TWO managers of a Chinese-owned South African gold mining company are fighting for their jobs and fear for their safety after blowing the whistle on R257m in alleged “irregular” and questionable spending.
Phillip Spencer, South Africa financial director for Heaven Sent Gold, the company that owns the Kopanang and Tau Lekoa mines, and his vice president for financial reporting, Stephanus de Koker, say their investigations uncovered R143.2m in “accounting irregularities”.
They stated this in a founding affidavit dated October 1 and filed with the Labour Court in Johannesburg.
According to the allegations, these “irregularities” were owing to “questionable transactions” entered into by Heaven Sent Gold South Africa CEO, Jeff Dong, chief operating officer Johan Jansen van Vuuren, and chief commercial officer, Mattheus Pieterse.
These deals were entered into between January this year, and August 25, Spencer and De Koker said.
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They also estimate that these company executives allegedly “misappropriated” R68m due to irregular spending and questionable decisions.
In addition, Spencer and De Koker identified a further R46m in alleged questionable spending that benefited Dong, Jansen Van Vuuren, and Pieterse.
Dong wrote in a responding affidavit, dated October 5, that Spencer’s and De Koker’s allegations were “false and baseless”.
He acknowledged, however, that Spencer had expressed reservations about Heaven Sent Gold South Africa’s financial position, and that Spencer had alleged that the company’s Tau Lekoa mine was “potentially at risk of reckless trading”.
In April, Miningmx reported that the jobs of up to 6,309 employees were on the line at Tau Lekoa and Kopanang gold mines, as well as the West Gold plant, all located in South Africa’s North West province.
Heaven Sent operates the mines through South African subsidiary, Village Main Reef (VMR). The company lost R700m last year and its liquidity prospects worsened after Heaven Sent called off a listing planned for the Hong Kong Stock Exchange in December.
The allegations follow a management purge at the company with the January ousting of Heaven Sent CEO, Owen O’Brien. Dong then took over as the CEO. He was previously a representative of the company’s main shareholder, the Heaven Sent Capital Group, headquartered in Hong Kong.
In February, after Dong became CEO, he made major changes to the company’s management.
Dong denied in the answering affidavit filed with the Labour Court that the new management of Heaven Sent Gold South Africa had attempted to sideline Spencer and De Koker.
Instead, it had attempted to implement managerial control over Heaven Sent Gold South Africa to address its dire financial situation, he claimed.
The manner in which Heaven Sent implemented the management changes came as a “complete shock” to the employees, according to another source close to the company who met with Miningmx.
Many VMR managers left the company after O’Brien’s departure, including those that Dong forced out, said another source.
Only five of the twenty VMR managers working at the company at the end of 2019 had survived the purge, the second source said.
Heaven Sent acquired VMR in June 2015 for R637m and delisted the company from the Johannesburg Stock Exchange. Then in 2018, the company bought the Kopanang mine and the West Gold processing plant from AngloGold Ashanti for R100m.
Spencer took his allegations of wasteful and irregular expenditure by Dong, Jansen van Vuuren and Pieterse to Michael Zhang, a director of Heaven Sent Gold South Africa, who lives in China.
Spencer said that Zhang had expressed concern about various aspects of financial and operational mismanagement and requested these allegations be committed to paper.
FRAUD, THEFT, TAX EVASION
In a letter to Zhang, Spencer alleged that there had been incidences of “serious mismanagement” at Heaven Sent.
The protected disclosure documents detail events that allegedly “may constitute illegal, irrational or unethical behaviour by the leadership and management of the company”.
“There was severe wrongdoing, fraud, theft, tax evasion at our company. The shareholder has taken no action to date. There are potential criminal charges here,” a source alleged.
Spencer and De Koker applied to the Labour Court in Johannesburg on October 1 for an urgent interdict against their employer from holding internal disciplinary hearings against them. The lawyers for Spencer and De Koker and the lawyers for the company appeared before acting Judge Sean Snyman on October 6.
Prior to the court hearing, the parties agreed that they transfer the disciplinary hearings to the Commission for Conciliation, Mediation and Arbitration in Klerksdorp where a commissioner would hear a pre-dismissal inquiry.
During a brief court hearing, Snyman sanctioned the draft court order to which the parties had agreed.