140 likes | 155 Views
A briefing on the developments and update in the crisis in Orkney and Grootvlei Mines, including lessons learned from the Aurora fiasco and suggestions for future liquidations.
E N D
BRIEFING ON DEVELOPMENTS AND UPDATE IN THE CRISIS IN ORKNEY & GROOTVLEI MINES THE LESSONS BEING LEARNT FROM THE AURORA FIASCO AND SUGGESTIONS FOR THE FUTURE IN LIQUIDATIONS
From Pamodzi to Aurora and CAPM • The briefing of 13 April 2011 is attached as part of this presentation for ease of reference • From our perspective, there has not been any significant movement since April 2011 as our members still remain unemployed • The only thing which has been consistent has been the stripping and the sale of the assets and no mining
From Pamodzi to Aurora and CAPM • Eight of our members were arrested in April 2011 for arson to a truck during a scuffle with Aurora during the illegal removal of the assets • Liquidators were not helpful as their view was that the members should not interfere on security matters in the mine • MEAC was contracted by liquidators to do care and maintenance but asset stripping is still continuing
Sections 417 & 418 Enquiry • Unions made presentations and led evidence on the conduct of Aurora management • Unfortunately, Aurora management is not cooperating in the enquiry and did not twice bring evidence and documents to the inquiry • Delays by Aurora directors is at a cost to the insolvent estate and to the detriment of creditors • The liquidators should apply the law to the letter in finalizing the inquiry
Orkney Mine • There is only an offer on the table for Orkney and nothing for Grootvlei • Orkney’s offer is at R150m from China African Precious Metals (CAPM) • R150m was expected to be transferred by October 2011 due to Reserve Bank’s exchange controls & approvals and we await to see what happens • CAPM is co-managing with MEAC in order to avoid the Aurora fiasco where Aurora was handed the mine and money never came
Orkney Mine • The R150m purchase price is subject to Asset Verification Record, meaning that the R150m would be less the replacement value of any assets which would have been removed/stripped after the purchase price was agreed upon • There is a draft Union Termination and Recall Agreement which parties are considering although we have serious reservations about its contents which are partly outlined below
Union Termination & Recall Agreement • To preserve the current mining rights, the agreement purports to invoke sections 189 (retrenchment for operational requirements) and 197 (transfer of contracts in insolvencies), which sections cannot be used at the same time • Agreement wants to de-recognise the union and cancel all existing agreements • The union must waive all rights of the members without any settlement of any claim
Union Termination & Recall Agreement • The only concession on recall procedure is that the agreement gives preference to Pamodzi’s employees although it initially preferred those of CAPM and its Affiliates and we would stand at the end of the queue • The union is obliged to accept the terms and conditions of employment of CAPM although we have not seen them • Generally, the unions’ hands are tight in relation to rights in a new employer in circumstances where all employees have been dismissed.
Legislative Intervention • There is a need for change of Insolvency legislation • Liquidators are powers unto themselves and the Master of the High Court’s role is reactive largely as a result of protest from the unions and public outcry • Liquidators’ reporting is unpredictable/erratic and they choose what and when to report and operate in a veil of secrecy • The state is not hands-on and has outsourced its role to liquidators and cannot safeguard its interests
Legislative Intervention • Unions and creditors are kept in the dark and only get supplied sifted information which does not help in decision-making like whether an investor is a fit and proper person with funding and correct business credentials • Liquidators act in their own interest and not those of creditors and the pay formula for them needs to be changed as it encourages a particular behavior of liquidators (percentages for cash, assets, etc)
Legislative Intervention (Solutions) • Stricter qualifications, rules and ethics regulating liquidators must be established • Reporting guidelines should be designed for liquidators such that creditors know what to expect from them • Reporting guidelines should include a business plan with a Programme containing month to month milestones which should be achieved, failing which penalties should be imposed on liquidators
Legislative Intervention (Solutions) • The State, unions and creditors should, on a quarterly basis, assess the reports of liquidators with a view of charting the next quarter’s programme of action • The State should design the minimum liquidator’s report content which should assist creditors and investors to make decisions • The Master should be able to remove a liquidator who fails to meet the minimum performance requirements • The corporate rescue provisions in the Companies Act, 2008, should be used proactively and not only as avoidance of payment of salary increases