The Kebble Story Slush Funds

Scam of the century

For all his apparent loyalty to gold, Brett Kebble was a man of paper, a man dragged by his paper creations into a vortex of debt. How differently things might have turned out had he stuck to gold, a quiet life in the suburbs and a modicum of recognition.

The creation of Kebble’s huge and fragile pits of vapour started as early as
30 June 1997, when a JSE-listed entity, New Kleinfontein Properties (NK Props),
issued 244 million shares to Consolidated Mining Corporation (CMC).* This
transaction, with its dramatic provenance, was the toxic fountainhead that would
taint every moment of Kebble’s business career.

The shares were issued at 600 cents each, computing to a value of R1.5 billion.
For one brief shining moment, due to a single transaction that rates as the biggest
South African confi dence trick of the twentieth century, Brett Kebble was a paper
billionaire.

This was a defining deal for Kebble for other reasons as well. NK Props would
soon change its name to Consolidated African Mines (CAM) and later morph into
JCI Ltd, to be listed under the JSE code of ‘JCD’, as opposed to the original JCI,
which carried the eponymous ‘JCI’ code.

The 1997 transaction not only allowed Kebble to hijack the original JCI, but also marked the start of his full-time and flagrant abuse of investor cash through slush funds.
There is no easy defi nition for a slush fund, but it may be seen as the fi nancial
equivalent of guerrilla warfare waged by an entire army division. There was already huge mischief behind the 1997 transaction.

During 1996, Kebble had added many millions of rand to his personal wealth as a member of the
cabal of directors at Randgold & Exploration who had talked up the company’s
stock price. This phenomenon, in turn, surfed on the bubbles whipped up around
Randgold & Exploration subsidiary Randgold Resources, which for its part had
surged on the rising tide of the Bre-X apocalypse.

In March 1997, global markets had the fi rst hint of what would eventually crystallise into the incontrovertible truth that Bre-X’s Busang deposit in Indonesia was an utter fraud. Gold stocks, and
especially so-called juniors and exploration stocks, tanked. Randgold Resources was battered after its listing in London, dragging Randgold & Exploration’s stock price down by around 90 per cent from its 1997 high. By this time, of course, Kebble had taken his money and run. Riding solo and in total control so as to avoid sharing his ill-gotten gains with anyone, he was conducting the series of transactions that allowed him to hijack JCI.
Kebble had sold his Randgold & Exploration shares to CMC, a company also
listed on the JSE and one that he already secretly controlled. In this manner, Kebble
listed his own little fortune, which he had made within months. The technique,
known as a reverse listing, is hardly rare and is referred to by some investors as the
materialisation of an asset.

Essentially, a listed vehicle is used to execute the business model that its originators had in mind. In Kebble’s case, instead of holding stock in Randgold & Exploration, he held stock in CMC, which in turn held stock in Kebble’s original Randgold & Exploration holding.

These early career moves graphically illustrate Kebble’s obsession with control.
He didn’t control Randgold & Exploration, but he secretly controlled CMC and NK
Props. When NK Props issued shares to CMC, Kebble was simply issuing shares
to himself.

Showing utter contempt for rules of corporate governance, and even greater
disdain for the fi duciary duty of directors, with fl agrant disregard for confl ict
of interest, NK Props bought CMC from Kebble for R1.5 billion. It was a paper
transaction from start to fi nish. Nothing was done about Kebble issuing shares to
himself, and it is likely that nothing ever will be.

There is no evidence that anyone else had the vaguest idea of what was going on at the time, and given the chaos generated by the collapse of the original JCI in the midst of a slumping gold price,
this is hardly surprising. There were keen, if not desperate, sellers of the original
JCI, and in the early stage of Kebble’s Roman candle career, he carried the highest
tag of credibility he was ever to enjoy. Some sellers might even have regarded him
as a momentary paragon of business beauty.

Kebble’s strategy was premised on the simple sales pitch of rescuing the original
backers of the sale by Anglo American and De Beers of a controlling stake in the
old JCI to the African Mining Group (AMG). It had been marketed as one of the
biggest BEE deals during a period when chaos allowed Kebble to deploy his talents
as a scam artist to a degree that he would never exceed or even equal.

To confuse the issue just a little more, there was yet another unlisted entity involved – BNC
Investments, which supposedly controlled the Kebble ‘family fortune’, though in
reality it appears to have been of no consequence.

Ownership of 244 million shares in the new JCI gave Kebble close to 50 per cent
control. Furthermore, in the space of about 12 months, Kebble’s apparent value
had grown from little more than zero to R1.5 billion, at least on paper. Apart from the early use of slush funds, the June 1997 deal was classic Kebble in that it involved the vending of totally overvalued shares – in this case in NK Props – with Kebble as the benefi ciary. The deal was rare to the extent that buyers of the overvalued shares would normally have been found among the broad investment fraternity, as was the case when Randgold Resources listed in London around the same time.

In the NK Props deal, however, Kebble was on both sides and no cash changed hands.
In other deals involving outside parties, Kebble would look to mop up cash, not
paper. In his truly amazing Walter Mitty world, Kebble owed nobody, and the rest
of the world owed him cash.

The general fi nancial climate at the time unquestionably contributed to Kebble
being able to successfully stage such a monumental con. Apart from exploiting the
market chaos as the gold price tanked, Kebble leveraged every possible detail to his
advantage. He networked to maximum effect.

He fronted the suspect transaction by enticing a number of important names to the board of what would become the new JCI. The chairman was no less than Mzi Khumalo, head of AMG and boss of
the newly acquired old JCI, the very entity that Kebble was hijacking. Directors of NK Props included John WG Mackenzie, Alan Bruce McKerron (from the Anglo American stable), Ronald Kort Netolitzky and Jens Eskelund Hansen (both Canadian). Kebble was the CEO, of course, fl anked by his faithful second fi ddles: Hennie Buitendag, Roger Kebble and Paul Ferguson. Within a year
of securing control of the new JCI, Kebble had booted out all the unsuspecting front men he had used for his successful corporate coup, leaving the fi eld clear for even more of his cronies to take their seats in the boardroom.

John Stratton became a director in 1998, and Charles Cornwall replaced Ferguson
in 2001. From then on, JCI’s board members and Kebble’s inner circle were one
and the same. His father, Buitendag, Stratton and Cornwall allowed Kebble to do
exactly what he wanted, when he wanted and how he wanted. As long as he was not
caught out, Kebble could run the new JCI as if it were his personal salon privé, and
Buitendag’s creative fi nancial engineering ensured that the books would always
balance. It was he who kept the auditors happy.

A major consequence of Kebble issuing JCI shares worth R1.5 billion to himself
was that the new JCI acquired CMC, which would be used as one of his prime
slush funds. CMC was delisted shortly after acquisition, and its accounts effectively
disappeared from the public domain. They could be accessed only after considerable
effort by the relevant authorities in Pretoria.

As the meagre cash fl ows available to Kebble deteriorated, he increasingly
expanded his slush fund franchise. During 1999, he acquired Consolidated Mining
Management Services (CMMS), the second big slush fund under the JCI umbrella.

The third one was acquired early in 2002, when Kebble used JCI to buy out the
minorities in JCI Gold.* The company’s rate of debt growth had been completely
unsustainable, and by assuming control Kebble could again effectively conceal
the accounts from public scrutiny. JCI Gold was the remaining relic from the
disembowelled old JCI and, like CMC, was delisted from the JSE.

CMMS, a 98 per cent JCI subsidiary, was never listed and would become the
single most important Kebble slush fund, but both CMC and JCI Gold played useful
roles in concealing what was really going on. The key directors of the slush funds
were the trusted triumvirate of Kebble’s father, Buitendag and Stratton.
Among those who knew Kebble, some say that if he ever had a real friend, it was
Stratton.

The wily British-born Australian, an indefatigable worker, was a major generator of ideas for Kebble and was often at the very core of convoluted schemes such as Rawas. No longer a young man when Kebble met him in the mid-1990s, Stratton was a retired military intelligence operative, bright but not brilliant.

While a number of people would rather not do business with Stratton, he is known to have introduced Kebble to various individuals who were not only shadowy, but quite
likely on the wrong side of the law. Those who gather information for a living take it
from whence it comes, and secrets are not always shared in the rarifi ed surrounds
of gentlemen’s clubs.

Kebble used CMMS, in particular, to buy properties, mostly ultra-luxurious,
including what appears to be an orchid farm. However, CMMS was also the vehicle
for a number of other activities that had little, if anything, to do with mining, such
as share trading. The 2003 accounts refl ect a profi t of R14 million for ‘jobbing’, an
activity synonymous with chancing, risking, hazarding, adventuring and gambling.

As part of jobbing the stock market, Kebble indulged in one of his favourite bad
habits, scrip borrowing, a tactic specifi cally designed to confuse friend and foe alike.
The CMMS accounts show that the entity borrowed Western Areas shares worth
R115 million under the heading ‘contingent liabilities’. Kebble also borrowed stock
in JCI, JCI Gold, Randgold & Exploration and CMC.

