Harmony admits to concern over Khumalo's deal
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Empowerment may not have been achieved'
Financial Services Correspondent
HARMONY Gold said yesterday that in the light of corruption allegations hovering over its 2001 empowerment deal with Simane, the company may not have achieved broad-based economic empowerment as it had intended.
Harmony executive Ferdi Dippenaar was responding to reports carried by website Moneyweb alleging improprieties in the deal, including suggestions that mining magnate Mzi Khumalo hijacked the deal for his own ends, thwarting broad-based empowerment.
The Industrial Development Corporation (IDC) helped fund Simane's purchase of 6,8% of Harmony but it emerged only much later that Khumalo was a major shareholder in Simane.
Dippenaar said yesterday that on the basis of the reports "it does seem that in this instance, broad-based economic empowerment participation may not have been achieved. This is a concern to both ourselves and, I would imagine, for government as well," he said.
But Dippenaar said Harmony would take no action as it believed it achieved its aims of funding further company growth and allowing for empowerment participation in the company.
Dippenaar said Harmony was "definitely not" hoodwinked into the Simane deal. "If a few officials saw an opportunity to use a well-conceived idea for their own benefit, then there should be procedures to deal with that, but from our side we're comfortable that we did what we could," he said.
The Scorpions said yesterday they were considering whether to investigate two former IDC officials involved in facilitating the Simane transaction. The two, Mavungo Netshitangane and Andile Reve, were allegedly granted a R6m loan by Khumalo's Mawenzi Resources.
As Business Day reported previously, Netshitangane quit the IDC in a hurry after IDC official Eva Sam wrote a memorandum on October 9, saying "we have reason to believe serious corruption has taken place relating to one of the larger IDC financing deals".
IDC spokeswoman Neo Sowazi said Netshitangane's case was referred to the Scorpions, but Scorpions spokesman Sipho Ngwema said: "We are still looking at the information we have received to see if there is any basis for a full investigation. We have not yet satisfied ourselves in this regard. Bearing in mind that this kind of thing can affect someone's reputation, we expect to move fairly quickly to decide on whether to investigate the matter or not."
Minerals and energy department spokesman Kanyo Gqulu said it was up to the prosecution authorities to investigate. "But if it comes out that there was some criminal doing that detracts from the integrity of black economic empowerment in any of the deals in the mining sector, we have legal recourse," he said.
Khumalo is evidently abroad. His lawyer, David Hertz, said: "He has asked us to take legal action over the reports."
Jul 16 2003 07:47:58:000AM Rob Rose Business Day 1st Edition
Wednesday
16 July 2003
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