Aurora and the Grootvlei Gold Mine Pollution
Since February 2017, OUTA has lobbied for the directors of Aurora Empowerment Systems to be prosecuted for the environmental damage caused while Aurora owned Grootvlei gold mine near Springs
We want to see the Aurora directors prosecuted for environmental damage
Aurora Empowerment Systems ran the Grootvlei gold mine near Springs from October 2009 to May 2011. When they took over, it was a working mine. When they left, the mine had collapsed, 5 300 employees had lost their jobs, the equipment had been looted, there was uncontrolled pollution of the nearby water systems which the mine drained into. Nobody has been prosecuted in connection with any of this. OUTA pressured the state to pursue environmental charges, as it's easier to bring a private prosecution on this if the state declines to prosecute. However, OUTA would like to see the Aurora directors held to account for the collapse of the business and the way the employees were treated.
In February 2017, OUTA started lobbying the National Prosecuting Authority (NPA) to prosecute the directors of Aurora Empowerment Systems on environmental charges relating to the pollution from Grootvlei gold mine of the nearby water systems.
The Aurora directors are Khulubuse Zuma, Zondwa Mandela, Thulani Ngubane and Raja Zainal Alam Shah.
Zuma, the Aurora chair, is the nephew of former President Jacob Zuma; Mandela, the Aurora MD, is Nelson Mandela’s grandson; Ngubane was an executive director; and Shah was an executive director based in Malaysia who was supposed to provide $100m in financing.
Aurora was in charge of Grootvlei gold mine near Springs from 15 October 2009 to 26 May 2011 and, during this time, the mine was looted resulting in uncontrolled pollution of water sources by acid mine drainage (AMD).
The charges
In November 2018, the NPA confirmed to OUTA that it had decided to prosecute offences in terms of the National Water Act. “The decision was taken to institute the prosecution herein against those responsible, at this stage only on contraventions of the relevant environmental legislation,” the Gauteng DPP wrote to OUTA.
The decision to prosecute was made in September 2018.
An NPA document says those to be prosecuted are Zuma, Mandela, Ngubane and Alam.
Businessmen Solly Bhana and Fazel Bhana (who arranged the funding for Aurora’s purchase of Grootvlei) and attorney Michael Hulley (Jacob Zuma’s former lawyer, who was briefly an Aurora director) are not among those to be prosecuted.
The NPA plans to prosecute the four on five offences under the National Water Act: unlawful water use; failure to comply with conditions of a permitted water use; failure to comply with a compliance notice; pollution of a water source; and detrimentally affecting a water resource. The Act says a first conviction on these may result in a fine or a sentence of up to five years or both; a claim for damages may be brought against those convicted.
Aurora Empowerment Systems was in charge of Grootvlei gold mine near Springs from 15 October 2009 to 26 May 2011.
2006 to 2009: Grootvlei mine near Springs in eastern Gauteng and Orkney mines in western Gauteng were owned by the Pamodzi group, until it went into liquidation in 2009 and the Aurora group took over.
February 2009: During February 2009, Khulubuse Zuma, Thulani Ngubane, Solly Bhana and Fazel Bhana met to discuss going into business together. Bhana was to provide the funding.
May 2009: Jacob Zuma inaugurated as President, arising from the April 2009 election. His first Cabinet, appointed the day after his inauguration, included Minister of Mining Susan Shabangu, and Minister of Water and Environmental Affairs Buyelwa Sonjica.
19 May 2009: The Department of Water Affairs issued The Grootvlei Proprietary Mines Ltd with Water Use Licence No. 20018320, which department officials said “authorised the mine to remove, treat and discharge water found underground for efficient continuation of mining and for the safety of people”. This licence was issued while Grootvlei was still owned by Pamodzi and under provisional liquidation.
18 June 2009: Khulubuse Zuma, Zondwa Mandela and Thulani Zwelihle Ngubane were appointed as directors of Aurora Empowerment Systems. Raja Shah was a director from November 2009 to August 2011, and Michael Hulley (Jacob Zuma's legal advisor) was a director from January to August 2011.
27 July and 1 October 2009: Aurora Empowerment Systems made written offers to buy the mines, offering R200m for Orkney and R350m for three East Rand mines (Grootvlei, Modderfontein and Nigel mines) with a promise of further funds for development and backing from Malaysian funders including Shah.
