Grootvlei and Orkney Mines crisis: Briefings by Aurora, Unions, Liquidators, Departments of Mineral Resources & Labour

This premium content has been made freely available

Mineral Resources and Energy

27 October 2011
Chairperson: Mr F Gona (ANC)
Share this page:

Meeting Summary

The Chairperson summarised that during public hearings on the mining charter in 2009, the Committee was first approached with complaints about the plight of workers at Aurora Mine, who apparently had not been paid. On further investigation, it also discovered that the rights of workers at the Orkney and Grootvlei mines had been breached, and it also looked at whether there might have been breaches of various pieces of mining, safety and labour legislation. On 13 April 2011, stakeholders were invited to make submissions on the situation, including submissions by Aurora Empowerment Services (AES) and the Joint Provisional Liquidators (JPLs). At this meeting, the union Solidarity accused AES of destroying two fully functional mines and 5 300 jobs, leaving 42 000 people without an income. One worker had, in desperation, committed suicide. It was also claimed that AEC had deducted money from workers to pay for tax, Unemployment Fund and Compensation Fund contributions, and other third party payments, including pensions and garnishee orders, but that it had failed to pay over the money. A further problem was the threat of acid mine drainage, as water needed to be pumped away and treated, but because the mine was not operating, no subsidy for water pumping was available from the Department of Mineral Resources (DMR). At this stage Mr Enver Motala headed the Joint Provisional Liquidators(JPLs), but the Unions were adamant that he should be removed, that AES should be removed from the mines, and that the open mine shafts had to be covered and an investigation into the conduct of Aurora should ensue.

This meeting was a follow up to the meeting on 13 April 2011. The Chairperson noted that the Master of the High Court had convened an inquiry under section 318 of the Companies Act, into the administration of the Pamodzi Group of Companies, after which the then-liquidators Gainsford and Motala were removed. New Joint Provisional Liquidators (JPLs) were appointed. The JPLs noted that  when they took over, they discovered that large portions of the mine assets had indeed been removed and destroyed, that there was no accounting for gold removal in terms of an Interim Trading Contract with Aurora, that AES had sold Pamodzi assets without permission and the assets were neither insured nor secured. The JPLs had managed now to do this, despite financial constraints, and had funded limited care and maintenance by limited gold cleanup at East Rand and Orkney mines. The High Court had extended the date for finalisation of the disposal process to 25 April 2012. An offer of R150 million had been made for Orkney Mine, by the China African Precious Metals (CAPM) company, but this was still subject to verification and finalisation of conditions precedent. Members’ main concerns were the timeframes within which the workers should be paid what was owed, and they also questioned any possible links between the previous liquidators and Aurora. It was noted that because the previous liquidators had called for a review of the Master’s decision, this was sub judice. Members noted that the claims of employees were preferent claims, and it was hoped that they would be paid in full, but were still concerned about the delays. They questioned how Aurora had come to be a preferred bidder, what the value of the gold removals was,  and the impact of rising water. Members were pleased with the scope of the current enquiries, but enquired how the investigations into Pamodzi Group and Aurora (one of the Pamodzi affiliates) fitted together, enquired how many jobs could be created, and questioned the sale of the mine, and the conditions, pointing out the differences between sale of movable and immovable assets, and calling for details on the deal.

The Department of Labour (DoL) summarised that it had first received complaints from employees of Grootvlei Mine in July 2009, and complaints from employees of Aurora Orkney in September 2010, and it had then conducted inspections and meetings. Most complaints related to unpaid wages and overtime, failure to repay a loan of R150 000 from the Agency Shop Fund, and failure to pay over moneys deducted. DoL described its interventions in respect of both mines, stressing that it was only empowered to intervene for workers who fell within the Basic Conditions of Employment Act thresholds. It had managed to get a court order and payment of R2.03 million for Grootvlei mine from Aurora, and had paid 1 278 qualifying workers from this amount. 1 035 UIF claims were approved and R15 million was paid out to workers at Grootvlei Mine. However, although it had managed to get another court order in respect of Orkney mines, for R8.85 million to be paid to 1 170 employees, it could not serve the Court order, and only recently had it been notified that a liquidator had been appointed for Aurora, and an appointment was made to serve the order on that liquidator on 1 November 2011. DoL would follow the developments at the High Court on Aurora, in order to bring this case to its conclusion. Members asked what act of insolvency had been committed by Aurora, asked how the DoL was dealing with payment to workers who did not have bank accounts, again expressed concerns about the delays, and what the JPLs had done to address them, and enquired about the living conditions of workers, which were apparently squalid, and who was responsible. The DoL stressed that only some matters fell within its jurisdiction. Members asked what was being done to try to recover benefits due to workers, whether there were assets in Aurora, who would take over the responsibility for the UIF declarations, whether the total number of claimants was known, and noted that further updates would be needed from the DoL.

The National Union of Mineworkers (NUM) noted that not much had changed from its perspective as its members remained unemployed, and alleged that stripping and sale of assets continued, despite attempts by NUM members to stop this. It was noted that presently CAPM was co-managing the mines, with MEAC. The NUM was adamant that there had to be a change in the insolvency legislation. Liquidators were powers unto themselves and the Master of the High Court’s role was reactive, largely as a result of protests from the unions and public outcries. Liquidators’ reporting was unpredictable, erratic, selective and secretive. NUM called for unions and creditors to receive more information, changes to the formula for liquidators’ remuneration, stricter qualifications, rules and ethical codes regulating liquidators, and more certainty in the reporting process, with timelines and a business plan, with penalties imposed if these were not met. The Master should be able to remove a liquidator who did not meet the minimum performance criteria. The corporate rescue provisions in the Companies Act should be used proactively, and not to avoid paying salary increases.

The union Solidarity outlined that Aurora had not paid salaries, had not relocated the pump station and confirmed that assets continued to be stripped. It updated the Committee on the pumping of water, cautioning that this was already approaching crisis proportions, and the water levels were too high already for installation of pump stations and that R47 million was needed to instal pumping solutions, within the next few months. Solidarity claimed that about R27 million was made out of god recovery so Aurora must have assets. The concerns about the previous liquidator were enumerated, and the new JPLs were communicating more regularly and openly with unions. The Unions and Chamber of Mines had a collective agreement whereby mining houses would communicate any vacancies to Solidarity and the NUM, would train ex-employees, and joint statements about concerns were listed.  The lessons learnt were listed, and Solidarity urged that Aurora must pay for the damage. Members agreed that liquidators should not be allowed to continue looting and mistreating employees, wondered why Aurora directors had not been stopped from practising, noted concerns about changes of company name, asked if Aurora belonged to any other structures who could help, asked what the DMR was doing about the continuation of health and safety violations, who would pay for pumping of water, and how the shafts were covered. Members were also concerned as to how directors who acted in this way could be permanently banned from operating in the industry again. The DMR was asked how its due diligence failed to pick up that Pamodzi would be liquidated a year after starting operations, and Members asked about cancellation and auction of rights. They urged that all loopholes should be closed and asked what was being done to amend the legislation, and were interested to hear of preventative measures to avoid repetition of such incidents in future.
The Committee concluded that no clear recommendations could be formulated from this meeting, as the processes were ongoing, and the Committee would check whether the amendments to the Insolvency Act went far enough, would examine the Mineral and Petroleum Resources Development Act, urged the Unions to engage fully with the prospective buyer, and awaited a further report from the liquidators.

