Alexkor Development Foundation governance structure, operations and audited financial statements

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Mineral Resources and Energy

20 September 2011
Chairperson: Mr F Gona (ANC)
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Meeting Summary

The Committee met with the Alexkor Development Foundation to learn about its deed of trust, its audited financial statements, the details of its programmes, and for the trustees to account for monies provided. The Committee had struggled to get the Foundation to attend and had to resort to a subpoena. The Foundation apologised and gave lack of travel funds and illness as having prevented it from appearing. The Foundation provided financial statements up to June 2005. >From 2006 till the present the Foundation had not been operational and had existed only on paper. In 2004/5 it had effected a transition into the Namaqualand Development Agency (Namda) which would have a 10% share in Alexkor after tax profits. The Foundation had not received the 30% it was supposed to receive from Alexkor nor had Namda received the 10% it was supposed to get. The current chairperson of the Foundation could not account for what happened prior to her taking office. The Committee resolved to send the delegation back to develop a more comprehensive report and wanted the lawyers and accountants to be present to assist trustees to answer the Committee’s questions, especially on the financial statements and accounts, including the loan book and investments. The Foundation had to submit its documents by Friday 21 October and reappear on 26 October. 

Members wanted to know why the Foundation had not appeared before the Committee and why it was necessary for it to be subpoenaed, if the Foundation was still registered as a trust fund, what the relationship between the Foundation and Namda was, how much of the Foundations money was transferred to Namda, from what date the Foundation was not operational, and if the trustees received any monies between 2005 and 2011. Members wanted the Foundation's financial statements of 2006 and 2007 and all the financial statements of Namda.

Meeting report

Alexkor Development Foundation governance structure, operations and audited financial statements: interaction
The Chairperson said that the Committee had struggled to get the Alexkor Development Foundation (the Foundation) to Parliament, to the point where it had to be subpoenaed. The Committee wanted the Foundation to provide the deed of trust, the audited financial statements, the details of the programmes the Foundation was running and to account for monies provided.

Ms Beverly Vries, Chairperson of the Foundation, apologised to the Committee for its inability to be present prior to that day. She had been hospitalised and that other members had also been sick or could not travel.

Mr Joshua Losper, Trustee of the Foundation, said that members were short of funds needed to travel to Cape Town and that they had approached Alexkor Ltd for assistance, which had been refused.

Mr M Sonto (ANC) said that in a meeting with Alexkor on 29 July 2010, Alexkor had said that it did not know if the Foundation still existed and that there had been no contact with the Foundation.
Mr Losper replied that in 2004 the then Ministry of Minerals and Energy had requested that the Foundation be dissolved, a move linked with the Alexkor land claim. This move had been facilitated by two Members of the Executive Council (MECs) and the Premier of the Northern Cape as well as the Standard Corporate Merchant Bank (SCMB). The Foundation would be replaced by a new entity, the Namaqualand Development Agency (Namda), which would allow a strategic partner to enter Alexkor, which was a 100% Government-owned entity. The new entity would receive a 10% shareholding in Alexkor.

The Chairperson reiterated the question why the Foundation was undermining Parliament by not appearing when requested to do so.

Ms Vries replied that it was not attempting to undermine Parliament. It was correct that the Foundation only existed on paper. It was not a functioning body because it did not have any money.

Mr Losper added that there were no members of staff, and no resources; they had even approached Alexkor for financial assistance to travel to Cape Town. It was just circumstances, for no other reason.

Ms F Bikani (ANC) said there were 15 trustees; they could not all be ill.

Mr Losper said that, when the Foundation transitioned into Namda, it was supposed to get a 10% share of Alexkor’s profits but that had not occurred.

The Chairperson asked if the audited financial statements had been brought.

Ms Vries said that the Foundation was not functional for the last two years. It had brought the financial statements up to June 2005.

The Chairperson said that, according to Alexkor, in the 29 July 2010 meeting, Alexkor had given R18 million to the Foundation in the period 1993-1998.

Ms Vries said that she joined the Foundation only in 2000 and did not know what happened prior to that. The Minister of Public Enterprises had approached them to establish the Foundation as the social development arm of Alexkor using 30% of Alexkor’s after tax profits. It had only received a once off payment which it had used on bursaries, social support and education and training. It had struggled with the mine to get its share of the profits and there had been communication between the Foundation and Alexkor. When the Foundation was transitioned into Namda, it had handed over monies to the Namda Business Centre. The Foundation had not been supported for the last five years. Alexkor had never given the 30% of after tax profits as per the agreement, only a once off payment. Other monies received were for being a contractor to the Witvoorkop mine. This income was inconsistent.

Mr Losper said the start-up amount given was R6.5 million. Since 1996 it had received no royalties. The written agreement to provide R250 000 in bursaries was only given in 1994 and in 1995. When Namda was established the 30% share provision was deleted and replaced by a 10% share. But, here again, nothing had been received. 