15 September 2009: Aurora took over the Orkney mines.
15 October 2009: Aurora took over the eastern Gauteng mines: Grootvlei, Consolidated Modderfontein and Nigel mines. While the Aurora offers were to buy the mines, Aurora was contracted by the Pamodzi liquidators to manage the mines in terms of an Interim Trading and Contract Mining Agreement until the sales could be finalised, with Aurora responsibilities including paying employee salaries, electricity and water bills, insurance premiums, security, maintenance of slime dams and pumping of water. However, Aurora's funding to buy the mines never materialised. In June 2015, the Pretoria High Court Aurora’s was scathing about Aurora's situation as a prospective mine owner, saying that Aurora was hardly doing any business when it put in the bids, it had no experience of mining, it had no capital at all other than R15m borrowed from the Bhanas’ family and friends, was unable to invest in any venture, was already insolvent when it submitted the second bid in October 2009, its directors’ approach to the financing “demonstrates a surprising lack of acumen, insight or care”, they claimed to have international funding but couldn’t produce any paperwork, and had committed Aurora to spending R550m to buy the mines “without the company having a single cent to its name”.
November 2009: The Department of Mineral Resources twice ordered Grootvlei to cease operations due to safety concerns after two fatal accidents; the directors used their political connections to overcome these instructions.
December 2009: By now, payments to the 5 300 workers were erratic and by
March 2010: The Aurora directors had stopped visiting the mines and the mines were put into care and maintenance. Aurora also failed to pay electricity bills, security, insurance premiums. Sometime during Aurora’s tenure, the mines were looted of assets, a loss which the Pamodzi liquidators later valued at R1.7bn, and proceeds from gold sales estimated by the liquidators to be worth R112m went missing. The assets removed included mine headgear and the pumps and equipment for dealing with the acid mine drainage; much was allegedly sold as scrap metal.
March 2010: The Pamodzi liquidators asked Aurora to explain reports in the media about polluted water being dumped in the Blesbokspruit and a raid on Grootvlei by environmental enforcement authorities.
April 2010: The Portfolio Committee on Mineral Resources discussed the situation at Grootvlei. The committee heard that rising water levels were a hazard, conditions in hostels were deteriorating, the workforce remained unpaid, and mining had halted. At this committee meeting, the Department of Mineral Resources referred to Aurora as managing Grootvlei and were apparently not aware that Aurora intended to buy it.
25 May 2010: The Department of Mineral Resources issued a directive to Grootvlei mine over the pollution of the Blesbokspruit with untreated polluted water from underground workings. This refers to site previous directives on 13 April 2007, 5 February 2009 and 8 April 2010, and inspections on 21 August 2009 and 13 May 2010. The directive orders immediate rectification of the quality of water being discharged, the submission of the biannual performance assessment and revised financial statements for mine rehabilitation, which “quantify all the environmental cost and further provide financial provision to cover the shortfall”.
20 July 2010: The Department of Water Affairs outlined the national situation on acid mine drainage to the Portfolio Committee on Watern and Environmental Affairs. The department called AMD “the biggest environmental challenge ever”, saying it was largely associated with gold and coal mining, with derelict mines decanting AMD and becoming the state’s responsibility. The department outlined the situation in Gauteng’s Eastern Basin (one of four Gauteng basins): “Grootvlei is the last mine pumping from the Basin”; the water level was 700m below the surface; the mine’s financial problems resulted in failure to meet the licence conditions; effluent was contaminating a Ramsar wetland ; the pumping station could be flooded in 30 days if pumping stopped; decanting would then probably result in Nigel; and the department had taken legal action. The department said when mines were classified as derelict and ownerless, they may become the responsibility of the state. The department said it had proposed a public-private partnership, funded by government and mines, to pay for infrastructure for pumping and water treatment; it said a new or existing state agency would be required.
27 July 2010: The Portfolio Committee on Water and Environmental Affairs undertook an oversight visit to Gauteng, Mpumalanga and the North West to assess the acid mine drainage problem. A report on this was filed in Parliament. The committee found that the mine could not keep up with the water discharge standards of its water licence, the mine claimed it no longer received its Department of Mineral Resources subsidy of R5 million and had spent more than R100 million in pumping costs. The committee found that the Department of Water Affairs had laid criminal charges against Grootvlei over unlawful water use activities and for releasing contaminated water into the surrounding water course.