Meeting report

Grootvlei and Orkney Mines crisis: Follow up meeting
The Chairperson noted that this meeting was a follow–up to the one held on 13 April 2011 when the liquidators at the time, the Departments of Labour and of Mineral Resources, as well as Aurora Empowerment Systems, delivered presentations to the Committee on the situation around the Orkney and Grootvlei mines.

He summarised that during public hearings on the mining charter in 2009, the Committee was first approached with complaints about the plight of workers at Aurora Mine, who apparently had not been paid. It had investigated the matter further, and discovered that the rights of workers at the Orkney and Grootvlei mines had been breached, including human rights and living conditions, and it also looked at whether there might have been breaches of various pieces of mining, safety and labour legislation.

On 13 April 2011, stakeholders were invited to make submissions on the situation, including submissions by Aurora Empowerment Services (AES) and the Joint Provisional Liquidators (JPLs). AES were at this stage managing the mines, to try to see if the Committee could resolve the situation and save jobs. At this meeting, the union Solidarity accused AES of destroying two fully functional mines and 5 300 jobs, leaving 42 000 people without an income. One worker had, in desperation, committed suicide. Solidarity also claimed that SAE had allowed the mines to be vandalised, had allowed shafts to be dismantled and sold as scrap metal, and that there were deep shafts left open, posing a danger, particularly to children. It was also claimed that AEC had deducted money from workers to pay for tax, Unemployment Fund and Compensation Fund contributions, and other third party payments, including pensions and garnishee orders, but that it had failed to pay over the money. A further problem was the threat of acid mine drainage, as water needed to be pumped away and treated, but because the mine was not operating, no subsidy for water pumping was available from the Department of Mineral Resources (DMR). At this stage Mr Enver Motala headed the Joint Provisional Liquidators(JPLs), but the Unions were adamant that he should be removed, that AES should be removed from the mines, and that the open mine shafts had to be covered and an investigation into the conduct of Aurora should ensue.

There had been some changes in the interim. There had been a change in liquidators, as well as proposals from people who wanted to participate. The Committee decided to give space to new developments that sought to move the situation in a positive direction.

Joint Provisional Liquidators (JPL) presentation
Mr Barend Petersen, Joint Provisional Liquidator, Sizwe Business Recoveries, said that he would summarise events since January 2011. The Master of the High Court had convened an enquiry in terms of Section 381 of the Companies Act, into the administration of the estates of the Pamodzi Group of Companies. All the liquidators were called to testify. The Master had then decided to remove the then-joint provisional liquidators, Gainsford and Motala. This was a decision of the Master, and was still sub judice because they had called for a review of the decision.

During May 2011, the mine owners Aurora Empowerment Systems (Aurora) were put to terms for their failure to comply with the terms of the Interim Contract Trading and Mining Agreement (ICTMA). Aurora failed to remedy the breaches and was ordered to vacate the mining sites. The JPLs took possession of East Rand and Orkney mines.

When the current JPLs took over, they found that large portions of the assets of the mines had been removed and destroyed.  There had been no accounting by Aurora in respect of gold removal, in terms of the ICTMA. Aurora had sold Pamodzi assets without permission, the assets were not insured and there was insufficient security.

The current JPLs therefore, on taking possession, secured the mines despite financial constraints. The JPL firm funded limited care, and maintenance by limited gold cleanup at East Rand and Orkney mines. It had regular consultations with NUM and Solidarity. It engaged with the Department of Labour relating to the payment of workers, but efforts were frustrated by a computer crash. It commenced with a training lay-off scheme under the auspices of the Commission for Conciliation, Mediation and Arbitration (CCMA). It instituted a process by Standard Bank to source alternate buyers for the two mines. It had regular consultation with the two secured creditors of the Orkney and East Rand Mines. It concluded a deal to sell Orkney to China African Precious Metals (CAPM) for R150 million, subject to certain conditions precedent, including labour consent to the sale. It was currently considering offers for the sale of East Rand Mines.

The JPLs had to submit regular reports to the Master regarding water pumping negotiations with the Department of Mineral Resources (DMR) and Department of Water Affairs (DWA) and organised labour. They responded to illegal mining and the theft of assets. The JPLs had cooperated with the Master in terms of Section 417 and 418 of the Companies Act (see attached presentation for the scope of operations). The inquiry was under way so the JPLs were unable to comment on the evidence.

The High Court had extended the date for finalisation of the disposal process to 25 April 2012, in the interests of creditors. This would give time to finalise the disposal of Orkney and East Rand mines, or to realise the assets on a piecemeal basis. The JPLs negotiated with Orkney mine, and intended negotiating with East Rand, so that workers’ claims could be paid on receipt of the proceeds of the disposal, subject to secured creditor consent. Legal action would be instituted to claim damages from responsible parties.

Ms F Bikane (ANC) asked whether the Master’s enquiry could be discussed, as it was said to be sub judice.

The Chairperson said that the Master’s enquiry was sub-judice, but the other issues could be discussed. The JPLs had been offered R150 million for Orkney. He asked whether the deal had gone through. He also asked how many job opportunities would be created or retained in the process. The terms were listed in the presentation.

Mr E Lucas (IFP) was not sure whether the sub-judice classification was correct, as he though the Committee also needed to investigate. He was very concerned about non-payment of employees, saying this had to be attended to urgently, and was surprised that the Court had not made another order.

The Chairperson said that the Department of Labour (DoL) would have to quantify the wages.

Mr M Sonto (ANC) questioned the statement that workers’ claims would be paid on receipt of disposal proceeds, subject to secured creditor consent. He asked if this meant that their claims would be paid once the mine assets were disposed of.

Ms Bikani asked for the likely timeframe for the workers to be paid. She hoped that, at the least, they would be paid between now and April 2012.

Ms Bikani also referred to the deals for the sale of Orkney and asked how much of the eventual sale price was likely to benefit disadvantaged people. She asked when exactly the affected employee issues would be resolved.

Mr Petersen set out the categories of worker payments. The first included the salaries of workers at the time of liquidation. The second category were workers employed by Aurora. The third would include retrenchment benefits or termination of employment. He understood that all salaries up to time of liquidation had been paid. The JPLs would pay the retrenchment benefits within 30 days after receiving the money. He could not comment on the payments of workers who were employed by Aurora. This was in the domain of Aurora.

Ms Bikane asked how much of the R150 million was earmarked for employees.

Mr Petersen replied that the Labour Relations Act requirements had specified how much was needed, and he expected that their claims would be satisfied in full.

