Workers stranded at Gupta mine
Competing interests have paralysed the business rescue of the former Gupta asset Shiva Uranium, leaving workers unpaid and the mine falling into possibly terminal disrepair
When the Gupta family bought the Dominion uranium mine in 2010 they renamed it Shiva, after the god of destruction. A principal Hindu deity, Shiva is typically depicted as blue-skinned, with a deadly cobra wrapped around his neck and dark, matted hair.
His third eye, when open, emits flame and fury, turning everything to ash. His body, too, is covered in ash — a reminder that all of material existence is transient and that everything comes to an end.
The name is apt as, increasingly, Shiva Uranium appears doomed.
President Cyril Ramaphosa’s inauguration in February made life in SA too hot for the Gupta brothers, who are now thought to spend their time in Dubai or India. Their companies were placed in business rescue after transactional banking facilities were cut off.
But now a complex and at times baffling mix of interests threatens the rescue process — particularly at Shiva, where operations have come to a standstill.
The futures of 287 people hang in the balance, and it’s feared the assets are falling into an irreversible state of disrepair.
In spite of the searing October heat, Shiva workers assembled last week near the entrance to the mine, located on a long, quiet road near Klerksdorp in the North West.
The order of the day was a political rally by the DA, which chose the site to expound on the ills of state capture and the complicity of the ANC. However, for many of the workers, politics were secondary. They gathered in the hope of getting information and help.
"Nothing is operating here, everything stands still," says Welile Dube, an electrician at the mine since 2009. He says salaries have not been paid since July, so workers stopped coming to work. Nothing appears to have happened since.
Nothing is operating here, everything stands stillWelile Dube
"The zama zamas [illegal miners] took everything in the mine. They took the cables … even now they are stealing, there’s nothing here," Dube says.
Tumi Matosela, an engineering assistant on the mine since 2010, says the impact on workers and their families is dire.
"Some of the people, their houses have been taken away by the banks, their cars. The kids can’t go to school any more because they can’t afford to pay transport," he says. "Some of the guys who wanted to register for the colleges now can’t afford to go there because their parents can’t afford to pay for them. It’s been more than three months — their policies have lapsed, funeral cover, everything."
Matosela says he cannot understand why nobody is doing anything.
For Dube, too, there is a lot of confusion surrounding the business rescue process. "There are lots of things we don’t know, we just hear the rumours," he says.
The mess at Shiva started almost as soon as the business rescue process began in February. Because of the actions of the banks, the boards of Shiva and other Gupta-linked companies put the entities into rescue. Louis Klopper and Kurt Knoop were appointed as the senior practitioners to oversee them all.
Business rescue is a provision of the Companies Act that allows for the rehabilitation of financially distressed businesses.
At Shiva, the Industrial Development Corp (IDC), SA’s largest development finance institution, sprang into action to recoup some of the R287.5m owed to it.
The matter has left the IDC with a fair amount of egg on its face. Back in April 2010, it lent the Guptas’ Oakbay Resources & Energy R250m to acquire Shiva. Four years later the IDC allowed the loan to be restructured, with about R250m in interest to be converted into equity in the form of company shares. At the time, the IDC was accused of giving the Guptas unduly favourable terms, which it denied.
Oakbay delisted last year, after various firms cut ties with the company and it failed to secure a new sponsor on the JSE. The share price plummeted and the IDC’s equity was rendered worthless.
Details have since emerged of how the Gupta brothers manipulated the share price to artificially inflate it upon listing. In papers filed with the high court in November last year, the IDC cites this as one of the reasons the 2014 loan restructuring agreement should be scrapped.
The IDC is now accused of playing a key role in hobbling the business rescue at Shiva.
In March it went to court for a "perfection of security" order to ensure that its rights, as Shiva’s largest creditor, were fully enforceable. In effect, this required that the rescue practitioners run every transaction past the corporation.
