Crime still unpunished
Why has it taken so long to reclaim the stolen Kebble billions?
‘‘ IN JUNE 2006, WE KNEW A WHOLE LOT OF MONEY WAS STOLEN AND GIVEN TO WESTERN AREAS. YOU KNEW THAT 10 YEARS AGO FORMER R&E DIRECTOR JOHANN BLERSCH
There are those who choose to fool themselves that the corporate sector is an island of accountability in SA’s otherwise lawless high seas.
But consider SA’s largest corporate fraud.
More than a decade after the silver-tongued Brett Kebble and his accomplices pilfered more than R2bn from Randgold & Exploration (R&E) to pay off politicians and prop up his other firms, exactly no-one has been jailed.
Kebble was gunned down on a highway overpass in September 2005, weeks after stepping down as CEO of R&E, JCI and Western Areas. But the grand total that R&E has wrangled from his estate is a relatively measly R46m.
Little wonder that two weeks ago, a few fiery R&E shareholders vented their anger at the company’s AGM in Sandton’s Michelangelo Hotel.
“It’s not right that the biggest fraud SA has ever seen goes unpunished,” said Johann Blersch, a former R&E director, who was voted off the board in 2007.
Blersch is probably angrier than most. Nine years ago, he was voted out after asking rather uncomfortable questions about how banking group Investec had ensured it was repaid money it had lent to R&E, before anyone else. But his axing wasn’t a surprise, considering Investec’s David Nurek chaired R&E then.
Now Blersch was in the audience, putting R&E CEO Marais Steyn on the spot.
Blersch’s question was simple: why hadn’t the company done more to recover the pilfered cash? And why hadn’t it pursued the people who stole it?
True, three of the beneficiaries — Kebble, his father Roger, and former financial director Hennie Buitendach — have since died. But the stolen cash also ended up in two other former Kebble companies: JCI and Western Areas, which was swallowed by Gold Fields.
Steyn replied that R&E was intent on pursuing Gold Fields, based on a summons of R11.4bn it issued against Nick Holland’s company back in 2008. (It could be a lot more: it would cost Randgold R33bn to replace the stolen shares using the legal principle of condictio furtiva.)
But why, Blersch asked, had it taken a decade to act? “In June 2006, we knew a whole lot of money was stolen and given to Western Areas. You knew that 10 years ago,” he said.
Steyn replied that R&E’s strategy was to first get a settlement from the company’s auditor, PwC, before pursuing other claims. PwC settled only in 2014, paying R150m without admitting liability.
PwC got off lightly. The auditor had signed off R&E’s financials, which incorrectly said it held R5.4bn in shares that Kebble had long since sold. Just one of those assets — shares in Randgold Resources — would cost R33bn to replace today.
“We thought [the PwC claim] was the easiest victory to be had, and it would arm us for the Western Areas case. We couldn’t do everything at the same time,” said chairman David Kovarsky.
But the problem for Steyn is that Gold Fields will, in turn, look to JCI for the stolen money. And in 2010, R&E gave JCI an indemnity “in respect of all claims which may be made by third parties against a JCI party”, which will essentially “reduce the amount recoverable by an R&E party from the third party”.
In other words, as Blersch said after the meeting, it’s a vicious circle. “Much of the proceeds from the sale of stolen shares went to Western Areas, the only asset-rich entity in the Kebble empire. But that indemnity neuters our largest and most valuable claim almost entirely. Gold Fields Operations will pass the buck to JCI, and R&E will then (be on the hook). It means our biggest asset, the legal claim, is worthless.”