The Chairperson said that the JPLs stated that they had been engaging with the DoL but their efforts were frustrated by a computer crash. He asked if this meant the payments had ceased, and he asked what engagements there had been and whether the JPLs assumed full liability for money owed to the workers.
Mr Petersen replied that the JPLs set up an office at the mine but there was no electricity, so power was provided by generators. The computer hard drive crashed while the JPLs were assisting the DoL to compile lists of workers who qualified for Unemployment Insurance Fund (UIF) payouts. The JPLs had been liaising with the DoL again, and were trying to recover that information.

Mr Sonto questioned the apparently conflicting statements that Aurora had failed to meet demands, yet it was considered the preferred bidder.

Mr Petersen replied that Aurora was not the preferred bidder. The liquidators were investigating how Aurora was named as the preferred bidder.

The Chairperson referred to slides 3, 4 and 5, and asked if there was any link between Aurora and the previous JPLs, and whether there was anything complicit between them.

Mr Petersen replied that he could not comment on the removal of the previous JPLs. The removal of Aurora from the mine was a decision of the current JPLs, during May 2011.

The Chairperson said that the presentation mentioned that there was no accounting by Aurora in respect of gold removal in terms of the ITCMA. He asked if any estimates were possible, so that the Committee could gauge the impact of operations by Aurora.

Mr Petersen said the JPLs were in the process of investigating the removal of gold fully. The JPLs had the records, but the investigation had not yet finally quantified the numbers, so he would prefer not to give estimates at this stage.

Mr Johan Engelbrecht, Joint Provisional Liquidator, Icon Insolvency Practitioners, said that there was some question about the accounting done by Aurora. This formed part of the investigation and it was part of the reason why Aurora’s contract with the current JPLs was cancelled.

Mr J Schmidt (DA) asked whether the rising water table was endangering the assets of the Grootvlei mine. It was clear that it was not being handled effectively at the moment.

The Chairperson said that he was concerned about water-pumping, pointing out that in some mines, only one pump was in operation. He asked if only one pump was working in each of these mines, and if others had been repaired. Pumping of water linked directly to the bigger problem of acid mine drainage, contaminating ground water, that South Africa faced.

Mr Engelbrecht replied that the JPLs were in regular contact with all the relevant departments concerned with the pumping of the water. There was no electricity on the East Rand and Orkney mines. The water pumping problem was actually at the East Rand basin. The DMR and DWAF had sent out quotations and invited contractors to submit proposals. The JPLs had been part of the process, and had escorted them and accompanied them on their visits to the mines. The pumping contracts were in the process of being finalised.

Mr Petersen agreed that the rising water was of concern. The liquidators approached HVB, the secured creditor for the East Rand, for pumping water. HVB had advanced R50 million, of which R23 million was used to settle outstanding employee claims. HVB was not comfortable with advancing more money for the pumping of water. If water pumping was reinstated, some of the damages could be reversed. The major difficulties currently were lack of money to pay for pumping, and lack of electricity.

The Chairperson said that the scope of enquiry was impressive. He asked if both mines would have to be sorted out financially by 25 April 2012.

Mr Schmidt had a concern about how the investigations fitted together. He noted that there was a section 381 inquiry in respect of the Pamodzi Group of companies. However, he understood this Group to be an overarching body, of whom Aurora was an affiliate, and he thought that only Aurora was insolvent. He noted that there was a fine line between investigating directors for certain missteps in terms of section 381, and a section 417/8 inquiry.

Mr Petersen replied that the Section 381 inquiry focused on what happened during the administration of the estate, and the Master was therefore investigating the conduct of the previous JPLs. The section 417/8 inquiry was one in which the Master and the JPLs examined the company’s affairs. In the case of China African Precious Metals (CAPM), an agreement had been concluded. Certain conditions precedent needed to be fulfilled, including a section 11 application, and the transfer of the license.  
He added that in regard to the payment of monies, the JPLs were only awaiting Reserve Bank approval for the first tranche of money to flow. A third condition precedent was the agreement of organised labour to the terms and conditions of “the Termination and Recall Agreement”. At this point this was still being negotiated between the unions and CAPM, with the assistance of the JPLs. The unions had to agree to the terms of sale and the terms of re-employment. Both unions were in the process of engaging with the buyer.

Mr Schmidt asked for confirmation whether the Pamodzi Group of companies, or only its affiliate Aurora was under liquidation.
Mr Engelbrecht replied that the Section 417 enquiry took a two-tiered approach. The one leg would investigate what happened to Aurora. The second leg, which would follow on after the Aurora investigation, would investigate the liquidation of the Pamodzi Group itself.
The Chairperson said that the presentation stated that an agreement had been reached with “CAPM”, and he asked for the full name of this company. He also wanted to know any conditions of the agreements, whether organised labour had agreed to a sale, and how many jobs would be created. He also enquired if there would be any further capital investment in the mine to get it to a state where it could function as a mine again. Finally, he enquired the timeframes for re-commissioning the mine.

Mr Petersen replied that there would be a period during which the Orkney mine would have to be restored, and there would be capital investment into the mine to rank it up to production level again. During this period, there would be significant job opportunities. When it had again reached production level, it would also provide jobs to the Orkney community. It was not the intention of the JPLs to wait for April before starting this process. The JPLs anticipated that the agreements could be finalised within the next few weeks. The JPLs were in constant contact with the Reserve Bank to get its approval. The agreement that the JPLs had negotiated stated that within 30 days of the purchase being concluded, money would flow through to settle outstanding claims on the estate.

Mr Petersen added that it was hard to say exactly how many jobs would be created, because this depended on how and over what period the mine would be restored. There would be a gradual build-up over time. The recall agreement, which was being negotiated with organised labour, was very important, because it would regulate how future employers would recall employees who had lost their jobs as a result of the liquidation. He could not commit to any numbers, because this still depended on what would be available, and the decisions of the buyers.

Mr Schmidt did not want to impeach the credibility of the liquidators. There had been media articles about the previous liquidator. There was a major difference between selling a movable and selling an immovable asset. It was distasteful when the removed liquidators had sold a mine on the same basis as if it had been a movable asset. He asked what the correct approach was, saying that the difference in commission was huge.

Mr Petersen replied that he was not in the position to comment on this today. It depended on the deal. How the seller sold depended on the manner and format in which the buyer wanted to buy. At the end of the day, the JPLs would have to account to the Master, who would decide what the correct legal position would have been, under the circumstances.

Ms Bikane asked whether CAPM was the only company willing to buy. She asked for details on this deal.

Mr Petersen replied that there was another bidder. The JPLs were, however, concerned about the ability of the bidders to fulfil all the conditions of the deal, and pay the money.

Mr Sonto asked what would happen to workers and assets during the period between now and April, and asked if the assets were protected from fraudulent sales. He pointed out that the assets of Pamodzi were stolen, and there was not sufficient security. He asked how this had happened.

Mr Engelbrecht replied that the JPLs started with a limited mining operation, the recovery of gold sweepings, to pay for the security company. The current JPLs had not seen large scale removal of assets, but only isolated cable theft, which they had addressed. He believed the assets were sufficiently secured.

Mr Lucas was concerned that the large scale removal of assets had serious implications for the value of the mine. The answer the JPL provided did not reflect the seriousness.

