubung in several court litigations to determine the whereabouts of the community shares. Production at the mine is scheduled to start in 2018. —

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