By the end of 2004, CMMS controlled 85 companies† with widely differing
interests, ranging from diamond concessions in Angola to luxury properties in
Cape Town’s Clifton, and from trading and investment entities (such as Quick
Leap Investments 137) to numerous BEE vehicles, including JSE-listed Matodzi.
Old and familiar names such as Transvaal Gold Mining Estates, fi rst registered
in 1895, appeared alongside Simmer and Jack Mines, Sabie Mines, Stilfontein Gold
Mining, DAB Securities, Tavlands, Samada Diamonds, Continental Base Metal
Mining, Lindum Reefs Gold, Palfi nger SA, First Westgold Mining and Randgold &
Exploration. From 1999, when Kebble took control of CMMS, the weird stuff started
rolling in: New Adventure Shelf 114, Onshelf Property 74, Defacto Investments 33,
Castle Ultra Trading 295, Rapitrade 306, Clifton Dunes Investments 67 and Little
Swift Investments 133.

In the months following his murder in September 2005, various attempts were
made to compile a comprehensive list of properties connected with Kebble. Some
estimates put the number at 30 or more, with several being put on the market in
the period immediately before his death.

Whatever the fi nal analysis of Kebble’s property portfolio, no one would dispute
that in his guise as land baron, he honoured the realtor’s mantra: location, location,
location. In Johannesburg, suburbs such as Melrose, Bryanston, Illovo and Inanda
got the nod, while Cape Town’s ‘old money’ enclave of Bishopscourt was favoured.
In addition to Monterey, Kebble’s corporate seat in the south, there were properties
in Canterbury Drive, Primrose Terrace, Rhodes Drive and Klaassens Road.

In addition, Kebble had bought more than a dozen vacant plots at Stonehurst, a gated
estate near the exclusive Steenberg golf estate in Tokai. As proof that Kebble used slush funds for every kind of deal imaginable, however, Kirstenberry Lodge is a good example. This super-prime property – in Bishopscourt, again – comprises a package of adjoining erven overlooking
Kirstenbosch Botanical Gardens, with the manor house a magnifi cent centrepiece.

Andrew Golding, CEO of Pam Golding Properties, a prominent real estate agency,
confi rmed that Kirstenberry – acquired via funding from CMMS – was ‘a Kebble
property’. It was placed on the market in late 2005, and according to Golding, if
sold as a package in a single transaction, would fetch up to R30 million.
CMMS allowed Kebble to hold sway over companies in ways that did not
necessarily require a shareholding at all, a technique known as ‘statutory control’.
This saw CMMS act as secretary and/or administrator and/or manager of a captured
entity. Once a company fell under the CMMS umbrella, all material ingoing and
outgoing transactions would be subject to Kebble’s authority.

The structure allowed him access to intimate knowledge of companies sheltered by CMMS. Thus, in 2004, CMMS registered and bought under its control an entity named Sello Mashao
Rasethaba Associates, for reasons that can only arouse suspicion. When it came to
his BEE connections, Kebble had no intellectual, mental or emotional investment
in the men and women he used as fronts.

Rasethaba was CEO of Matodzi, Kebble’s ‘leading’ BEE company, where, of course,
the fi nance director was Buitendag. Though he boasted that JCI held no shares in
Matodzi and that Matodzi was black-controlled, Kebble in fact controlled it in just
about every possible sense. CMMS had also controlled Matodzi Management
Advisory since 1996.

Among many other entities under CMMS control were Koketso Capital (which
apparently had a 24 per cent interest in the Luxinge alluvial diamond mining
concession in Angola’s Lunda Norte province); Masupatsela Angola Mining
Ventures (which held a 20 per cent interest in the Dando Kwanza alluvial diamond
prospecting concession in Angola’s Bie province); Tlotlisa Financial Services;
Orlyfunt Financial Enterprises and Orlyfunt Strategic Investments.

In a number of cases, Kebble did in fact control shareholdings of various sizes
in companies falling under CMMS, as in the case of Randgold & Exploration.
In November 2004, CMMS was offi cially pushed into a deregistration process
by the companies offi ce in Pretoria after Kebble failed to sign its accounts for the year
to 31 March. During the latter accounting period in particular, he had been dumping
controlled entities into CMMS at an unprecedented rate.

When Kebble was ousted as CEO of JCI on 31 August 2005, JCI’s new directors pulled CMMS back from deregistration and lodged the 2004 accounts, signed by Buitendag. Kebble had been
toting them around in his briefcase for months, but never signed off on them.

The fundamental problem with CMMS was that control and complexity do not
automatically produce cash, just as money does not grow on trees, no matter who
owns them. Beyond CMMS, CMC and JCI Gold, the uneasy truth of the overall
matter is that, under Kebble, JCI itself was a gigantic slush fund.

A thorough forensic examination and analysis of the JCI group accounts from
1997, including deconsolidation and reconstruction of the accounts, revealed that
JCI had posted total losses of R792 million* from 1997 to 2004. This is simply
staggering, given that at no time during this entire period did JCI have any form
of normalised income. Its two biggest investments, in listed stocks Western Areas
and Randgold & Exploration, controlled by either Kebble or his father from 1997,
never paid dividends in the normal sense.

Just how did Kebble survive for so long with nothing in the way of normalised
income? Quite simply, he forced companies under family control into various cashraising
transactions. JCI was the natural centre of gravity, given that it represented
Kebble’s single biggest equity interest in the 244 million shares he acquired in 1997,
but Western Areas and Randgold & Exploration were tapped as well.

In November 1998, Western Areas sold half of South Deep for $235 million in cash, allowing
payment of a special dividend of which more than 30 per cent went to JCI. In July
2000, the Kebbles forced Randgold Resources to sell half of Morila for $132 million
in cash. The bulk of this money found its way back into Kebble hands through a Randgold Resources share buy-back that generated a signifi cant cash fl ow to its
technical parent, Randgold & Exploration.*

In February 2002, Kebble sold the South Deep derivatives or hedge book
for $104 million in cash. It proved to be one of the most toxic hedge books in
the history of mining, given Kebble’s forlornly incorrect guesses as to forward
movements in the gold price.

The hedge book showed Kebble to be a clear bear of the gold price, when in fact it was in the early stages of a robust bull market that would last for years. For one whose career, cash fl ows and future depended so heavily on the price of gold, in this deal at least, Kebble appeared to have little (if any) faith in the notion that the gold price would ever recover. While JCI possessed
no normalised income, it managed to stagger along on the basis of ad hoc receipts
from transactions that Kebble forced through the market. But after the sale of the
South Deep hedge book, he ran out of options.

Sweltering under his own fl awed delusions, Kebble was forced to fritter about,
blowing his off-key clarion, moving from one rats-and-mice deal to the next,
concocting one irregular transaction after another. The virtuoso moved into a
jejune phase of his business career, seemingly determined to prove that when
measured as a conventional businessman, he was a complete and utter disaster.

He remained the control freak of old as CEO of the three JSE-listed stocks at the core
of his falling empire: Western Areas, Randgold & Exploration and JCI. Western
Areas continued to gobble cash; the sinking of the deep level twin sub-vertical shaft
system at South Deep, started in 1995, was years away from completion, and would
indeed remain unfi nished when Kebble was ejected from all three companies on
31 August 2005.

After selling the South Deep hedge book, Kebble and his spin machine soldiered
on, trampling the detritus that spread in every direction wherever he appeared. On
31 March 2003, when JCI held 35 per cent of Western Areas and 28 per cent of
Randgold & Exploration, he boasted that the company was ‘widely recognised as
owning two of the world’s premier gold assets’. Not to split hairs, but JCI ‘owned’
neither Western Areas nor Randgold & Exploration. Apart from the fact that it
actually held less than 50 per cent of either of these entities, JCI had been nothing
more or less than a slush fund for years, with nothing in the way of operations
or in-house staff doing real jobs.

The company had relinquished its day-to-day managerial role in Western Areas when half of South Deep was sold to Placer Dome in 1998. The biggest single element of value in Randgold & Exploration had been Randgold Resources, which had nominally enjoyed managerial independence
since 1995 under CEO Mark Bristow. However, though Morila was making money, AngloGold was managing it, and when Bristow was not reconstructing the history of Randgold Resources, he, like Kebble, had time to spare.

In 2003, as part of Kebble’s never-ending hunt for cash, Randgold & Exploration
sold a further 2.5 million shares in Randgold Resources, reducing its stake in the
London and Nasdaq-listed company from 48 per cent to 43 per cent. The proceeds
were used to ‘fund new projects’ for Randgold & Exploration and, inevitably, to
‘repay indebtedness’.

In June, Randgold & Exploration sold one million Randgold Resources shares for $16 million. Part of the cash was used to repay a loan from Absa Bank, while an outstanding $3.7 million loan from CMMS and a loan of $1 million from Western Areas were also settled. At least these stock sales were fi led with the Securities Exchange Commission in Washington DC, though in hindsight they
appear to have been dry runs made by Kebble in preparation for the truly stinky
stuff that lay ahead.

By the time Kebble sold the South Deep hedge book, he had been reduced to an
isolated fi gure in the corporate community. No longer could he call on the top
names in town, be they investment bankers, bankers, stockbrokers, lawyers, auditors
or other professionals. The Kebble name had been tainted beyond repair, and the
shift boss’s son spent most of his time and energy attacking law enforcement agents
or attempting to structure BEE transactions. He had little choice regarding the
latter, given legal requirements that portions of mining companies had to be sold
to qualifi ed BEE entities within specifi c time frames.