Mr Petersen replied that the phrase “the large scale removal and destruction of assets” referred to the state in which the current JPLs had found the mine. Since they had taken over, they had significantly decreased illegal activities at the mines. He believed it was incumbent on the current JPLs to make representations, on conclusion of the process, as to how similar situations could be prevented in future. He noted that the current focus of the JPLs was to finalise the disposals, and to pay people what was due. Then the JPLs would focus on the finalisation of the administration of the estate.

The Chairperson was grateful that the JPLs would also make recommendations to prevent a situation like this arising again in the future. He was very displeased with the previous situation, which he said had prolonged the suffering of the workers, by repeated requests for extensions. He was pleased that the process was ongoing, and hoped that there would not be a repeat of what had happened in the past. One worker had committed suicide as a result of the frustration, so this had been a very serious and painful process. He agreed that preventative measures must be put in place for the future. He noted that the Committee was very concerned also about the job creation aspects, and noted that the current march by the ANC Youth League had been a march against unemployment, which young people were saying was a threat to the stability of the country.

Department of Labour presentation
Mr Sam Morotoba, Deputy Director General: Public Employment Services, Department of Labour, updated the Committee on the developments since 13 April 2011, from the perspective if the Department of Labour (DoL).

He reminded Members that during July 2009 the Springs Labour Centre received complaints from employees of Aurora Grootvlei mine. In September 2010, the employees of Aurora Orkney laid complaints at the Klerksdorp Labour Centre. DoL inspectors had meetings with employees, employers and trade unions to resolve the matter. The complaints centred on unpaid wages and overtime, and an Agency Shop Fund of R510 000 that the company borrowed and failed to repay, Third Party payments were not made, despite deductions made by the company from employees in relation to Unemployment Insurance Fund (UIF),
Provident/Pension Funds, Compensation Funds towards Rand Mutual Assurance and garnishee orders. He fully described the legal basis for the DoL interventions (see attached presentation).

There were certain matters beyond the DoL scope. These included the liquidation process of Pamodzi Gold Mine, ownership of Aurora Investment Companies, mining license aspects, collective agreements signed with both National Union of Mineworkers (NUM) and Solidarity, non-payments of third parties despite deductions made from employees. Other issues related to the income of workers earning above the threshold of R149 575.00 per annum. migrant employees who could not be traced, unacceptable living conditions of employees at the hostel, and security problems at Aurora mine shafts.

Mr Morotoba then gave an update on its interventions at the Aurora Grootvlei Mine. The total amount owed to all
employees was around R4 million. DoL only intervened on-behalf of 1 238 workers earning below the Basic Conditions of Employment Act (BCEA) threshold of R149 575 per annum, but its interventions related to a total of R2, 033 million. A Compliance Order was issued in October 2010 in line with section 69 of the BCEA.  DoL approached the Labour Court during November 2010 for the Compliance Order to be made an Order of the Court. In terms of the settlement agreement, Aurora had transferred R2.03 million (which also covered future claims) to the DoL account.
The DoL Springs Office proceeded to make the payments to the 1 278 qualifying workers whose details were included in the Compliance Order.

A total of 493 new complaints for unpaid wages were received by 15 May 2011. The DoL submitted claims for the 401 workers who earned below the BCEA threshold, based on the settlement agreement, in the amount of R1, 73 million. This claim was to be forwarded now to the new JPLs.

Mr Morotoba noted that during April 2011 the DoL had reported that UIF benefits could not be processes because, at that stage, workers were still technically employed by Aurora. 3 000 potential claimants for UIF were identified, and 800 applications were received by March. The
declarations were still outstanding from employers. A meeting was held with Aurora management and worker representatives, on 22 March 2011, when it was agreed that workers would be retrenched in terms of the BCEA for operational reasons, because the mine had ceased to operate, with effect from 31 March 2010.  Aurora would provide each worker with a letter to this effect. Aurora would also ensure that the UIF declaration covering all workers would be updated and forwarded to the UIF. DoL would assist with this process to ensure that there are no undue delays. Other aspects relating to workers’ retrenchments were to be negotiated between Solidarity, NUM and Aurora, at a time to be agreed. These retrenchment negotiations should not delay the UIF applications by workers. The parties were supposed to meet by 15 April 2011 to review progress.

Between 31 March 2010 and the end of April 2011, a total of 936 claims were received. Mr Morotoba pointed out that these were from South African citizens only because foreign nationals did not contribute. 825 claims, or 88% were processed, of which 90 were rejected and 21 were not finalised, due to incomplete information.

Mr Morotoba then dealt with the update in respect of Orkney Mine. The amount outstanding for wages owed to all 1 170 employees (of whom 185 had since resigned) earning both above and below the BCEA threshold was about R8, 65 million. The Labour Court gave a ruling, but the DoL had had problems in getting the Court Order served. The first attempt at service resulted in the finding that the offices of Aurora had been vacated. On 8 July the Court Order was served on the joint liquidators of Pamodzi. However, on 26 July those liquidators advised that because they were not the liquidators of Aurora Orkney, they could not assist, and this Order had no direct bearing upon Pamodzi, because it related to agreements entered into directly between Aurora and the employees.

The DOL then attempted to serve the Order during the section 417/8 Aurora Inquiry held by the Master, but the attorney for Aurora refused to accept it, saying he had no general brief from Aurora, but was appointed only for the inquiry purposes. Since 26 October, the DoL had not been able to serve the Court Order on anyone. It was unable to locate Aurora at its registered offices. It was still waiting for a liquidator to be appointed for Aurora. However, it had since learned that Ms De Wet of Kaap Vaal Trust had been appointed, that an inquiry was scheduled to commence on 28 October, and it would participate. DoL had made an appointment with the new liquidator to serve the Court Order, on 1 November 2011.

Mr Morotoba then described the situation in regard to the UIF claims at Orkney Mines.1 107 UIF claims for the former Pamodzi Gold Orkney (Pty) Ltd employees were processed, after receipt of the employer declaration. 1 035 claims were approved. A total of R15.23 million was paid out.

Aurora employees’ UIF claims would be processed when declarations and applications were received
The DoL, the liquidators and the unions would have to work together to get those declarations from Aurora in order to pay UIF to the outstanding workers who qualified. DoL would follow the developments at the High Court on Aurora, in order to bring this case to its conclusion.

Mr Schmidt asked what the act of insolvency committed by Aurora was, noting that Pamodzi’s state of affairs was separate from Aurora. He asked if the unpaid claims of workers were considered an act of insolvency.

Mr Khathutshelo Dzumba, Senior Legal Administrative Officer, DoL, replied that the four Directors of Aurora appeared before the Commission of Inquiry of the High Court, but they failed to produce documents that they had to submit. The Commissioner saw that the directors wanted to delay the process, and they were accused of derailing the Commission. The Commissioner gave the order for Aurora to be liquidated.

Mr Lucas commented that some workers were not paid allegedly because they did not have bank accounts. There had to be a method to assist them.

Mr Sonto asked what the DoL was doing about bank accounts.

