The mine will be operated by Liberty Coal, controlled by former Gupta associate Daniel McGowan. From Moneyweb.
The storied history of Optimum Coal Mine (OCM), once the most prized trophy in the Gupta family’s portfolio of state capture assets, continues; it is about to exit business rescue after six agonising years of court bust-ups and near-death experiences.
Six years after being placed in voluntary business rescue, control of the mine will pass to Liberty Coal, controlled by British businessman and former Gupta associate Daniel McGowan.
This follows an approach to the court by the National Prosecuting Authority (NPA), Liberty Coal and others for an expedited forfeiture hearing, which would allow Liberty Coal to pay R461.7 million to the state, without admitting liability, thereby neutering the NPA’s claim that Gupta-controlled Tegeta Exploration & Resources had purchased Optimum assets with the proceeds of crime.
In March 2022, the NPA won a preservation order against Tegeta and its roughly R3.4 billion worth of shares in OCM and the Optimum Coal Terminal at Richards Bay on the grounds that it was acquired through corruption. This was the largest preservation order in SA history.
The rescue of OCM was anything but smooth. There were multiple attempts by creditors to liquidate it, and Gupta proxies were never far from the fray.
It seems somewhat astonishing that the NPA signed off on the deal giving Liberty Coal control, though this seems to have been the path of greatest expedience for reviving the mine and restoring the jobs of thousands of workers.
Less than two years ago the NPA led evidence in court that funds provided to McGowan’s company were derived “from money stolen from the South African government”.
Liberty Coal is a subsidiary of McGowan’s Templar Capital, which is the single largest creditor in OCM, having acquired its R1.3 billion claim via a cession of another company in which McGowan is director, Centaur Ventures.
Liberty Coal’s agreement to pay the forfeiture settlement of R461.7 million to the state removes the potential for confiscation of property under the Prevention of Organised Crime Act (POCA).
Of this, R100 million will be paid immediately, and the balance over two years. All funds will be overseen by an independent administrator and will be distributed to eligible creditors, reads a statement by Liberty Coal.
The Gupta’s acquisition of OCM was born of original sin, having been purchased with funds advanced by Eskom and others.
The mine was then asset-stripped, so that miners were sent underground without proper safety gear and hoisting cables were allowed to atrophy for want of proper maintenance.
The attorney representing the business rescue practitioners, Bouwer van Niekerk, tells Moneyweb that Liberty Coal’s was the only offer of substance on the table, and that the business rescue plans, once implemented, mean the mine assets will be able to operate unencumbered by debt for the first time in recent history.
“This is the most practical solution we have to get the mine out of business rescue and operating once again,” he says.
This is quite a turnaround for Liberty Coal, whose claim was initially rejected by the business rescue practitioners (BRPs).
The NPA expressed its concern at the BRPs’ use of contract miners to work what were called mini-pits to create cash flow to keep the mine functioning and to stave off possible liquidation.
Once OCM exits business rescue, Liberty Coal will take control of the mine from the contract miners.
Not ‘an admission’
In a statement issued last week, Liberty Coal says the high court settlement was concluded purely for commercial reasons and should not be construed as an admission of guilt or liability for wrongdoing by the company.
Ulrich Bester, director of Liberty Coal, states that the settlement agreement was motivated by mutual concern over the economic impacts of ongoing litigation on the mine, as well as its employees.
It is widely acknowledged that the value of the mine has been gradually destroyed since OCM was placed into business rescue in 2018, as it was the victim of theft and looting while under care and maintenance, which damaged vital infrastructure and stripped the mine of its assets.
“Additionally, while OCM retains its linked entitlement to export coal via Optimum Coal Terminal’s (OCT) shareholding in Richards Bay Coal Terminal, OCM’s export allocation has been suspended until the finalisation of the forfeiture proceedings and the implementation of the OCM and OCT business rescue plans. This has left the mine with little income,” says Bester.
“Settlement was the only option to save jobs and protect the future of OCM for the benefit of its creditors, its workers, and the greater Hendrina community who rely on the mine for their livelihoods.”
Griffin Line application dismissed
The Pretoria High Court also dismissed an application brought by Dubai-based Griffin Line General Trading LLC to intervene in the forfeiture application with the aim of postponing the settlement order.
Griffin Line is a Gupta-controlled company and was suspected by the National Director of Public Prosecutions (NDPP) of using funds stolen in SA for the purchase of Optimum.
The NDPP’s forfeiture settlement is in large part the result of its inability to secure the cooperation of the United Arab Emirates (UAE) in tracing the flow of funds into, and out of, Griffin.
The same UAE that has so far refused to extradite or to charge the Guptas for crimes of which they are accused in SA.