Ironically, the metal and commodities price environment had been favourable
for some time. South African resource stocks had benefi ted from a weak rand in 2001,
and while the currency strengthened from an all-time low to the dollar in December
of that year, dollar metal and commodity prices then turned positive. By 2003, the
country’s mining and resource fortunes were well on the mend. The cocktail served
up by global investment markets was dominated by a dollar that entered a protracted
bear market early in 2002. In addition, there was increasing information of a more
fundamental nature in the shape of fabulously performing emerging economies,
led by China, with its voracious appetite for raw materials of all kinds.

Investors were drawn once again to South African stocks. As the US Geological
Survey noted, after more than 30 years of a progressive decline in gold production,
from the historical peak of 989 tons in 1970 to 395 tons in 2001, the situation in
South Africa started turning around when production increased to 398 tons in
2002. With a combined capital investment of more than $1.6 billion, three large
projects – Target (Avgold), South Deep (Western Areas and Placer Dome) and
Moab Khotsong (AngloGold) – came on stream in 2002 and 2003, adding about
30 tons to production capacity by 2003 and another 25 tons by 2007.

Mines were becoming popular again, and Harmony CEO Bernard Swanepoel, a
mining engineer with a dry sense of humour, was pumping out the kind of action
that shareholders wanted. During 2003, Harmony merged with Patrice Motsepe’s
African Rainbow Minerals Gold, and subsequently acquired Avgold and its Target
Mine from Anglovaal Mining. AngloGold continued to develop Moab Khotsong,
and was involved in deepening the Mponeng shaft, the TauTona sub-120 metre level
project, the TauTona extension project and developing the TauTona Ventersdorp
Contact Reef.

The company also announced a proposed merger with Ashanti Goldfields of Ghana, prompting a bizarre hint from Kebble that he might mount a counter-bid for Ashanti. Bristow launched an equally unlikely initiative, which somehow developed into a more formal process. Having apparently suffered permanent amnesia about Syama, Bristow seemed oblivious to the delicate fact that AngloGold was managing Morila, the only operating mine in the Randgold
Resources stable.

So there was Randgold Resources, a non-operator of gold mines, making a bid for Ashanti, including its prize asset, Obuasi, the most complicated gold mine in the world from both a technical and a social viewpoint.

Beyond the Ashanti lark, 2003 saw Kebble wandering around aimlessly. He could
do nothing that remained standing. His pack of cards – CAM paper that had been
turned into JCI paper – was faded and dog-eared. He bore the look of a battered,
feral pool player in a run-down bar at Hotazel. What transactions he could structure
and conclude were inevitably small and, upon close examination, emitted a bad
odour.

As he sank steadily into deeper sloughs of despondency, Kebble maintained a
public devotion to gold, but privately nurtured his ambition of becoming a serious
player in African diamonds. On 30 December 2003, Randgold & Exploration entered
into a loan agreement with Masupatsela Investment Holdings (MIH). As security
for a loan of $11.9 million, MIH pledged 104 million ordinary shares of – surprise,
surprise – JCI Ltd. The loan enabled Randgold & Exploration ‘to continue to
strengthen our relationships with black empowerment companies’. Right.

When the loan had not been settled by 30 June 2004, the fi nal date for repayment
was ‘verbally’ extended to 31 December. Who knows what happened next?
These deals were doubtless related to an agreement between Randgold &
Exploration and Masupatsela Angola Mining Ventures (Pty) Ltd. In exchange
for 1 492 000 of its ordinary shares,* Randgold & Exploration acquired – or so it
was claimed – a 20 per cent interest in the Dando Kwanza alluvial prospecting
concession in central Angola’s Bie province. It was paper, again.

On 23 December 2003, Randgold & Exploration entered into an agreement
with Kemonshey Holdings, in terms of which a scrip loan dating back to 28 March
2002 was settled through the transfer of 3.3 million ordinary shares in Western Areas.
On 6 June 2003, Randgold & Exploration had sold 952 481 Randgold Resources shares
to Kemonshey, a company incorporated and carrying on business in accordance
with the company laws of Gibraltar.Kemonshey was no doubt one hell of a thing.

The year also brought pathetic news about Syama, the junk gold mine that
formed the rotten substratum of Kebble’s house of cards. On 16 April, Randgold
Resources and Resolute Mining Ltd, of Australia, agreed that Resolute would be
given a 12-month option to buy Randgold Resources’ entire interest in Somisy for
$6 million. Somisy, of course, owned 80 per cent of the Syama mine in Mali, which
had been on care and maintenance since December 2001. Yes, this was the same
Syama that Kebble and his cronies had used to bloat the Randgold & Exploration
stock price to all-time records in early 1997; the very Syama that Peter Flack and
his merry band of geniuses had ‘paid’ more than $80 million for in October 1996;
the refulgent Syama that the cabal had burked of all criticism.

The ‘new’ JCI had fi nally been formed on 16 July 2002 with the merger of
JCI Gold Ltd and CAM. According to Kebble: ‘An important consequence of the
restructuring process has been to broaden the group’s status as a prime holding
company and establish itself as a prominent, specialised resource fi nance house,
focused on developing relationships with emerging companies and investing in
opportunities in South Africa and the African continent.

‘Key to the process has been, and will continue to be, the company’s major
strategic drivers: to build on existing partnerships, focus on cost effi ciencies and
increased profi tability, effect appropriate exit strategies and consolidate and enhance
the company’s role as the capital partner of choice in black empowerment initiatives,
thereby contributing materially to the economic and social development of the
country and continent.’
Right.

JCI, Kebble crowed in rhetoric riposte to growing numbers of cynical investors,
owned ‘a portfolio of quality, wealth-creating investments’. During 2003, in a further
clean-up of Kebble wreckage, Barnato Exploration (Barnex) became a wholly owned
JCI subsidiary and, after a scheme of arrangement, was delisted from the JSE on 30
September. Barnex’s major asset consisted of shares in Golden Star Resources Ltd.
Amid the myriad woes that marked 2003, the cash-desperate Kebble was forced
to hint that a rights issue would be required to continue the funding of Western
Areas’ interests in South Deep, where development was running behind schedule.

On 5 February 2004, Western Areas announced a rights offer to raise around
R400 million.* JCI, which held 35.6 per cent of Western Areas, said it would follow
its rights, as would Randgold & Exploration, with its stake of 3.8 per cent. Cape
Town money manager Allan Gray, ‘acting on behalf of their clients’ holding in the
company of 24.5 per cent’, elected to do the same. Among the serious money men
there are those who observe wryly that Allan Gray, generally characterised as a
‘value’ investor, focuses a little too heavily on value per se. Be that as it may, the
money manager had seen the ultra-long-term value in Western Areas, and had
decided to invest, period.

In a further mopping-up move, Rand Leases Properties became a subsidiary of
JCI when shareholders approved a scheme of arrangement. Delisting from the JSE†
followed on 17 February 2004.
Beyond these forced transactions, designed to clean up a rotting corporate
structure that was sinking into a fetid morass, JCI announced that Matodzi, ‘a BEE
company listed on the JSE’ (but controlled, of course, by Kebble) ‘acquired an
additional 126 million JCI shares from Anglo South Africa Capital (Pty) Ltd on
29 August 2003, increasing Matodzi’s effective holding to 10 per cent of the issued
share capital of JCI’.

Like just about any other Kebble deal that required cash, this one was disastrous.
Matodzi announced that ownership of the JCI shares ‘would pass on payment of
the full purchase price. Anglo [American] has granted the company an indulgence,
and an amount of R15.5 million was paid on 4 July 2003. The balance of the
purchase price, together with interest, is due by 29 August 2003.’

Two years later, in August 2005, Matodzi announced that ‘a loan agreement was
concluded between Investec Bank, JCI Ltd and Letšeng Investment Holdings South
Africa, whereby Letšeng lent an amount of R75 million to Matodzi’. These funds,
Matodzi explained, would be used to settle a R68.7 million liability ‘relating to the
acquisition of 126 million JCI shares’.

At least part of Letšeng, Matodzi’s only visible operating asset, was cast into the
dungeon for debtors. In the civilised world, such mercantile manoeuvres are known
as cannibalisation. Kebble was forcing one company that he controlled (Matodzi)
to acquire shares in another company under his control – JCI, the mother ship of
his alien antics. But JCI’s stock price, which had been in decline since inception
in 1997, continued to tumble. Matodzi was being used as a cannibal, but the prey
was getting smaller and smaller. Kebble, on the other hand, a lavish R5 million-amonth
spending habit already fi rmly entrenched, was getting bigger and bigger, as if overindulgence would somehow bring relief from the multiple business
crises he faced.

Like a goose stuffed silly for a harvest of liver pâté, tumescent debt remained
the defi ning characteristic of a heavily dilated Kebble. When he staged his last big
bid to raise cash, the sale of the Western Areas hedge book in 2002, he had already
started hiding debt off JCI’s balance sheet. Try as he might to conjure up mighty
illusions with his underlying slush funds – CMMS, CMC and JCI Gold – Kebble was
required by law to consolidate accounts into JCI, the tip of the pyramid. It was the
horrifying and rising levels of group debt that forced him to secrete it; measures
such as taking out and delisting JCI Gold were simply no longer adequate.