Mr Thompson Buys, Acting Director: Operations, DoL, replied that if a bank account lay dormant for more than three months it was closed. The DoL had approached the four big banks. Two came up with proposals that would assist the employees. Employees would be issued with a smart card which could be used at identified merchants or at ATMs.  DoL would inform the 21 people who applied at the Springs office of the options open to them. He added that the UIF would finance the cost of the card, but the users would have to then sustain it.

Mr Sonto asked how long Aurora could legally delay matters, and what this meant to the industry.

The Chairperson asked what the liquidators had done about the delays. They were dealing with the assets of Pamodzi, who had been the original employer. He asked why no compliance orders had been issued in respect of the liquidators, commenting that the delays prolonged the suffering of the workers, and asked why there was no letter of termination.

Mr Sonto asked who was looking after workers still living in the mine housing, commenting that Solidarity described the conditions as “squalid”.

The Chairperson asked who had the responsibility to look after the hostels. The DMR said that this fell to DoL, as part of the BCEA requirements, but workers were living in appalling conditions, without water or electricity.

Mr Morotoba replied that DoL had indicated that only some of the issues fell within its jurisdiction, and this made it difficult to resolve the issues. DoL had to rely on other government departments who had jurisdiction. There were other issues regarding licences and collective bargaining agreements. In terms of the BCEA, DoL could not interfere where there were collective bargaining agreements in place. The DoL had raised issues regarding hostels and food parcels with the Department of Social Development. However, it was difficult for it to negotiate around electricity and water where it did not have the necessary jurisdiction. DoL tried very hard to solve the problems where it had jurisdiction, and would continue to involve other departments.

The Chairperson said that there were differences in the presentations as to the numbers of workers, and asked for the correct figure.

Mr Dzumba replied that slide 15 indicated the amount of money owed to all Aurora mine workers, but it must be remembered that some earned above the BCEA threshold, which meant that DoL could not intervene on their behalf. That was why the number of 1 170 workers was reduced to 1 007, when it came to the Court order.

Mr Schmidt said that slide 15 dealt with outstanding wages and slide 21 with UIF. Only upon the receipt of a declaration from Aurora (or the liquidator) would UIF be paid. He asked if any workers at Grootvlei would be negatively affected because Aurora did not pay the money subtracted from worker’s pay into the UIF fund.

Mr Buys replied that only the employer could declare that a person was now unemployed, although the JPLs could possibly also do so. Negligence by the employer in paying over the UIF would not prejudice the employee. The UIF would run a parallel process to get the outstanding moneys from the employer.

Mr Morotoba added that at Grootvlei the payment of workers’ outstanding wages was done after the transfer to the DoL. Payment of UIF had also been effected to former Pamodzi workers at Grootvlei. The JPLs of Pamodzi and Aurora should now assist the DoL with declarations, to allow the UIF to be paid.  There was an outstanding issue that had to be settled by the unions, because it was not clear whether some workers were retrenched, and what had happened to their retrenchment money.  They had not been given termination letters. The DoL would work with the new liquidators.

The Chairperson said that reference was made to other benefits like the pension fund, provident fund, Rand Mutual Insurance, compensation fund, garnishee orders, and provident fund, and asked how these would be dealt with.

Mr Morotoba replied that slide 7 indicated that there were a number of things Aurora had done, including deducting money, not paying wages and overtime and third party problems. The DoL was involved in the UIF arrangements, and had managed to recover some of the UIF for workers at Grootvlei. However, the DoL was not involved with the Provident and Pension Fund monies. Miners were not covered by the Compensation Fund managed by the DoL. The DMR had given a licence to Rand Mutual to manage the Compensation Fund for miners and construction workers. The garnishee orders affected workers. It was expected that as part of the liquidation processes, Rand Mutual, the Provident Funds, UIF and other people involved in garnishee orders would make claims.

The Chairperson asked, now that Aurora was finally in liquidation, whether it had assets from which the workers could be repaid. He pointed out that it was a management company. The Compliance orders were issued, but at the end of the day it depended upon what would be found. He asked what DoL could now do.

Mr Dzumba stressed that he had only just learned of the appointment of the liquidators, and he had set up a meeting with them on 1 November. The liquidators would establish the asset value of Aurora, to see whether there were assets to pay the creditors. They would also establish if the directors were negligent, or had mismanaged assets. If the liquidators found the directors guilty, they could hold them liable, press criminal charges against them, and attach their assets. He did not know whether Aurora had assets.

The Chairperson asked the JPLs whether Aurora had assets.

Mr Engelbrecht replied that he was aware of the liquidation of Aurora. He could confirm that Aurora had assets that could be pursued. The JPLs were addressing the Pamodzi issue, and he believed that the DoL would do the same.

Mr Schmidt asked whether employees could be worse off when a company was liquidated, because if it was not, at least the employees could receive UIF payments.

Mr Buys replied that if the employer no longer existed, the liquidator could take over employer duties. The unemployment benefits would be the same. He was not sure about the position with pension and provident funds.  Only when the employee terminated the employment himself, would he be adversely affected. The amount of UIF received was dependent on what the person had earned, when employed, and the lower the salary, the higher the percentage of the salary that would be paid as UIF.

Ms Bikane asked whether the total number of claimants had been established.

Mr Morotoba responded that there were foreign workers who had not yet laid claims. There could be more claimants and if they were found to be legitimate, they had to be honoured.

The Chairperson reiterated that it was an ongoing process. The Committee would call on the DoL for updates, either in the form of a presentation or a written report.

National Union of Mineworkers (NUM) presentation
A representative from the National Union of Mineworkers (NUM) noted that not much had changed since 13 April 2011, as NUM members were still unemployed. The stripping and sale of the assets of the mines continued, and there was no mining. Eight NUM members were arrested while trying to stop the illegal removal of assets from the mine’s premises. The JPLs had told NUM not to interfere in security matters. However, he maintained that the stripping of the assets of the mine continued.

He noted that the unions had made a presentation at the section 417/8 inquiry into Aurora, leading evidence on the conduct of Aurora management. Aurora management had not cooperated with the inquiry, causing delays which cost the insolvent estate and left fewer assets for creditors. NUM stressed that the JPLs had to apply the law to the letter and finalise the inquiry.

NUM noted that there was a R150 million offer from China African Precious Metals (CAPM) for Orkney, but none for Grootvlei. CAPM was co-managing with MEAC. However, the purchase price was subject to asset verification, and those assets lost after agreement would be deducted from the final sale price. A draft Union Termination and Recall Agreement was being considered, although NUM had some serious reservations about it.

The representative outlined what the Agreement stated. To preserve the current mining rights, the Agreement purported to invoke sections 189 (retrenchment for operational requirements) and 197(transfer of contracts in insolvencies). NUM believed that both these sections could not be invoked at the same time, or applied to the same situation simultaneously. The Agreement also did not give future recognition to the Union, and cancelled all existing agreements. The Union had to waive all rights, without settlement of claims. The only concession on the Recall procedure was that preference would be given to Pamodzi’s employees. The Union was obliged to accept the terms and conditions of CAPM, without knowing what these were, and the Union could not act in relation to rights with a new employer.

