The Department of Public Enterprises (DPE) says it is still in the process of drafting a response to the questions posed by OFM News. 

The allegations come from the former Company Secretary of the Pooling and Sharing Joint Venture (PSJV) formed between Alexkor SOC and the Richtersveld Mining Company (RMC), Raygen Phillips, who officially stepped down from the joint venture’s management team in late August. 

The attorney by training says the placement of Lloyd McPatie – who was the then administrator of Alexkor SOC – as the chairperson of the joint venture’s board by Gordhan in September 2019 was an unequivocal contravention of the Unanimous Resolution (UR) between the state and the Richtersveld community. She says according to clause 15, 5,1 of Alexkor’s Memorandum of Incorporation (MOI), Gordhan “shall appoint three non-executive directors of the Alexkor board to the PSJV board.  McPatie has never been appointed as a non-executive director of Alexkor,” she explains.

If it is found that Gordhan did indeed err in this placement, then the decisions made by the board since September 2019 can be deemed null and void. The decisions include the ousting of PSJV Chief Executive Officer (CEO), Mervyn Carstens.

Furthermore, the PSJV board, aka the joint board, is supposed to be made up of three RMC representatives and three Alexkor SOC representatives. It is alleged Gordhan "indicated on McPatie's appointment letter that he will occupy three seats on the joint board - in his capacity as administrator and chairperson. This meant McPatie on his own effectively represented half of the PSJV board during his tenure as administrator from September 2019 up until February 2020. Phillips says again this is unlawful because, in order for the PSJV board to be constituted, there have to be three Alexkor SOC representatives and three RMC representatives. For a quorum to be met there has to be a minimum of two members from each side of the joint board at a meeting. The former Company Secretary asks “how does one person represent three”?

Carstens has already won his bid, challenging his suspension thus far. On 25 September, the Commission for Conciliation, Mediation and Arbitration (CCMA) ordered Alexkor to cough up over R3,2 million which is the equivalent to a year’s salary. The scathing award by Commissioner Chitane Soza chastises Alexkor for failing to adhere to its own disciplinary code when suspending Carstens. The CEO says nothing was communicated to him regarding disciplinary proceedings, prior to the date of his suspension. In fact, he was only notified of his suspension while representing the PSJV at the Mining Ndaba in Cape Town in early February.

He further added that he wasn’t afforded an opportunity to address the allegations that were levelled against him, mainly by irate sub-contractors whose contracts with the diamond miner had not been renewed as outlined in the auditing report by Gobodo Forensic and Investigative Accounting. Soza found that Carstens’ suspension was punitive and did not serve any purpose, it further contradicted the Alexkor RMC JV’s own disciplinary code and due to its sheer unfairness, it had a “detrimental impact on the applicant and has prejudiced his reputation”. Former Finance Manager at the PSJV Frederick Strauss has in a separate interview echoed Phillips’ assertion. Strauss, like the former Company Secretary, also stepped down from his managerial position as the situation at the mine deteriorated from a governance perspective.

Meanwhile, Alexkor’s terminated contract with the alleged Gupta-linked company, Scarlet Sky Investments (SSI), is also garnering controversy. The sales and marketing contract came under scrutiny in the #GuptaLeaks series by the Mail and Guardian’s Amabungane and the Daily Maverick’s Scorpio teams in 2017. The forensic report by auditing firm, Gobodo, initiated in 2019, found the contract which was awarded in 2014 and renewed in 2016 for a five-year period, to be irregularly awarded by the joint board.

The OFM News team is in possession of a letter from Hector North Inc Attorneys, on behalf of Scarlet Sky Investments (SSI), which confirms word on the ground that the relationship between the respective parties has soured. In it, the law firm says “the agreement entered into by and between you and our client on 6 October 2016 remains of full force and effect and our client requires compliance with the terms of the agreement”. Hector North Inc further chastises Alexkor for informing subcontractors of the termination, “we understand that you have advised the land, beach, shallow and marine mining contractors that you have terminated the agreement with our client. Your conduct is unlawful and the agreement has not been lawfully terminated and remains binding”.

Hector North Inc Attorneys has declined to comment on the matter to OFM News, stating in an email responding to questions, that they “are not authorised to comment on the contents of the email under reply”.

OFM News