Ms Bikani asked what the relationship between Namda and the Foundation was.

Mr Losper said that Namda was created in 2004/05

The Chairperson said that Alexkor had reported that it had had given in:
1993      - R250 000 in bursary money and a R6.5 million grant.
1994      - R250 000 in bursary money and a R7.89 million grant
1995     - R250 000 in bursary money and a R2.7 million grant
1996     - R250 000 in bursary money and a R6.5 million grant
1997     - Nil
1998     - R250 000 in bursary money
This was a total of R18.5 million over this period. How much of that was used? If Namda was created in the interim, how much was transferred to Namda.

Mr Ruben Cloete, Trustee of the Foundation, said he could only account for the R6.5 million and the R250 000 bursary funds as mentioned in the presentation.

The Chairperson asked who did the Foundation’s books.

Ms Vries replied that the Foundation was not functioning so there were no books and no auditing. When she had taken over, nothing had been handed over to her.

Ms M Phaliso(ANC) wanted to know where the other trustees were.

Ms Vries said all members had been informed, except two. Two others were indisposed.

Mr Losper asked that those who were in charge at the time also be called to be present at the Committee meeting.

Ms Paliso said that the current trustees were the ones who had to be held responsible 

Mr H Schmidt (DA) asked if the Foundation agreed that R18.5 million had been given to it. From the Foundation’s own summary it appeared that R9.2 million had been given to it. Was the Foundation still registered as a fund?

The Chairperson added that Mr Cloete had said that only R6.5 million together with R250 000 for bursaries had been given, but as pointed out, the Foundation’s own documents showed R9 million had been spent.

Mr Losper said that the SCMB had dissolved the Foundation but that this was not clearly finalised. He repeated that it had not received the 10% under the new arrangement.

Mr Sonto said office bearers took office with all its responsibilities.

Ms Vries agreed that they had to take the responsibility. She said there had been engagement with Alexkor and that Namda was created but that the Foundation had not dissolved. It was not functional though.

Mr Losper said that Alexkor owed the Foundation R38 million, being its 30% share in Alexkor’s profits which had not been paid out.

Mr E Marais (DA) said that funds had been transferred to Namda. He wanted to know who the trustees of Namda were and wanted to see Namda’s financial statements. He wanted to know since what date the Foundation was not functional and whether the trustees had been paid monies between 2005 and 2011.

Ms Vries replied that the trustees had received money but in the last four years only the people who came to meetings from afar had been paid. This had occurred up to 2006.

Mr Marais wanted to know the exact date as well as the amount of money transferred.

Mr Losper said that since 2006 no payments had been made to trustees.

Mr Marais asked who the trustees of Namda were and which of them received director’s fees. Were all of the members of the Foundation present at the meeting part of Namda?

Mr Losper said the Trust Deed of Namda allowed for some to be represented on Namda.

Ms Vries said that she was a trustee, that Mr Cloete was a trustee, that Mr Losper was the chairperson and that there were no funds in Namda currently. Approximately R900 000 had been transferred from the Foundation to Namda.

The Chairperson reminded the delegation that they were under oath.

Mr Sonto said the financial documents were up to 2005 yet by their own admission they, the trustees, had received money till 2007.

Ms Vries said she did not realise that Namda had to be accountable at the meeting. She said she would attempt to collate all the relevant information although she admitted that she did not know if she would be able to obtain all of it. She would do all she could to account for what needed to be accounted for.

Ms Bikani said that there appeared to be a strong relationship between the Foundation and Namda. She said that the documents submitted contained lots of conflicting information. She said the delegation had said that they were not operational yet the documents showed them to be operational till 2005. The delegation claimed that they received no income, yet projects had been operational and regular meetings had been held on a quarterly basis. The trustees had to be subpoenaed to appear and explain.

Ms Vries said that the Foundation had been operational; it was just not operational in the last two years.

Mr Sonto asked when the Foundation had been dissolved and Namda created.

Ms Vries sad Namda was established as a business centre and the Foundation was to remain as an arm of the mine to fight for its 30%. Namda was in the same situation, fighting for its share of Alexkor’s profits and had no operations going.

Mr Losper said that a lawyer had helped them through the transition processes. It would be helpful to have him also present before the Committee.

Mr Marais wanted the financial statements for 2006 and 2007 of the Foundation and all the financial statements of Namda.

The Chairperson said Namda’s lawyers and accountants had to appear before the Committee to be accountable and the Committee wanted to know about its investments and its loan book. He understood that Alexkor had stopped payments because of a lack of co-operation from the Foundation and its representative on the Foundation board had become frustrated and left. The delegation had to go back and prepare to appear before the Committee on 26 October 2011 and it should forward the information by the Friday before – 21 October - at the latest.

Ms Vries said that it was a financial problem to travel to Cape Town as she and her colleagues had paid out of their own pockets for the trip.

The meeting was adjourned.


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