NUM suggested there was a need for a change in the insolvency legislation. Liquidators were powers unto themselves and the Master of the High Court generally only reacted to protests from unions, or public concerns. The reporting by liquidators was unpredictable, erratic and selective, and they operated under a veil of secrecy. The State was not hands-on, and outsourced its role to liquidators, and could not safeguard its interests. Unions and creditors were kept in the dark and only received selected information which did not help in decision making – for example, it could not determine if potential buyers had correct business credentials. It alleged that liquidators acted in their own interests, not in the interests of creditors, and the formula for their remuneration needed to be changed, as the current system encouraged them to behave in a particular way. There must be stricter qualifications, rules and ethical codes regulating liquidators. The reporting guidelines should be designed in such a way that creditors could know what to expect from them. Reporting guidelines had to include a business plan, with a programme containing month to month milestones, and if these were not achieved, penalties had to be imposed. The State, unions and creditors should, on a quarterly basis, assess the reports of liquidators with a view to charting the next year’s programmes of action. The Master should be able to remove a liquidator who did not meet the minimum performance criteria. Finally, the NUM said that the corporate rescue provisions in the Companies Act should be used proactively and not to avoid paying salary increases.

Solidarity presentation
Mr Gideon du Plessis, Deputy General Secretary, Solidarity, gave a presentation responding to the issues raised in April 2011. He noted that Aurora did not pay outstanding salaries, did not relocate the pump station, and that the destruction of the mining assets by contractors continued after April 2011.

There were still some unanswered questions around Aurora. The first was what had happened to the DMR subsidies paid over to Aurora, and the second had to do with the status of the directive on water pollution issued by the DWA.

Mr du Plessis gave an update on the current status with the pumping of water. Currently, at Grootvlei mine, the water level was 590 metres below surface. It was currently rising by 12 to15 metres per month in the dry season, but the rate would increase during the coming rainy season. The problem started when it got to 400 metres below surface, when it would start to rise at a much higher rate, because all the large underground volumes would be filled by then. The crisis would start at 300 metres below surface, when the water would strike dolomite, which would cause sinkholes and cause contamination of all the boreholes in the area. The situation was already developing towards a crisis. It had already moved beyond 600 metres below surface, when a pump stations could have been installed, so submersible pumps would have to be used. He pointed out that it would cost about R47 million to instal a pump station, and if this was not done within the next four to five months, a crisis would occur.

He added that there had been about 108 mega litres of polluted water pumped into a wetland for an extended period of time, and this was already a criminal offence.

Mr du Plessis noted that earlier, a Member had asked if Aurora owned any assets. He pointed out that at Grootvlei alone, R27 million was made out of gold proceeds. No tax was paid on that amount. A lot of equipment, as well as scrap metal, was sold, so there had to be assets in the estate, especially in cash value.

Solidarity had expressed several concerns about the previous JPL, Mr Enver Motala. Solidarity maintained that he had made misleading announcements regarding the Shandong transaction, and had failed to prove that fellow liquidators supported his presentation and comments. He made further misleading and untrue statements that Solidarity supported Aurora. Solidarity had documentary evidence to prove its stance. Mr Motala had called for financial support from the unions, but Solidarity said that it would rather buy food for hungry employees than support him. He made a proposal on employee termination, in order to have UIF paid, but if the unions had agreed to it, the employees would have been stripped of their other rights. Mr Motala had also claimed, falsely, that there was an inquiry into the reasons for the Pamodzi liquidation.

Solidarity had called for Mr Motala to be removed as liquidator, for Aurora to be removed from the mines, and for an investigation into Aurora’s conduct to be launched. It also called for political support for the battle against Aurora and asked that the open mine shafts had to be covered. All of these had been achieved and Solidarity was grateful for the support.

Mr du Plessis said that the new JPLs were communicating with the unions regularly and openly. The massive looting of mines came to an end.

Kaunda Global Mining Resources II was placed under provisional liquidation. This was an Aurora subsidiary, and belonged to Zondwa Mandela. The employees at Grootvlei mine were employed through this specific company and the company was regarded as their employers, although there was a nexus to Aurora Empowerment Systems, which was currently under final liquidation. Mr Z Mandela had claimed – similar to the previous Managing Director of Pamodzi - that he was not aware of the liquidation and had moved on to take up other business interests. The same employees suffered through both these processes.

Mr du Plessis noted that the Aurora directors and consultants (the Bhanas) were summoned to testify in the Section 417/8 insolvency inquiry. Solidarity believed that the Bhanas were responsible for much of the destruction at the mine. There was clear evidence that Aurora had no intention to mine. Solidarity requested SARS to do a thorough investigation of Aurora Empowerment Systems.  Aurora deducted money but did not pay SARS. SARS was suing the employees for tax related matters and they were unable to submit an IRP5. Solidarity was providing legal assistance in that regard.

There was also an insolvency inquiry into Kaunda, and Solidarity got the liquidators to extend their powers.  Solidarity would investigate the R4.8 million worth of pension fund deductions that was never paid over, secondly, it would investigate the theft of other statutory deductions and thirdly, would look into the payment of outstanding salaries. When a reporter from the Saturday Star confronted Aurora spokesperson, Thulani Ngubane, with this information, his response was ”Solidarity’s legal attempts to recoup outstanding salaries owed to workers are a waste of ink and paper”.

Mr du Plessis noted that the Unions and Chamber of Mines had undertaken a joint initiative, and a collective agreement was reached, whereby mining houses would communicate any vacancies to Solidarity and the NUM. Mining houses and the Mining Qualifications Authority (MQA) would provide training to ex-Aurora and Pamodzi employees. There was a joint statement about concerns and future prevention of similar incidents, and there was agreement that the Master of the High Court had to investigate the conduct and the role of liquidators. The parties agreed that it was necessary to develop and communicate a matrix of legislative steps and actions to be taken during liquidation. In future, they would jointly lobby government departments about common issues. There was a decision that the Mining Industry Growth Development and Employment Task Team (MIGDETT) had to take control in any future occurrences.

Senior delegates from a very influential country came to visit MIGDETT and said that they were very concerned about the state of mining in South Africa. The Aurora-Pamodzi case was a sign of institutionalised corruption rearing its head, similar to what had been seen in Nigeria, and it was hoped that this would not become the norm in South Africa, as otherwise investors would be looking to other markets, such as Chile and Brazil.

Mr du Plessis dealt with the status of the former Aurora employees. He noted that they were desperate and had suffered permanent damage. Pamodzi’s pension fund lost 50% of its value, because it had been placed under liquidation. Employees who had been saving since 1973, had lost 50% of their benefits, and could not retire as expected. Solidarity had advised the DoL to press criminal charges against Aurora, because its directors ignored two court orders. Some workers were retrenched in May 2011, but severance packages were not paid. The unions were in negotiations with prospective buyers CAPM. Mr du Plessis noted that ex-employees were under severe stress and poverty, and were desperate.