In the beginning, the amount that Kebble stashed off the JCI books was a fairly
modest R135 million. Over the next two years, it increased to a still manageable
R163 million in 2003, but then it veritably exploded, to an incredible R1.3 billion
in 2004.*

Naturally enough, if JCI was hiding debt from the investing public, it was also
refl ecting some debt on the balance sheet. That fi gure was R1.6 billion in 2004.
Add the ‘offi cial’ debt to the latent amount, and the once venerable mining
house of JCI, which had started out as a ‘new’ entity in 1997 owing not a sou or a
centime, was in the red to the tune of a cool R2.9 billion when Kebble awakened on
the morning of 31 March 2004 – the last day of JCI’s fi nancial year.

Accumulated losses ran to R792 million. It was an impossible situation, but for
the while, at least, Kebble successfully kept investors utterly confused and, far more
importantly, apparently managed to keep JCI’s bankers at bay. When Kebble was
criticised over the lack of cash fl ows or levels of debt in his so-called empire, he
would harangue the critic. In later years, Dominic Ntsele, Kebble’s front-line
quietus lobbyist, would react with celerity and tell critics that their negativity was
damaging some of the country’s most imaginative and important BEE deals.
Right.

It is hardly possible to fully dramatise just how fragile Kebble’s kingdom was,
whether in 1997 or any other year. Scrutiny of the CMMS accounts shows that it was
irredeemably bankrupt from the moment that Kebble acquired it in 1999. From
day one, CMMS had negative equity, something that is simply unheard of, either
standing still or going forward, for any normal going concern. On 31 March 2004,
CMMS had negative equity of R584 million.† It enjoyed a R468 million loan from
its ultimate holding company, JCI, that was ‘unsecured and interest free’ and had
no fi xed terms of repayment. There are probably few people who would not jump
at the chance of loans worth hundreds of millions of rand that require no security,
bear no interest and can apparently be repaid at the borrower’s convenience, if
indeed at all.

Such fi nancial shenanigans were a common thread running through all the
alchemy of Kebble’s witchcraft, but a freeloading loan like this could conceivably
have pushed demons and wizards to levels never known before or since. JCI’s
auditors throughout the relevant period, Charles Orbach & Company, could well
argue that the accounts of JCI and its subsidiaries complied with all the technical
rules that auditors are expected to apply, but there can be no question that the
economic substance of JCI’s accounts was unmitigated trash.

Had they been presented on a see-through basis, as in the various appendixes to this book, JCI
would have been stampeded by entire kennels of fi duciary watchdogs, including
the SA Institute of Chartered Accountants, the Public Accountants’ and Auditors’
Board, the JSE (which, ironically, has a special committee to monitor accounts),
the Financial Services Board and the full gamut of law enforcement agencies. The
overweening naivety of these various oversight entities will remain both unthinkable
and unpalatable, since history already shows that CMMS passed all apparent tests
of approval.

For years, the CMMS accounts contained various ‘warnings’ from its auditors.
The most signifi cant among a number of factors regarding the ability of CMMS to
continue as a ‘going concern’, said the auditors, was that ‘the members continue to
procure funding for the ongoing operations’ of the entity. In traditional corporate
fi nance parlance, CMMS can best be described as a special purpose vehicle (SPV),
a generic entity that became world famous when Enron, once a Houston-based
energy conglomerate, imploded in December 2001.

The business and related objectives of CMMS were far from clear; its accounts stated that it ‘operates in the fi elds of management and fi nance and also holds investments in management and fi nance companies and a farming enterprise’. Mining is not mentioned. According to the accounts, the CMMS holding company was CMC, with JCI as the ultimate holding company. These are all hallmarks of a slush fund, from the inexcusable complexity to the stretching of truth in every direction.

One might well ask what happened to JCI’s declared accumulated losses of
R792 million. Well, R459 million went the way of ‘fi nance costs’, indicating both
the lengths to which Kebble was prepared to go in order to fund his fantasies and
the extent to which he created cash fl ow pressures from the outset. It was one thing
to seize control of assets in a clandestine manner, as he did in 1997, but generating
free cash was another matter entirely. There was always going to be a problem
when the chickens – millions of them – came home to roost.

Even after paying fi nance costs of R459 million between 1997 and 2004, JCI
showed a ‘loss’ of R333 million. In the latter phase of his so-called business career,
Kebble needed vast sums of money to ‘stand still’. He plundered the companies he
controlled to fi nance egregious personal spending habits, including those of his
cronies. In the 2004 fi nancial year, JCI’s ‘staff costs, consulting and directors’ fees’
were a massive R116 million, almost double the R60 million paid the year before.

A good deal of the new JCI’s original debt was raised by Kebble to fi nance his
personal acquisition of 244 million shares in the company, but it was the shareholders
of a listed entity that carried the burden. If Kebble’s landmark 1997 deal,
which saw him effectively issue shares worth R1.5 billion to himself, was tainted,
then both the debt created in the process and the interest paid on it, must be
equally toxic. To label this as JCI’s debt is nonsense; it was Kebble’s debt.

Immediately after the 1997 deal, the debt stood at R466 million. Seven years
later, it had ballooned to R1.6 billion, with another R1.3 billion tucked away in
Kebble’s version of Pandora’s Box. When he swapped his shares in CMC for shares
in NK Props, the new JCI acquired 100 per cent of CMC, and all its debt, allowing
Kebble to walk away with 244 million shares and a controlling stake in a listed
company, leaving JCI with debt of R2.9 billion in 2004.*

The scam of the century was a fait accompli. From the date of inception, the ‘new’ JCI was never an operating company in the normal sense. It held just the two key investments that Kebble so fondly referred to as ‘ownership’. Someone defi nitely needed to teach Kebble a thing or two
about ownership, especially ownership of cash. Ironically, such lessons would
come from the very man he ripped off royally in 1997.

The laughing Zulu According to years of accounts for Brett Kebble’s most important slush
fund, Mzi Khumalo Enterprises ‘owed’ Consolidated Mining Management
Services (CMMS), a 98 per cent subsidiary of JCI Ltd, R30 million. It wasn’t enough
that Kebble had hijacked the new JCI in mid-1997, he also raised a debt against
Khumalo, the very man chosen as the BEE executive of choice to run the old JCI.
In one of South Africa’s earliest and biggest BEE transactions, Khumalo had led
the African Mining Group (AMG) in its successful bid for the company at the end
of November 1996, becoming the fi rst black to gain control of a legendary South
African mining house.

Kebble inveigled his way into the transaction by offering to fund Khumalo’s
personal stake, but, in fact, he used Khumalo as a front by appointing him chairman
of NK Properties, which would, in due course, become the new Kebble-controlled
JCI. Once Kebble had what he wanted, Khumalo got both the boot and a chit for
R30 million. Khumalo owed Kebble, who would have no compunction about suing
to recover the ‘debt’.

However, the injury and insult appeared to energise Khumalo to get even. The
extent of his revenge was unimaginable, but Khumalo had learnt from the master,
and he would apply with stunning effect the costly lessons he had both witnessed
and experienced at fi rst hand.

While Kebble headed slowly and steadily toward the bottomless pit of debt,
Khumalo banked a billion, with hundreds of millions in change. It was the fi rst
billion-rand fortune made in BEE and it was clean money, with no debt attached.
It had taken just six months. It was a world-class performance. It was cash.

Though their backgrounds were totally different, Khumalo, like Kebble, was a
street fi ghter. Mzilikazi Godfrey Khumalo was named after one of the great Zulu
warriors. History records that in 1795, Mashobane, chief of the small northern
Khumalo clan, sired a son who would conquer more than a million square kilometres
of southern Africa. The name Mzilikazi means the Great Road.

The modern-day Mzi Khumalo was born in the township of KwaMashu outside
Durban in 1956. His father was a policeman, his mother a domestic worker, and
Mzi was the youngest of 11 children. His mother died before he reached his teens and, like so many other young blacks at the time, economic hardship forced himto abandon his education and fi nd a job.

While working as a petrol attendant, he became involved in the tinplating of recycled oil cans and learnt the rudiments of motor vehicle repair. He also joined the ANC’s underground military wing, Umkhonto we Sizwe, and was trained in urban guerrilla warfare. Arrested in 1978 and jailed on Robben Island, he had a degree in economics to his credit when he was released in 1990. He joined the McCarthy Retail group and set up a management consultancy, MK, on the side. He
was also an executive at Thebe, an ANC investment company, and served in the
organisation’s department of economic planning and its political structures in
KwaZulu-Natal.

But Khumalo had scant interest in politics. What he wanted was to become
fi lthy rich, and business was the route he chose. Some of his fi rst ventures were
controversial, such as Malaysian company Renong’s involvement with Durban’s
Hilton Hotel and the sale of Transnet land in the city’s Point area.

One day, long after the debacle at JCI, fortune beckoned. In April 2001, a threeway
deal between the state-owned Industrial Development Corporation (IDC),
Harmony Gold,* a listed stock, and Komanani Mining set the scene for catapulting
Khumalo into the big league. Harmony, led by Bernard Swanepoel, one of the most
attractive and investor-focused of all mining executives, was alive to the possibilities
of early BEE deals and was keen to be seen as an innovative promoter of such
transactions. Financing remained the biggest, and apparently insurmountable,
problem. Few, if any, companies were going to simply donate chunks of equity to
BEE groups. If equity was to be offered, the best that could be offered was a
discount. There was consensus within the business community that BEE was
necessary, given the wretched hangover of apartheid, and shareholders were likely
to accept that a discount offered to a BEE grouping would be acceptable, if
perceived as fair.