August 2010: The Department of Labour briefed an NCOP committee on Grootvlei. The department’s briefing included: there had been problems with paying workers since December 2009; the department was working on claims against Aurora on behalf of the workers; Aurora had deducted UIF payments from workers pay but failed to pay these over; the living conditions at the mine were appalling, including lack of sanitation and water.
December 2010: A report by 26 experts to the Inter-Ministerial Committee on Acid Mine Drainage raises concern about the AMD situation in all three Gauteng basins, including the uncertain pumping situation at Grootvlei in the Eastern Basin. At the time, Grootvlei was the only mine in the Eastern Basin which was pumping. The experts called for urgent action, including securing the pumping capacity in Grootvlei and returning the treatment plant to service.
January 2011: Trade union Solidarity warned that only three of Grootvlei's 10 pumps were still working, leading to flooding of the mine, and fears for miner safety and of ecological disaster.
24 January 2011: Aurora Empowerment Systems went into provisional liquidation which was finalised in October 2011.
11 February 2011: The then liquidator Enver Motala told the media that the Grootvlei pumps had been removed for repairs, which could cost up to R30m. He said flooding could be contained for up to six months and “in one or two months the situation will be returned to normal”. It was reported that all pumping had halted a week earlier and the mine was flooding, rising about 0.4m a week. It is understood that the pumps were never replaced, leaving Grootvlei permanently closed, the workers unpaid and desperate, and an unresolved acid mine drainage environmental problem in Gauteng’s Eastern Basin. Water must be both pumped out of the mines and treated before discharge. Both these systems failed.
April 2011: The Portfolio Committee on Mineral Resources was again briefed on Orkney and Grootvlei. The Solidarity union told the committee that Aurora had destroyed two functional mines (which had produced 504.56kg of gold from October 2009 to mid-March 2010) and 5 300 jobs, deducted UIF, PAYE, union subscriptions, pension/provident fund payments and garnishee orders from workers’ pay but had not transferred these to the relevant organisations, it was not registered with SARS, it provided no death or disability cover for workers, it owed service providers millions of rand, various shafts were flooded or destroyed, wetlands were polluted, water pumps had been removed and workers were owed more than R12m. Photographs showed mine headgear completely removed, leaving gaping open shafts unprotected. The National Union of Mineworkers (NUM) said it had opposed Aurora’s involvement in the first place as it had no mining experience, and had been “enticed by the due diligence report that shown a lot of ore depost which were lying in boxes underground”. The union described the desperate situation of the unpaid workers, the Aurora failure to hand over deductions to the appropriate authorities and the collapse of the mine. NUM blamed the “consistent looting of the mine assets” on Aurora management and the then liquidator Motala (Motala was later removed by the court).
The Department of Labour told the committee of Aurora contraventions of labour laws and described actions which resulted in some of the wages being paid. The Department of Mineral Resources told the committee that Grootvlei used to pump 110 megalitres a day. It had applied for a pumping subsidy but did not meet the criteria, as this was only for operational mines, “critically marginal” mines or mines in financial difficulty or short-term crisis. The department said Aurora should not have built this subsidy into its cash flow projections. Aurora officials told the committee that the Pamodzi liquidators and their financial advisor Standard Bank had been satisfied with Aurora’s credentials. Aurora said the acid mine drainage was an inherited problem and the Department of Water Affairs was supposed to subsidise the pumping, but suspended the subsidy when it went into maintenance as this was only for fully operational mines.
May 2011: The Master of the High Court initiated an inquiry into the Pamodzi liquidators and removed liquidators Enver Motala and Gavin Gainsford. The remaining Pamodzi liquidators cancelled the arrangement with Aurora.
June 2011: The Labour Court issued an order in favour of the workers over payments.
29 June 2011: The Master of the High Court ordered an inquiry into the Pamodzi liquidation in terms of section 417/418 of the Companies Act.
29 September 2011: Aurora’s affiliate, Kaunda Global Mining Resources, trading as Aurora Gold East Rand , went into liquidation. The final liquidation was on 1 November 2011.
4 October 2011: Aurora Empowerment Systems was finally liquidated.
October 2011: The Department of Labour declared the mine not operational, enabling workers to qualify for UIF benefits. However, it’s not clear if the legally required mine closure certificate was ever issued; this certificate is needed to legally unlock environmental rehabilitation funds.
27 October 2011: The Portfolio Committee on Mineral Resources heard of ongoing chaos at Grootvlei from both unions.
“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… 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 install pumping solutions, within the next few months. Solidarity claimed that about R27 million was made out of gold recovery so Aurora must have assets,” said the committee report.