Mr du Plessis summarised that there were various lessons to be learnt. The Minister of Mineral Resources had said that the management of Pamodzi by inexperienced directors amounted to undermining of local mining regulation, and had urged companies to appoint those with a real interest in mining.  Ownership of mining interests should not be controversial, since owners should have a vested interest in growth and development of the mining industry. The Aurora debacle should not recur if proactive and decisive steps were taken. Liquidators had to act in the best interests of workers and the mining industry.

Mr du Plessis urged that Aurora and it consultants had to pay for the destruction caused, to 5 300 lives and jobs. The Aurora owners had enriched themselves at the expense of workers, had violated human rights and totally disregarded labour and mining legislation. Solidarity urged the Portfolio Committee to retain its watchdog role until the process had been finalised. It was a valuable part of the fight for justice for the workers. The regulatory processes had to be fast-tracked for the new owners.

Mr Madoda Sambatha, Head: Parliamentary Unit, Solidarity, suggested that the Committees should take the Aurora issue as a case study to see the deeper social implications of liquidation. Voluntary liquidation, which was linked to the greed of capitalism, had implications for the social security net, and mineworkers would become paupers. Their children’s education would suffer, as parents would not have money for school uniforms and transport. Liquidation was similar to labour brokering, and should be banned.

Mr Sambatha noted that if a mine worker did not clock in for seven consecutive days, he was liable to be summarily dismissed. He believed that non-payment of UIF contributions should be a criminal offence for which the Board should be charged, and sentenced to imprisonment. He pointed out that in this case, the owner of one company had opted for voluntary liquidation, whilst still operating another profitable business, and he urged that any directors must be blacklisted once their company had been liquidated. He believed that assets were owned by Aurora, but they were hidden in another company, whilst the owners of Aurora still displayed their wealth.

Mr Lucas said that important points were raised by NUM. Liquidators should not be allowed to continue looting and mistreating employees. After a liquidation, there should be a “cooling off” period where a director or owner should be unable to trade in that particular field of business. He was glad that the Chairperson was leading the process, and agreed that this Committee must align itself with those who had suffered.

Ms Bikane said that she thought the Committee had to bring in legal services, pointing out that people were still experiencing a crisis. The employees had to get their money. She wondered when the DMR would take visible steps and impose sanctions against Aurora. There was a repetition of violations by Aurora, but the DMR was conspicuous by its silence. If the directors of Aurora were practising elsewhere, then she asked why they had not been stopped, and why they had not been charged, and why the whole process had taken so long. She noted that no time frames had been mentioned.

She also noted her concern about the changes of name, from Pamodzi to Aurora to CAPM, because this could have been done to shift the responsibility, and she believed that something had to be done to address this issue.

The Chairperson said that the DMR would deal with questions later.

Ms Bikani asked whether the owners of Pamodzi, or Aurora, were part of structures like the Chamber of Mines, and whether it was not possible to get assistance from other structures for the workers.

Mr Montisetse replied that Aurora had no track record anywhere else in the world and did not belong to any employer’s organisation. It was essentially a loophole. Pamodzi worked in construction, and sold BMWs, but although it had no track record in mining, whereas other companies did have mining experience. He alleged that the liquidators had apparently accepted Pamodzi as this created time and space for the liquidators to enrich themselves.

Ms Bikane said that health and safety violations were continuing, and again asked what the DMR was doing about this and why it was not applying environmental and safety laws to punish the

Ms Bikane was concerned who would pay for the pumping of the water.

Mr Marais said that acid mine drainage was a serious concern. In the mid-year budget, the Minister of Finance allocated an amount of R260 million for acid mine drainage. He urged the Chairperson to take action as R46 million was needed to install a pump in the mine.

Mr Thabo Ngwenya, Acting Deputy Chief Inspector, DMR, said that the DMR was very concerned about the rising water levels at both the Grootvlei and Orkney operations. These could permanently sterilise mineral reserves, because at some stage the cost of pumping the water could exceed the value of the assets, and then nobody would be interested in buying the mines. At Grootvlei  over R5 million was required to pump the water. DMR appointed officials to monitor the water level on a weekly basis. At Orkney, the DMR had established a “Kosh” Committee, comprising representatives from various mines who would meet monthly for progress updates, because if Orkney flooded, it would affect all neighbouring mines. Although the DMR wanted to assist, Aurora-Pamodzi did not qualify for a water pumping subsidy, because it was not operational and producing minerals.

He added that water licensing fell under the DWA, who had established environmentally critical water levels. DWA thought that it would take between three and five years for “critical water levels” to be reached, but DMR was already treating this as a very critical situation.

The Chairperson asked what the DMR budget was for pumping water.

Mr Ngwenya said that he could send the figures to the Committee.

Mr Marais asked whether the open shafts were covered or fenced.

Mr Du Plessis said that shafts had been covered on top but fences needed to be put around them, in line with the regulations.

Mr Sonto noted that Mr Motala was removed as the liquidator, but he thought there were already some warning signs in respect of the new JPLs, as NUM claimed that the liquidators were powers unto themselves. It was in the best interests of workers to stop extensions, and he asked if the JPLs had been responsible for the latest extension to 2012.

Mr Sonto thought that the JPLs were chasing the name of Aurora, but not actually chasing the directors. He asked how the DMR, the Committee and Unions could “get the monster out of the industry”, and what steps had to be taken to permanently remove these directors from any mining operations.

Mr Sonto commented that NUM had said that CAPM was co-managing to MEAC, and asked if the deal with CAPM had gone through, or was still at negotiation stage. He commented that NUM’s presentation showed its concern to protect workers and the industry as a whole.

Mr Schmidt said that in 1998, Rainbow Mineral Resources took over the assets from Anglo, in 2004 Harmony had taken over, and in 2008 Pamodzi bought the mine. In less than a year Pamodzi went into liquidation. He wanted to know if the DMR had done its due diligence, in line with the section 11 procedure, and how it had approved a company that would go into liquidation less than a year later.

Adv Mmadikeledi Malebe, Acting Chief Director: Policy, DMR, explained how the DMR vetted potential buyers for financial and technical competence. The person/company who would take over presented information to the DMR. The DMR believed that the information was correct and, based on this information, the bid was approved. The section 11 procedure also incorporated information from the Competition Commission and the Reserve Bank. He conceded that Pamodzi had gone into liquidation within a year after receiving its licence, but, at the time of the application, the DMR believed that the information was correct and that it was able to continue with the business of mining. Only during the process was it shown that this was not the case.

Mr Schmidt said that Aurora Management was not only the preferred bidder, but was also the interim management company for the asset. The DMR had cancelled the rights of Central Rand Gold because their social and labour plan undertakings were not adhered to. However, these had far less impact on workers than the Aurora case. Somewhere along the line, the cancellation of rights was also a possible solution. If the DMR cancelled the rights there was little left except for scrap metal. If there was no purchaser for Grootvlei, the DMR might just as well cancel the rights. There was a case for arguing that the rights at Orkney had to be maintained, because there was an offer on the table. It could also be argued that there was not adherence to the social and labour plan undertakings. DMR could not shift the responsibility for living conditions to the DoL. If any company did not adhere to its social and labour plan undertakings, it could and should lead to the cancellation of mining rights. Somebody in the DMR should be able to say that if the living standards of the workers on the mine were not improved, the mine could lose its mining rights. It had happened in the past and it had to happen again if necessary.