In one of the biggest BEE deals on record at the time, Harmony agreed to sell
10.7 million of its ordinary shares to Komanani at R36 each, a discount of 6 per
cent on the 30-day average ahead of the transaction’s announcement. Harmony
would also make available 11 million preference shares at nominal cost, effectively
* Harmony Gold Mining Company Ltd was fi rst incorporated as a public company in South Africa on 25 August 1950. Towards the end of 1994, Randgold & Exploration cancelled Harmony’s management agreement and entered into a service agreement to supply executive and administrative services at market rates. In 1997, Harmony and Randgold & Exploration terminated this agreement and Harmony began operating as a completely independent gold mining company. Starting in 1995, Harmony expanded from a lease-bound operation to a world-class gold producer, increasing sales from 650 312 ounces in its 1995 fi nancial year to 2 388 458 ounces in the 2002  f inancial year options that could be converted to ordinary shares. If conversion took place within
fi ve years, however, Harmony would have to be paid R41.50 per share.

Harmony was generously offering a ‘wild-card’ method of fi nancing the deal.
The IDC stumped up R400 million in cash, paying the full price of R36 each for
10.7 million shares in Harmony, plus a nominal price for the options.
The IDC would ‘warehouse’ the shares and options until Komanani’s debt
was settled. The ‘break-even’ point was R78 per Harmony share. At that price, the
IDC could exercise its options, sell the resultant Harmony shares in the market,
pay Harmony R41.50 a share and end up with R400 million in cash to retire
the Komanani debt. Komanani would then walk away with an unencumbered
10.7 million shares and become Harmony’s biggest single shareholder, with a stake
of about 10 per cent.

The IDC normally required outside parties to chip in with 10 per cent of a
deal’s value, or R40 million in this case. However, the IDC agreed that Komanani
would put up just R10 million or less, and even then it appeared that the IDC
might be prepared to assist.
But, for reasons that were never made clear, Mashudu Romano, chairman of
black-controlled media group Johnnic Communications and of Komanani, let the
deal go. It was cancelled on 17 August.

Eleven days later, a new tripartite agreement was signed between Simane
Investments, the IDC and Harmony. In effect, Simane was simply substituted for
Komanani. Simane was presented as a broad-based BEE company with four main
shareholders. At the time, the company had a total of 100 issued shares, but at
a secret meeting on 31 August, Khumalo became the proud owner of 200 newly
issued shares, putting him instantly in control of 67 per cent of Simane. He was
elected a director and given greater signing powers than any other board member,
including chairman Audrey Mokhobo. There was no evidence that Khumalo had
paid a cent for the shares.

On 7 September, Harmony, ignorant of Khumalo’s involvement, ratifi ed the deal
with Simane and the IDC, and the games began. Harmony’s stock price reached
the break-even point within months, less on a fi rm dollar-gold price than on a
weak rand. In December 2001, the rand reached its record low to the dollar. A weak
rand spelt good fi nancial news for South African mining stocks, which pay costs in
rand but receive revenues in dollar-derived rand.

No one could have known that the value of Harmony’s stock would increase by
just under 160 per cent, from R37.30 a share on 3 April, when the original deal was
structured, to R96.50 a share on 4 February 2002. On this date the IDC converted
its options into shares and sold them, making Simane the owner of 10.7 million
06_BK.indd 189 06_BK.indd 189 4/12/06 3:50:56 PM 4/12/06 3:50:56 PM
the slush funds shares in Harmony.* The acquisition was unencumbered, and Simane was debt-free.

The IDC itself earned a handsome profi t from the deal.
The bottom line was that Simane had become worth more than R1 billion
within six months. On 24 May 2002, when Harmony’s stock hit a record price
of R186.80 per share, Simane’s value was a stupendous debt-free R2 billion.† But
there were still minorities of 33 per cent in Simane in various hands, and Khumalo
wanted every sliver of this treasure trove for himself. In Simane, Khumalo had his
very own slush fund, which was bleeding millions upon millions of rand in cash in
every direction. There had never been anything like it.

One way or another, Khumalo bullied, cajoled, charmed and pestered Simane’s
minority partners into selling him their shares for a pittance. Vaya Fleet Management,
trading as Vaya Investments and represented on Simane’s board by Mavuso
Msimang,‡ was said to have sold its 20 shares for R2 million. When Harmony’s
stock price peaked, a bundle of 20 Simane shares was worth R134 million.
Another minority shareholder, E-Goda Telecomms (trading as Khoetsa Holdings),
* Various accounts of the Simane transaction are available. The preferred sequence of events and fi gures is that fi led by Harmony with the Securities and Exchange Commission in Washington in 2003.

On 20 June 2001, the IDC completed subscriptions for 10 736 682 Harmony ordinary shares and 10 958 904 Harmony convertible preference shares (essentially options). These subscriptions were carried out in fulfi lment of an agreement dated 3 April 2001 (when the Harmony stock price closed at R37.30 a share), signed by Harmony, Komanani and the IDC, pursuant to which, subject to the fulfi lment of certain specifi ed conditions, Komanani and the IDC agreed to subscribe for 222 222 Harmony ordinary shares and 10 736 682 Harmony ordinary shares respectively, and Harmony undertook to issue those shares at a price of R36.00 each. The IDC also subscribed for, and Harmony issued, 10 958 904 convertible preference shares at a price equal to their par value of R0.50 each. If the preference shares were converted to ordinary shares within fi ve years, the price to be paid was set in effect at R41.50 each. The Komanani transaction was cancelled as of 17 August 2001. On 7 September 2001, Harmony entered into an agreement with Simane and the IDC, where Simane subscribed for 222 300 Harmony ordinary shares ‘on substantially
the same terms as the Komanani subscription’. The Simane subscription was completed on 25 September. The aggregate consideration for the ordinary shares and preference shares issued to the IDC and Simane was about R400 million. During January and February 2002, the IDC converted all of its preference shares into 10 958 904 ordinary shares, transferred 10 736 682 ordinary shares to Simane and sold 10 958 904 ordinary shares to third parties in a series of transactions. The 10 958 904 Harmony shares were issued on 4 February, after the Harmony options were exercised by the IDC, at a conversion price of R41.50
each. On that date, Harmony closed at R96.50 a share. The average price for Harmony stock during January and February 2002 was R94.36 a share.

‡ Msimang, listed as deputy chairman of Simane, was a well-known businessman who around this time resigned as CEO of the SA National Parks Board to head up Sita, the State Information Technology Agency.

He had previously served as an executive director of Satour and as CEO of Tourism KwaZulu-Natal.
Holder of a Bachelor of Science degree in entomology and biology, as well as an MBA, Msimang was also listed as a director of various JSE-listed companies, including Massmart and Grintek was represented by Mokhobo and allegedly sold its 30 shares for R8 million.

At Harmony’s peak, they were worth R200 million. Khoetsa was described as ‘a women’s
investment grouping focused on identifying opportunities where its members can
leverage their skills in technology, transformation and business’. Mokhobo, holder
of a master’s degree in political science, was listed as a director of Capital Alliance
Holdings, Barnard Jacobs Mellet, Women’s Development Bank Investment Holdings,
Rotek Industries and M-Net Phuthuma Trust, and was a full-time general manager
at Eskom. She previously held senior positions at the Development Bank of South
Africa and as special adviser in the Ministry of Public Enterprises.
Themba Langa and Jomo Ntombela represented another Simane minority
shareholder, E-Sim Holdings, trading as Mageba Mining. Mageba described
itself as ‘an investment holding company aiming to leverage its legal and fi nancial
skills through emerging black entrepreneurs’, and was associated with the ANC
Youth Trust.
L

anga, a Johannesburg attorney, was the tough guy on the Simane board. He
held out for a market-related price from Khumalo, but settled for R10 million. The
30 Simane shares could, again, have fetched R200 million at Harmony’s peak. Langa
later claimed that Khumalo had threatened to force a rights issue and dilute Mageba’s
10 per cent stake in Simane to almost zero. The last 20 outstanding shares were in
the hands of broad-based BEE company Sifi kile, and would become a major problem
for Khumalo.

Part of the original agreement with Harmony and the IDC was that Simane would
not dispose of or transfer any Harmony shares for a period of 18 months from the
effective date of the agreement, 7 September 2001. But Khumalo could not resist
temptation and started selling millions of Harmony shares almost immediately.

During June 2002, Ya Rona, one of the original Simane shareholders, became
aware of the sales and went to court to stop Khumalo. By 15 July, when an order
was granted to halt Khumalo’s selling spree, more than 8 million of the 10.7 million
Harmony shares had been disposed of. He was forced to go back to the market to
reconstitute the original shares held by Simane.

Harmony had been trying for months to get information from Mokhobo about
Simane’s corporate structure, shareholders and agreements between the stakeholders
that would enable them to participate in the empowerment initiative that formed
the foundation of the original deal. She ignored all Harmony’s requests, and it was
not until the middle of 2003 that this author exposed the fact that Khumalo had
been in control of Simane since 31 August 2001. His hijacking of the company had
been a close secret.