Relations broke down, with the practitioners accusing the IDC of blocking a deal that would result in local mining company BEK Holdings managing Shiva for an interim period until the company could be sold.
In April, the IDC brought an urgent application to remove Klopper and Knoop, claiming they were not competent and not independent of the Shiva board.
What it means
Uncertainty around who Shiva’s business rescue practitioners are has left the uranium mine in operational limbo
The two summarily quit but continued the rescue process at other Gupta-linked companies such as Optimum Coal. They have had to fight more than 40 legal actions, many launched by Gupta allies to try to scupper their efforts.
The next set of rescue practitioners at Shiva — Cloete Murray and Christopher Monyela — fared little better than their predecessors.
Last month the IDC’s board refused to approve post-commencement financing, a type of financing for distressed companies. Murray says he concluded there is no reasonable prospect of rescuing the company.
He says the Shiva management has also tried to sabotage the business rescue efforts — it launched three legal bids against the practitioners within the space of five weeks.
Murray agreed to step down because he and Monyela could not see eye to eye on liquidating Shiva. Murray and Monyela appointed Juanito Damons as the new senior practitioner.
Klopper says he too had come to the conclusion there was no hope of rescue when the IDC stopped authorising payments for critical material, thereby forcing Shiva into liquidation. This, he says, amounts to the wilful destruction of jobs.
Matosela and his colleagues also wonder where the IDC stands in all of this. "They own the assets, I think we the employees are part of the assets. We don’t understand why they can’t protect us," he says.
The IDC’s response is that to minimise job losses as far as possible, the corporation agreed to allow the rescue practitioners to use money recovered from Shiva’s debtors to pay for critical items including electricity, security and salaries while they devised a rescue plan for Shiva.
The funds "formed part of the IDC’s security and therefore, strictly speaking, belonged to the IDC".
The IDC says the decision on post-commencement financing for Shiva fell within the ambit of its investment committee, which considered the request and declined it.
"The IDC’s position though remains that the business rescue practitioners are responsible for running the day-to-day affairs of Shiva and it is imperative that they finalise Shiva’s rescue plan without any further delay," the corporation says.
Meanwhile, another state entity, the Companies & Intellectual Property Commission (CIPC), has also thrown a spanner in the works by rejecting the appointment of Damons, citing potential conflict.
Unbeknown to Monyela, the Shiva board appointed two new practitioners, filing notice with the commission. Board member George van der Merwe, who formerly worked at the Guptas’ Sahara Computers and was CEO of Optimum Coal, played a prominent role in the move.
Monyela is disputing these appointments as unlawful. The board has no power to administer the affairs of a company once it is placed under rescue, he says.
But the two new practitioners, Mohamed Tayob and Eugene Januarie, claim that, in the absence of a senior practitioner, Monyela has no authority to make any decisions on behalf of the company.
The CIPC says Monyela’s claims that the appointments are unlawful must be tested in court. Van der Merwe did not respond to a request for comment.
Monyela this week submitted an urgent application to the Companies Tribunal.
Meanwhile, the already tenuous prospects of rescue are worsening by the day.
The business rescue practitioners can’t do their job and the workers are worried, says Matosela. "They are busy at the court instead of rescuing the mine. I don’t understand why. They are here to rescue us and the business [so that] maybe the mine can be sold and we can have other investors."
Shiva is one of the most complex Hindu deities, with conflicting attributes conveying the difficulties, dualities and paradoxes of existence. He may preside over death and devastation, but, conversely, total destruction clears the way for renewal, rejuvenation and transformation.
Monyela is holding onto the hope that new life can be breathed into Shiva Uranium. There is already an arrangement in place to reclaim gold from Shiva’s slimes dams, which could at first bring in R600,000 a month in much-needed cash flow, rising to as much as R3.5m a month with the help of an independent contractor.
But without certainty over who the lawful rescue practitioners are, no progress can be made. "This is to the obvious prejudice of Shiva and all affected persons," says Monyela. "It is essential that certainty be restored as soon as possible."