AMCU litigates against major mining company – Samancor [Press statement]
Alternative Information & Development Centre (AIDC) & Association of Mineworkers and Construction Union (AMCU)
2 October 2019
AMCU is litigating against the second largest chrome producer in the world – Samancor Chrome Ltd – for alleged profit shifting and fraud.
Today (Wednesday, 2 October 2019), AMCU served and filed an application in the Johannesburg High Court. The allegations include:
- $125 million siphoned off to a bank account at Nedbank in London in April 2007 owned by British Virgin Island company Kermas BVI, to the benefit of three directors.
- Sales commission of minimum 9% with no meaningful service provided. Once again to the benefit of Kermas BVI and its three Samancor directors and allegedly later to new owners of Samancor in 2009 and then in 2013.
- Baseless management fees in 2008 to the amount of $4 million.
- A flawed business deal with Sylvania for the extraction of chrome and platinum group metals from tailings dams since 2006, secured by a bribe of 14.1 million shares in Sylvania to two Samancor directors.
AMCU has an interest in Samancor Ltd., through its members in the Ndizani Workers ESOP Trust which indirectly owns 5.6% of Samancor.
An investigation ensued following a whistle blower and former member of Samancor Board contacting Richard Spoor Inc, Attorneys (“RSI”) in 2015. RSI in turn contacted AIDC given work previously done on Lonmin for the Marikana Commission. A long investigation followed in close cooperation with the former director. The CEO of Samancor, Mr Juergen Schalamon and the Chair of the Samancor Board met AMCU’s President Joseph Mathunjwa, Richard Spoor and Johan Lorenzen in March last year. They promised an internal investigation.
This investigation did not materialise and AMCU followed through today, filing the litigation at the Johannesburg High Court. In a first stage, AMCU seeks the court’s permission to litigate against Samancor, its current and former directors, and various other entities implicated in the impugned transactions and seeks an order that Samancor account for the true value of the transactions. If granted the court’s leave, AMCU will proceed to seek the appointment of independent directors and the award of compensation to persons harmed by the transactions.
The whistle-blower alleges that directors and majority shareholders of Samancor from 2006 have engaged in transfer mispricing, profit shifting and fraud that has siphoned off a massive amount of funds from Samancor to the prejudice of its minority shareholders to the benefit of the directors of Kermas Limited (based on British Virgin Islands, a tax haven).
A preliminary calculation suggests that these transactions and agreements may have deprived Ndizani of “well over” $100 million, says the former Samancor director in his supporting affidavit.
The investigation and the allegations was presented an AIDC conference in Cape Town today, at Fountain Hotel, by Johan Lorenzen (RSI), Dick Forslund (AIDC) and Phutuma Manyati (AMCU).
For more information contact Dominic Brown (AIDC, Economic Justice Programme Manager) 0813094973 or Phutuma Manyati (AMCU, North West Regional Secretary) 071 609 2987