But the Sifi kile shares had continued to elude Khumalo, and he had also become
involved in a dispute with Ya Rona, a genuine BEE entity,* over a claim that it had
been promised but never received 10 Simane shares. When Harmony’s stock price
hit its peak, this 3 per cent share of Simane would have been worth R67 million.

Court papers fi led by Ya Rona in its bid to halt Khumalo’s sale of Harmony shares
showed a relationship between Ya Rona and Harmony, based on an unsuccessful
bid by the latter for the Free State assets of what was then AngloGold. In August
2001, Harmony executive director Ferdi Dippenaar suggested that if Simane really
wanted to empower Ya Rona, it should offer 10 rather than 3 per cent of its shares. Ya
Rona boss Tebogo Koetle accepted the offer, but as soon as Khumalo took control
of Simane on 31 August, the board reneged on the deal and voted instead to transfer
20 Simane shares from Fukama to Sifi kile.

September 2002 found Khumalo negotiating a R760 million loan to his asset
management company, Mawenzi, from Deutsche Bank London (DBL) to fi nance
the reacquisition of the Harmony stock he had sold too soon. One of the many
preconditions for the loan was that all the Harmony shares held by Simane were
pledged to the bank.

Langa, now representing Sifi kile, refused to pledge the company’s 20 shares in
Simane unless Khumalo bought them at a market-related price in the region of
R100 million. When DBL granted Mawenzi the loan, it emerged for the fi rst time
that Mawenzi was a Simane shareholder. There were several onerous preconditions
for the loan:

Harmony had to confi rm that it had no objection to the agreement.
The South African Ministry of Mineral and Energy Affairs had to confi rm that
it had no objection to the arrangement.

DBL had to conclude a scrip-borrowing agreement in respect of approximately
6.4 million Harmony shares.
DBL had to receive documentation relating to and conduct a due diligence in
respect of Simane and its shareholders that rendered results acceptable to DBL.
The relevant parties had to be in agreement regarding the loan, swap and security
arrangements, and legal requirements.

Opinions from external lawyers (acceptable to DBL) had to confi rm that the
arrangement did not breach any law or previous agreement relevant to the matter.
The exchange control department of the SA Reserve Bank had to approve the
relevant elements of the arrangement.
* The original shareholders (all located in the Free State) were listed as the Disabled Children Action Group, the Virginia Unemployment Association, the Ema Sizame Women’s Development Project, Tebogo Koetle, Johanna Macotsi, Kelebogile Tauyane and Mosoeunyane Shadrack Ramathe. Earlier shareholders had included MK veterans and community HIV/AIDS groupings.

DBL’s credit department had to approve the arrangement, something only possible
upon completion of all the other conditions.
The loan was granted on 13 September, implying that all the preconditions
had been met. Khumalo fi nally paid Sifi kile R62 million for its shares in February
2003. In total, he paid R82 million for the 100 minority shares in Simane, an
average discount of 88 per cent on their market value.* By 2003, Simane’s original
profi le of a broad-based BEE company had become the alter ego of a single and
immensely wealthy man. If this was BEE at work, the future appeared bleak for the
overwhelming majority of previously disadvantaged South Africans.

Within weeks of the author exposing Khumalo’s hijacking of Simane, Mokhobo
resigned as the company’s representative on the Harmony board of directors. By then,
Khumalo had sold most of the Harmony shares, and in due course they would all be
gone. Khumalo had no interest in paper. He had no interest in BEE. He wanted cash.
Simane was to prove a slush fund of dimensions that Kebble could only have
dreamt of.

In effect, Khumalo not only banked more than a billion in cash, he also placed the lion’s share of booty from Simane offshore. Taken at face value, the apparent granting of permission by the SA Reserve Bank to do so via DBL would constitute a contravention of South Africa’s stringent exchange control laws. In addition, it would seem out of kilter with the intention behind not externalising substantial funds generated from a BEE transaction.† Yet Khumalo made no attempt
to hide the existence of his offshore investments. Apart from high living – hiring billionaire’s yachts for parties on the Mediterranean and fl aunting his wealth

* For 80 of the minority shares, Khumalo had paid just R20 million at discounts of 95 per cent and
higher. Khumalo acquired the fi nal 20 shares in Simane for R62 million by February 2003. See
†

Among the countless interventions the democratic South African government has made in the private sector, perhaps none are as aggressive as the assaults launched on the mining sub-sector. As early as December 2002, Marian Tupy of the Washington-based Cato Institute argued that racial quotas established by the government ‘will likely result in economic harm to the country, and to black South Africans’.

He observed that one of the mining companies’ ‘most important business decisions – the hiring of workers will be dependent upon non-business-related criteria’. As to the agreement that mining companies would raise $10 billion over the next fi ve years for the purchase and transfer of company stock to non-whites, Tupy argued that ‘this will drive down the profi t margins in the industry and the mining companies will be forced to cut their costs by hiring fewer employees than they normally would, or by letting some of their employees go. As a result, unemployment will grow. That outcome, of course, is the direct opposite of what South Africa currently needs and what the government aspires to do.’

As an observer for a foreign-based entity, Tupy was fearless in noting that ‘South Africa’s top mining executives publicly express support’ for BEE; however, ‘in private they are said to be gravely concerned about the cost associated with it. That is a bad sign, for it means that the businesses will now likely resort to political manoeuvring to escape charter requirements.’
•
around the French Riviera – he made substantial (and public) investments abroad
in foreign currency.
Khumalo had owned an offshore vehicle, Efferton Investments, since at least
August 2001. On 31 August, when Simane had issued 200 new shares to Khumalo,
in detail, Simane issued 170 new shares to Efferton and 30 to Nest Life, another
Khumalo concern. Efferton, seen alone, was the effective controlling entity of
Simane, with a 57 per cent stake. More than half of Simane had been externalised
from South Africa.

Asked about Efferton and related matters, Reserve Bank executive Alick Bruce-
Brand offered a terse response: ‘We are not in a position to comment.’
Equally signifi cant was Khumalo’s investment in Cluff Plc, a company listed in
London, but with certain operating assets in South Africa. Algy Cluff, an Englishman
who could pontifi cate with the best of them, was an interesting mix of merchant
adventurer and opportunist. Something of an anachronism, he always left the
lingering impression that he walked deep in the shadows of Lonrho’s Tiny Rowland.
Cluff had started out in oil, bidding for North Sea licences in 1972, then had moved
on to mineral exploration in Africa, making several signifi cant discoveries before
his Cluff Resources was taken over by Ashanti Goldfi elds in 1996. After that, he
remained focused on gold.

Cluff Plc elected Khumalo to its board on 1 August 2002. Earlier, Cluff had
announced that, via Khumalo’s interest in Rosario International Investments
and Gibbs International (both offshore companies), Khumalo was interested in
3.5 million ordinary shares in Cluff Plc. Usually, a South African company must
be an operating (as opposed to investment) entity before it is allowed to invest
offshore. There was no evidence that any of Khumalo’s companies were operating
at the time.

His interest in Cluff Plc increased to some 17 per cent following a capital issue.
The cost of Khumalo’s stake in Cluff Plc was around £9 million (about R112 million
at the time). When Khumalo joined the Cluff board, he was a director of Mawenzi
Financial Services, Mintek, African Pioneer Mining, Simane, Metallon, Efferton
Investments, Nest Life, Rosario International and Gibbs International. Between 1995
and 2002, he also served on the boards of the old JCI, Anglo American, Capital
Alliance, Western Areas, Telkom SA, McCarthy Retail, Momentum Life and Southern
Mining Corporation.

Apart from serious questions about Khumalo’s export of cash from South Africa,
there was unfi nished business at the IDC. On 17 February 2003, Gerrie Nel of the
Scorpions contacted IDC chief executive Khaya Ngqula in connection with ‘alleged
irregularities pertaining to the sale of Harmony Gold Mining shares to Simane
Security Investments’. Two of the most senior mining executives at the IDC conceded
the laughing zulu receiving a R6 million ‘loan’ from Khumalo. One of them, Andile Reve, left the
IDC in 2002 to run the Khumalo-owned Metallon group.

There was another grave issue. In August 2001, Mawenzi Asset Management
signed surety for R10 million in Khumalo’s name. It was allegedly in support of
a commercial bank loan used to meet the IDC requirement for a ‘deposit’ as
part of Simane’s R400 million deal with Harmony. The arrangement was in direct
contravention of laws regulating asset management companies and gave Khumalo
100 per cent advantage in the BEE deal, without any of the risk. The surety was the
equivalent of pension fund trustees guaranteeing a loan to the company CEO to
play the stock market for his own benefi t.

The surety was signed and countersigned by the two most senior executives
at Mawenzi, Norbet Engel and Charles Graham. Between them, the two men
had almost 40 years of experience in the investment industry, and had worked for
household names such as Old Mutual and Norwich Life before joining Mawenzi.
By signing the surety, they might well have breached Mawenzi Asset Management’s
publicly stated policy, which offered the following assurances:

As an asset protection and risk control measure, Mawenzi does not have access
to clients’ assets. These are held in safe custody by the chosen custodian (most
of the major banks are used). All assets, other than bearer securities and cash,
are registered in the name of an appropriate client-approved nominee. The client
directly appoints the custodian to hold the client’s assets in safe custody and
Mawenzi is granted a power of attorney to administer the assets.