Mr Sambatha said that the Minister must have cancelled the rights, and also auctioned them. In South Africa there was the possibility of a concessionary contract, but no mining licence should be approved until a prospective buyer agreed to adhere to the Minerals and Petroleum Resources Development Act (MPRDA) and the Mining Charter. He noted that some people saw mineral rights as an opportunity for self-enrichment, not as a developmental tool.

Adv Malebe added that section 56 of the MPDRA said that when the holder of the mining rights was liquidated or sequestrated, the rights ceased to exist and thus could not be cancelled. Section 22(5) however allowed the Minister to auction off the rights if there was a need. The Minister would look at all the possibilities, and publish a notice in the Government Gazette. If there was reason for the auction of mining rights, this could be done.

Mr Sambatha responded to the suggestions made by Mr Sonto and agreed that the loopholes had to be checked. There was a need to look at the way in which individuals operated their businesses. The rules had to change, so that when somebody applied for voluntary liquidation, the National Credit Regulator had to be involved, and the individual would then be blacklisted. He agreed that no individual should be allowed to fail in mining, and then still be allowed to operate another mine. The individual directors had to be blacklisted without a cooling-off period.

Mr Montisetse thanked the Members for endorsing the legislative amendments that NUM had proposed for the powers of liquidators. The liquidators had been given more powers. He pointed out that often liquidators wanted extensions, because they were allowed to sell off the assets of the company to get cash, but at present they would simply note that “some issue” needed to be resolved. If there were no regulations requiring specific tasks and a programme of action to be enumerated, he feared that liquidators would continue to enrich themselves at the expense of the suffering workers. The current extension had been influenced by the JPLs.

Mr Sonto said currently, the liquidators would approach the Master and say that they needed a certain amount of time to liquidate the company. NUM was saying that the liquidators had to be given a restricted time.

Mr Montistese said that the liquidators had to assess potential buyers for a company. If they accepted a company as a bidder, they had to check the company’s financial credentials, but this should be done within a specified period of time.

Mr Mphashele referred to an earlier question about involvement of MEAC, and said that MEAC and Aurora operated jointly as a venture to undertake care and maintenance. DoL and DRM did not have to accept companies that had transgressed the rules. He too urged that people who had committed criminal offences, at the expense of workers, should be charged.

Mr Mphashele said that NUM would be pleased if the money for pumping of water could be found. The mine was already flooding and the situation would worsen during the rainy season. He welcomed proposals by Members to resolve the issues.

Mr Du Plessis confirmed that workers were ranked as preferential creditors, and that Solidarity would put pressure on the JPLs to make sure the workers were paid first. He trusted that the Committee would assist the unions in that regard. He noted that whenever Solidarity tried to raise an issue with a government department, there was a lot of red tape to get through. He understood that due process had to be followed by government departments, but they needed to have more teeth. He noted that this was now the third end-of-year that employees were suffering, and agreed that in future stakeholders should agree on a timeframe, and auction the rights. The mines were losing value daily, and if they had been auctioned a year ago, it was likely that all creditors and employees would have been paid in full. He asked that, as soon as charges were laid, the Portfolio Committees on Police and Justice should be involved to oversee the process.

Mr du Plessis confirmed the status of the China African Precious Metals Company, noting that it was waiting for the Section 11 process to be concluded, to get its mining licence, and was also waiting for Reserve Bank approval for the deposit, and signature of the Union agreements, although Solidarity had some issues of concern.

Mr du Plessis noted the comments about cancellation of licences, but said the action did not stop there. Legal processes still needed to be taken, because losing a mining license was not punishment in itself.

Ms Bikane asked the DMR at which stage it would do its own inspection and assessment of the potential buyer, to verify the information supplied. She asked what preventative measures the DMR had in place to make sure that the Aurora situation did not repeat itself.

Adv Malebe replied that for every application submitted to the DMR, it went on a compliance inspection. Part of the inspection concerned an investigation of environmental liabilities. The new buyer had to commit to taking over the environmental liabilities, social issues and social labour plans, as well as the economics. At the point of takeover the DMR went on the compliance inspection to see what the new owner was taking over, and it was monitored from then on.

Ms Bikane said that the MPRDA and Mining Charter were in the process of being amended. She asked how quickly the DMR could react if it became aware of a problem.

Mr Schmidt said that he was not sure whether the clauses included anything about provisional liquidation, pointing out that provisional liquidation differed from final liquidation.

Adv Malebe replied that the DMR was working on amendments, having already identified some loopholes, including the need to review liquidations. When the rights were taken away, the owner was liquidated, and this created a gap between the department liquidating, and the DMR, with nobody wanting to take responsibility for the rights.

Ms Bikane hoped that Adv Malebe was going to say something about CAPM, and asked if there were proper measures to authenticate CAPM, and whether the grey areas giving rise to the Aurora problems were now eradicated.

Adv Malebe said that the DMR had not received the CAPM application yet. It would use the experience it gained in the Aurora situation when verifying the information on the buyer. The liquidators had told the DMR that they were busy finalising the deal. DMR did not have an official Section 11 application with a name as yet, but once it did, it would conduct due diligence.

Ms Bikane said that she was concerned about how effective the oversight of the Committee had been. There were already deals taking place, and she questioned how this could happen before credentials had been checked. In addition, she noted that labourers must be protected. She asked why there was a decision to invest in a mine with such serious environmental problems.

The Chairperson said that he had hoped that this meeting would close with clear recommendations, but it was clear that there was still work in progress, and the Committee would have to allow this to proceed to finalisation.

The Committee would investigate what the Companies Act said about people registering different companies under different names. The Committee also had to check whether the amendments to the Insolvency Act went far enough to address the situation. Employees were supposed to have preferent claims, but he wondered if the Act went far enough to address the Aurora situation. The Committee would also need to look again at the MPRDA.

The Chairperson noted that there were not specific timeframes. The Committee must wait for the processes to take their course. The Committee had engaged in this matter to prevent similar situations from occurring in the future.

The Chairperson told the unions that their negotiations with China African Precious Metals had to be much stronger, and they should look to CAPM’s international labour and human rights records, and its behaviour in other countries. The information that the unions presented to this meeting already raised alarm bells, because CAPM wanted the unions to deviate from worker rights enshrined in the Constitution. Whilst it was desirable to have foreign direct investment in South Africa, this should not be at the expense of hard won human and worker rights. There was the issue of due diligence that new owners would have to undertake. The value of R150 million could be less, resulting from the due diligence. It was up to the DMR to verify the credentials of CAPM to ensure that these were correctly stated, and whether it genuinely had an interest in the mining industry.

The Chairperson said that the Committee would await a further report from the JPLs and would then call all the stakeholders back, hopefully to conclude the issue.

The meeting was adjourned.

Share this page: