STEPHAN HOFSTATTER, ROB ROSE and MZILIKAZI WA AFRIKA | 04 September, 2011 01:13
Kenny Kunene Picture: SIBUSISO MSIBI
The company that turned bank robber Gayton McKenzie and fraudster Kenny Kunene into flashy multimillionaires faces losing its mining licence, because the ex-convicts cut corners to get it.
Central Rand Gold (CRG) may also have broken London and Johannesburg stock exchanges rules by failing to disclose to shareholders, who have sunk R1.67-billion into it, that government is considering shutting down the mine next week.
The mine is near Soweto, Johannesburg, and has rights to a 40km reef estimated to be worth hundreds of billions of rands.
On August 5, the Department of Mineral Resources sent a Section 47 notice to CRG, informing it of "the intention of the Minister (Susan Shabangu) to suspend or cancel the mining operation in question".
It said CRG had done nothing to fix clear breaches of its mining right despite being ordered to do so repeatedly during several compliance inspection meetings dating back to 2009.
This is because neither the social and labour plan nor the environmental management programme was fully implemented.
Shabangu's spokesman Bheki Khumalo confirmed the company's final deadline expires this week. He said Shabangu "has been very clear: we are going to pounce on companies that do not implement social and labour plans".
It was Kunene and McKenzie who ran the division responsible for CRG's social and labour plan, the blueprint for how the mine says it will help the local community - a pre-condition for being awarded a mining right. The two ex-convicts, who had no mining experience, were paid at least R13.5-million in shares, salaries and bonuses for convincing poor communities in Soweto to support the mine by promising them jobs, poverty relief projects and shares.
In salaries alone, Kunene and McKenzie earned R4.7-million a year - launching their spectacular rise from rags to riches.
Kunene went from selling fish from his car boot to eating fish [sushi] off models, driving supercars and hobnobbing with President Jacob Zuma.
Though McKenzie told the Sunday Times that "everyone who's been involved [including] me and Kenny, should share some responsibility" if the mining right is cancelled, he reacted angrily to suggestions they should pay back CRG if the company loses its mining right.
"R13.4-million might be a lot for you, but it's not a lot for me. I didn't hold a gun to anyone's head and say 'pay me that'. It's what I'm worth," he said.
He said he knew of no mining company that complies 100% with the mining rules. "We were hired to get the mining rights, and we did our job flawlessly."
Kunene declined to discuss the issue. "I am no longer at CRG so I can't comment."
But community leaders believe they should take the blame. "Gayton and Kenny must be held accountable for all this mess," said Godfrey Makunene. "They decided to enrich themselves. Police must investigate."
CRGcould also be breaking the rules of the JSE and the London Stock Exchange.
The JSE's Andre Visser said the rules "place an obligation on a company to announce something to the market that is unpublished, and price-sensitive".
CRG's CEO, Johan du Toit, said he hadn't told shareholders of the threat because "I don't believe we're at that stage yet. Once final discussions have gone on with the DMR ... and they say, 'you've got X amount of days to sort this out, then we'll go to shareholders.' ''
Initially, the department gave CRG until August 24 to comply.
Du Toit confirmed that the deadline was extended to this week. Charl Kocks, the CEO of governance experts Ratings Afrika, says any threat to cancel a mining right is "price-sensitive" and has to be disclosed to shareholders immediately.
Mandla Mtsweni, the CEO of CRG's 26% black empowerment shareholder Puno Gold, said it was improper not to disclose the notice to shareholders as this robbed them of important information. "It has a fundamental effect on investor confidence and share price." - email@example.com