April 2012: Grootvlei was sold to Gold One for R70m; the buyers intended to abandon the flooded shafts and prospect on new ground.
29 May 2012: The National Union of Mineworkers briefed the Portfolio Committee on Mineral Resources on the Pamodzi/Aurora matter, complaining that the information was always a closely guarded secret. “The workers are powerless under the pretext of confidentiality of business transactions,” said NUM. The union called for the Insolvency Act to be amended to allow workers to be first to be paid in insolvencies and for directors and owners of liquidated mining and construction companies to be barred from operating similar businesses for a decade.
18 November 2013: Based on the Master's Section 417/418 inquiry report on Aurora, the Master referred the matter to the National Director of Public Prosecutions and the NDPP confirmed there was a prima facie case for prosecution. The report was referred to the Special Investigating Unit in February 2014; however, the SIU required a proclamation to proceed with the investigation.
June 2015: The financial claims on behalf of the workers and other creditors were pursued over the years by unions and liquidators. In June 2015, the Pretoria High Court ruled in action by the Pamodzi liquidators that Aurora directors Zuma, Mandela, Thulani Ngubane and Aurora associates Solly Bhana and Fazel Bhana were personally liable for damages; the damages were to be finalised but the claim was for R112m in proceeds from gold sales and R1.7bn for depreciation and loss of assets. While the Aurora directors claimed that it was thieves who stripped Grootvlei of assets, the court said the assets disappeared on Aurora’s watch, which made them liable. This judgment found that Mandela, Ngubane and the Bhanas were “guilty of wilful deception by presenting the bid documents containing numerous false assertions” to the Pamodzi liquidators to buy the mines, and “guilty of reckless management of Aurora’s affairs”, and thus jointly personally responsible for all Aurora liabilities. The court found that Zuma was not involved in the negotiations to buy the mines but “must have known” of Aurora’s subsequent difficulties and was thus also jointly personally liable for all losses after 1 December 2009.
August 2018: After years of demands by unions, payments to former employees finally started in August 2018.
28 September 2018: The Gauteng Deputy Public Prosecutor formally decided to prosecute Khulubuse Zuma, Zondwa Mandela, Thulane Ngubane and Raja Alam on environmental transgressions in terms of the National Water Act.
November 2018: The NPA confirmed to OUTA that it had decided to prosecute offences in terms of the National Water Act. “The decision was taken to institute the prosecution herein against those responsible, at this stage only on contraventions of the relevant environmental legislation,” the Gauteng DPP wrote to OUTA.
28 April 2019: The Aurora directors appeared for the first time in the Springs Magistrate's Court. The matter is heard there, as this is the jurisdiction under which the Grootvlei mine falls. Those who appeared are Khulubuse Zuma, Zondwa Mandela and Thulani Ngubane. The state was unable to find the fourth accused, Raja Zainal Alam Shah. The accused were released on bail.
February 2020: The case was removed from the court roll, as the state was not ready to proceed.
Sources
Much of this information is from these sources: the Pretoria High Court judgment of 25 July 2015 in the case brought by the Pamodzi liquidators against Aurora; the February 2017 report on Grootvlei by Tracey Morton McKay and Milton Milaras; and the reports and discussions of Parliament’s Portfolio Committee on Mineral Resources and the Portfolio Committee on Water and Sanitation.
Since February 2017, OUTA has lobbied the National Prosecuting Authority (NPA) to prosecute the environmental case against the Aurora directors.
In November 2018, the NPA told OUTA it would prosecute.
On 28 April 2019, the Aurora directors appeared for the first time in the Springs Magistrate's Court. The matter is heard there, as this is the jurisdiction under which the Grootvlei mine falls. Those who appeared are Khulubuse Zuma, Zondwa Mandela and Thulani Ngubane. The state was unable to find the fourth accused, Raja Zainal Alam Shah.
The accused are out on bail.
However, in February 2020, the case was removed from the court roll, as the state was not ready to proceed. OUTA has asked the NPA what happened and what the future of the case is as, if the NPA declines to prosecute, OUTA would like to take this on as a private prosecution. OUTA has written to the NPA but has not yet received clarity on what happened. OUTA's letters can be found here.
Aurora took over Grootvlei as a working gold mine but left it derelict, leaving thousands jobless and ongoing pollution of water sources
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