A personal surety signed by an asset manager is simply illegal. Asset managers are
subject to strict and precise legislation, mainly because their livelihood comprises
the management of other people’s money. Cape Town fund managers, a notoriously
close-knit community, speculated that Engel and Graham subsequently received
‘bonuses’ of around R10 million each. Ordinarily, an allegedly illegal surety
would warrant investigation by the Financial Services Board, but queries in this
regard elicited a terse response: ‘Mr Khumalo is the chairman of Mawenzi [Asset
Management] and any release or explanation must come from him.’
Someone was stonewalling.

When the IDC was asked about the bizarre circumstances surrounding Simane,
it commented as follows on 14 July 2003: ‘Our records indicate that [Mzi] Khumalo
was not in the [Simane] deal, did not and could not have arranged for the IDC
to arrange or confi rm a loan. The BEE partner is Simane Security and not Mzi
Khumalo. The deal between the two parties, however it exists, is not recorded
anywhere in our books.’

On 15 August, the Financial Mail carried a two-article whitewash of the Simane
affair, stating: ‘Khumalo has for the fi rst time spoken out about the 2001 Simane
deal … Both the IDC and Harmony were aware of Khumalo’s fi nancial backing
of Simane.’

Somebody was lying. The Scorpions dropped their investigation into Khumalo’s ‘loan’ to the two
IDC executives. Kebble always suspected that the minutes of Simane’s August 2001 board meeting, at which Khumalo was issued the fresh 200 shares in the company, had been backdated.

The price at which the Harmony deal broke even, leaving Simane debt-free
and in possession of 10.7 million shares, was around R78 per share. Harmony’s
stock entered that territory in December 2001.
Kebble also alleged, with heated insistence and in splenetic tone, that Khaya
Ngqula, the chief executive of the IDC, had tipped off Khumalo to the Simane
deal. But then Kebble would say that, wouldn’t he?

The IDC’s annual report to 30 June 2002 contained no mention of the Simane
deal, despite its size and sensational fi nancial success. However, bonuses paid to
the nine members of the IDC’s executive committee had increased by 200 per cent,
from a total of R5 million in the 2001 fi nancial year to R15 million in the next
fi nancial year.

Within three months of Khumalo’s hijacking of Simane being exposed by the
author in July 2003, news leaked to the effect that Ngqula would quit the IDC
when his contract expired in September 2004. He did.

In seven years at the IDC, Ngqula had overseen some of the greatest value
destruction in democratic South Africa. In its fi nancial year to 30 June 2004, the
IDC posted its fi rst operating loss since being founded in 1940, yet the 12-member
executive committee took home R30 million in remuneration and bonuses. Ngqula’s
share was R6.9 million, including a R2 million bonus.

The majority of the IDC’s cash income derives from investments made up to
more than half a century before, such as Sasol (1950) and Sappi (1951). In the fi rst
nine months of its 2005 fi nancial year, the IDC was shown to be selling the family
silver in order to remain afl oat. Carefully tucked away between the lines was the
sale some time after June 2004 of 0.8 per cent (worth about $800 million) of BHP
Billiton, the world’s biggest diversifi ed resources stock.

In 2001, the IDC, which had become accustomed to ‘ordinary’ impairment
losses under Ngqula, wrote off R1.9 billion of ‘exceptional’ impairment losses. A
further R2.7 billion of such losses were written off in 2002.
Impairments fell to R843 million in 2003, R803 million in 2004 and were trimmed
06_BK.indd 196 06_BK.indd 196 4/12/06 3:50:57 PM 4/12/06 3:50:57 PM
the laughing zulu

to R256 million in the fi rst nine months of the 2005 fi nancial year. The IDC had
an operating loss of R803 million in 2004.
Ngqula, holder of a bachelor of administration degree, followed Alec Erwin’s
move from Minister of Trade and Industry (‘head offi ce’ for the IDC) until the April
2004 elections, to Minister of Public Enterprises. The latter is ‘HO’ for Transnet,
the notional parent company of South African Airways (SAA), where Ngqula was
installed as CEO in October 2004. Ten months later, he did not endear himself
to employees, passengers or the media by abandoning his post on the fi rst full day
of a countrywide strike by ground staff over a wage dispute that crippled SAA’s
domestic service for more than a week.

As travellers camped out in airports where chaos reigned, Ngqula was attending
an ‘important’ social function at a luxury resort adjacent to the Kruger National
Park. Embattled SAA staff often slammed his use of private helicopters and
penchant for fi ve-star luxury hotels while on airline business.

Two months later, Ngqula hit the headlines again, drawing harsh criticism
when it was shown that taxpayers in the Eastern Cape, one of South Africa’s most
indigent provinces, had forked out thousands of rand for upgrading a road leading
to Ngqula’s traditional village, Rhode. The work had been carried out in preparation
for the 48-year-old high-fl yer’s traditional Xhosa wedding to beauty queen Mbali
Gasa, attended by more than a thousand guests. After the Simane deal, Ngqula had
divorced Patricia Nonhlanhla, his long-standing wife, and disowned her and their
three daughters.
Kebble repeatedly mentioned Ngqula and Khumalo as two of the leading so-called
‘untouchables’ within South Africa’s new black elite. He complained bitterly that
despite prima facie evidence of wrongdoing in their behaviour, the two men seemed
immune to investigation, let alone prosecution. Following the Simane deal, Kebble
claimed, Ngqula and Khumalo entered into a number of irregular transactions,
both in South Africa and abroad, notably in France.

Kebble would practically froth at the mouth when accusing Khumalo of
‘stealing’ more than a billion rand in cash from ‘his own poor brethren’. He was
utterly convinced that Ngqula and Khumalo belonged to an elite cabal, allegedly led
by Saki Macozoma. Why, Kebble would roar amid profanities, had Khumalo’s ‘loan’
to the two IDC executives never been properly investigated? How had Khumalo
been allowed to trample on foreign exchange laws? Why had the legal position of
the surety been allowed to go unchallenged? In Kebble’s mind, there was no doubt
about who was protecting whom, and even less doubt about why such protection
was forthcoming.
What appeared to escape Kebble was that he had ‘invented’ the hijacking of
BEE structures. Not only had he hijacked the new JCI in 1997, he had humiliated
Khumalo in the process. It could be argued that while Kebble’s actions were
spawned by a precocious and massive confi dence trick, if laws had indeed been
broken, he had not been caught. But it could also be argued that Khumalo was
inadvertently tutored by the best.

Speculation aside, Ngqula and his friend Khumalo enjoy spending time on
the fashionable French Riviera, where Ngqula owns a villa at Port Grimaud, overlooking
the bay of Saint Tropez. Khumalo has acknowledged that at least once he
had hired the Christina O, one of the biggest luxury yachts available for private
rental on the Mediterranean. The original owner, Greek shipping magnate Aristotle
Onassis, delighted in telling guests that the barstools in the on-board Ari’s Bar
were upholstered in whale foreskin. Khumalo also fi nds this entertaining.

‘It’s nice,’ he once told a journalist, ‘when you fi nd a lady sitting there, prim and
proper, sipping champagne, and you say: You do realise that you are sitting on the
biggest dick in the world? and you see how she fl ushes and says: Excuse me?’
On 13 September 2004, Kebble quietly announced that JCI and Khumalo had
reached an out-of-court settlement in an amount of R30 million. The terse offi cial
statement said no details of the settlement would be revealed and no further public
comment would be made. Apparently, JCI had taken the legal route to recoup at
least R30 million relating to the issue of certain preference shares when the business
relationship between CAM and Khumalo was dissolved in 1998.

The amount tallied with the debt ascribed to Khumalo in the CMMS accounts,
and apparently excluded interest. In a number of utterances over the year preceding
the settlement, Kebble had claimed that Khumalo owed JCI ‘at least’ R50 million.
During the same period, Kebble publicly attacked a number of his real or imagined
enemies, chief among them Bulelani Ngcuka, director of the National Prosecuting
Authority at the time. Kebble alleged that the NPA was being used to settle old
scores and operate according to private political agendas.

‘Khumalo,’ Kebble bellowed, ‘a close friend of Ngcuka, has declared himself my
enemy in part because I am taking legal action against him seeking repayment of
moneys owed by him to me. Khumalo has sworn he will bring about my downfall,
and he told me to my face that he would use his friendship with Ngcuka to that end.’
While neither Ngcuka nor Khumalo made any secret of their friendship and the
bonds they shared as old struggle comrades, Kebble failed to produce any tangible
evidence of the vendetta he believed they were waging against him.
But Khumalo never forgave Kebble for booting him out of JCI, and after Kebble’s
murder he admitted that they had been ‘bitter enemies’.Play it again, Brett.

Having taken a leaf from his mentor Brett Kebble’s book, Mzi Khumalo kept his role in Simane secret for almost two years. From July 2003, however, this author exposed the gory truth in a series of Moneyweb* reports.

The Simane revelations made Kebble livid, and he used the information to
mount an attack on Khumalo, aimed at cash extraction. The R30 million settlement
eventually reached by the two men indicates that Kebble’s strategy had worked,
though it is likely that Khumalo paid more to settle a nuisance suit than to admit
any kind of liability. He was anything but short of cash, and although Kebble’s case
was circumstantial and patchy, at best, he might well have threatened that if the
matter went to trial, the evidence would not be in Khumalo’s interest. Subsequent
media reports suggested that ‘the laughing Zulu’, as friends and associates knew

Khumalo, did end up in some kind of trouble with the SA Reserve Bank.
Kebble had plenty of spare time to spend on such battles. From the moment he
burst onto the investment scene in 1996, he never had a real job, and, as time
passed, it became increasingly clear that he was inherently inept when it came to
making money from conventional business deals.

Sensing real cash fl ow danger, Kebble decided to go for broke with his
announcement on 9 December 2004 about the OrlyFunt BEE deal. Investors were
told that OrlyFunt would acquire ‘an extensive portfolio of BEE entities and various
mineral right interests’ for the sum of R1.4 billion from JCI.†

What investors were not told was that, in a classic example of Kebble alchemy,
he and four BEE associates – Mafi ka Mkwanazi, Sello Rasethaba, Andrew Mlangeni
and the ANC Youth League’s Lunga Ncwana – would end up owning 42 per cent of
OrlyFunt without laying out a cent.
* See www.moneyweb.co.za
† Real or imagined entities to be folded into OrlyFunt included JCI Telecommunications, JCI Pharmaceuticals,
J

CI Property, JCI Engineering, JCI Finance and Equity Holdings, JCI Mining, Cueincident,
Startrack Communications, DVI Telecoms, SA Bioclones, Advanced Medical Technologies, Nutrx
Trading, Mvelaphanda Properties, Boschendal, Rand Leases, Palfi nger SA, OD Engineering, African
Maritime Logistics, Tlotlisa Financial Services, Ikamva Holdings, Sekunjalo Group, Itsuseng Investments,
and ‘ordinary and preference shares in Matodzi and Witnigel Investments’. Randgold & Exploration
would chip in with its 74 per cent interest in the share capital of Minrico Ltd, and its 55.1 per cent interest
in the share capital of Free State Development and Investment Corporation, known as Freddev.

OrlyFunt died as natural a death as Kebble’s was not, but there can be no doubt
that the intention was to list Orlyfunt and raise hundreds of millions of rand
from big fi nancial institutions. How could they refuse when offered such a brilliant
line-up of BEE names and entities? How could they dare say ‘no’ to BEE?

Almost immediately after announcing Orlyfunt, Kebble hit the biggest pothole
on his rocky road through the corporate realm. His troubles began with
Randgold Resources making noises about its notional parent company, Randgold
& Explor a tion, selling down its holding in the London-listed company. Early in
2005, Randgold Resources released the results of a global shareholder identifi cation
exercise conducted by research group Ilios in December 2004. Merrill Lynch UK,
a money manager, was named as the company’s single largest shareholder, with
6.89 per cent of its issued stock. Randgold & Exploration’s holding had evidently
been reduced to 6.74 per cent, or four million shares.

On 30 June 2005, the murmurings became offi cial and entered legal history
when Randgold Resources fi led its so-called 20-F annual report with the Securities
Exchange Commission in Washington. Footnote 2 on page 65 referred to 14.4 million
Randgold Resources shares that could not be attributed to Randgold & Exploration,
despite that company’s claim of ownership. Arcane as it may have sounded, the
question was of vital importance to investors in Randgold & Exploration, which
for many months had stated in writing that it held 18.4 million shares in Randgold
Resources, worth nearly $300 million in mid-year. The SEC fi ling reiterated that
Randgold & Exploration held a mere four million shares in Randgold Resources.
Both companies were listed on the Nasdaq in the US, but Randgold & Exploration’s
primary listing continued to be in Johannesburg.

In 1995, Randgold Resources had been an all but irrelevant incubated backroom
entity within Randgold & Exploration. From about the middle of 1996, however,
the latter’s stake in Randgold Resources comprised the majority of Randgold
& Exploration’s underlying tangible value. There was no small irony in the
suspicion that Kebble had secretly been selling down the Randgold Resources
stake. At the time of the SEC fi ling about what would become the infamously
‘missing’ 14.4 million shares, Randgold Resources was valued at $832 million, and
Randgold & Exploration at a comparatively paltry $127 million. Of course, the
shares were not missing at all – unsuspecting buyers on open markets had bought
them in good faith. It was the cash that had disappeared – close on $300 million,
measured by replacement value.

A clutch of additional regulatory fi lings concerning Randgold & Exploration
spattered more fat on the fi re. The JSE announced that Randgold & Exploration
had failed to submit its annual report for the 2004 fi nancial year, and annotated
06_BK.indd 200 06_BK.indd 200 4/12/06 3:50:58 PM 4/12/06 3:50:58 PM
play it again, brett

the stock with an ‘RE’, pending suspension on 29 July 2005 if compliance was not
forthcoming. On 30 June, Randgold & Exploration had fi led an NT 20-F form with
the SEC, stating that it was unable to fi le its annual report because it was awaiting
the 20-F from Randgold Resources (which was, in fact, fi led on the same day), and
had experienced delays in obtaining information necessary to prepare accounts
according to US accounting standards.

Randgold & Exploration had fi led a similar delaying document the year before,
but then it complained only about accounting challenges, not the tardiness of
Randgold Resources. In 2005, however, Randgold Resources was adamant that
Randgold & Exploration only held four million of its shares, via Randgold Resources
Holdings (RRH).

Randgold Resources reiterated that the four million shares claim was based on
analysis of its shareholder base and other information. Under Kebble’s hand, RRH
fi led a Schedule 13G/A with the SEC on 14 February 2005, once again reporting
benefi cial ownership of 18.4 million Randgold Resources shares, or 31 per cent of
the company’s total outstanding ordinary shares. Randgold Resources categorically
informed the SEC that ‘we have asked [RRH] for documentation supporting its
claimed holdings, which to date has not been provided’.

Randgold Resources CEO Mark Bristow was adamant that the company had
exhaustively investigated its shareholders, including nominees, often used when
investors are unwilling to be identifi ed. Bristow insisted that Randgold & Exploration
could not possibly hold 18.4 million shares in Randgold Resources. He was not
spoiling for a fi ght, he said, but was legally bound to ‘discover’ the identity of
shareholders in Randgold Resources, whomever they were.

At the start of the 2004 calendar year, Randgold & Exploration stated that it
held 21.5 million (36.9 per cent of the total) shares in Randgold Resources. Of these,
3.2 million (6.0 per cent) were sold during the year, leaving 18.4 million shares
(30.9 per cent) by year’s end. Of these, 9.9 million (16.7 per cent) were apparently
lent to Inkwenkwezi, a BEE entity, primarily for the purchase of Anglo American’s
19 million shares in Western Areas.

On 7 July 2005, Randgold & Exploration said it intended appealing to Nasdaq
regarding notice of possible delisting. The company expected ‘to make a timely
request for a hearing with the Nasdaq Listing Qualifi cations Panel to review the
Nasdaq staff ’s determination, which will stay the delisting pending the hearing
and a determination’. Randgold & Exploration insisted that it had experienced
delays in obtaining information needed to fi nalise and analyse its audited fi nancial
statements. The company was ‘working diligently … and will fi le its Form 20-F as
soon as practicable’.

On 1 August, both Randgold & Exploration and JCI were suspended from the
JSE for failing to fi le documents on time.
In an offi cial notice published via the JSE on 8 August, Randgold & Exploration
said it anticipated that its South African audited annual report would be posted ‘on
or about 15 September 2005’, at which time the company would ask the JSE to lift
the suspension of its shares. Kebble was believed to have made representations to
Nasdaq offi cials following the threats that Randgold & Exploration would be delisted,
but no more was heard in this regard, and on 27 September, he was killed.

On 15 August, Randgold & Exploration crashed 15 per cent on the Nasdaq to
multi-year lows of $1 a share as specialist investors freely speculated that the
company’s 20-F annual report would not materialise, or, if it did, would be akin to
some or other hideous swamp creature. Randgold & Exploration’s market value at the
time was just $75 million, nearly $800 million less than that of Randgold Resources.

On 21 September, just six days before Kebble was shot in an apparent professional
‘hit’, Randgold & Exploration was delisted from the Nasdaq for ‘regulatory/
non-compliance reasons’. In a brief offi cial notice under the heading ‘security
deletions’, the stock was branded ‘delinquent’. This was a far bolder move than the
JSE suspension, though Nasdaq’s action downgraded the stock to ‘pink sheet’
status, meaning it could still trade in the informal over-the-counter (OTC) market.
However, the delisting stripped Randgold & Exploration of the vast majority
of privileges that a Nasdaq listing carries. The Nasdaq is the largest electronic
screen-based equity securities market in the US, with about 3 300 listed companies,
more than any competitor.

Kebble’s plunder of Randgold & Exploration had been carefully planned and
timed to coincide with his realisation that the sale of the Western Areas hedge
book was the end of one thing and the beginning of something else.
He had quit as a director of Randgold & Exploration in 1997, leaving it under
control of his father, who had exerted his ultimate authority in 1998 when he booted
CEO Peter Flack right out of sight. Brett moved back to Randgold & Exploration
in 2003. Of course he became the CEO; of course his father remained in the chair;
of course Hennie Buitendag remained the fi nancial director, as he had been since
1999. Gordon Miller was listed as the third executive director.

The record shows that Randgold & Exploration had long used Randgold
Resources as a cash cow. However, the source of the money was not normalised
income, it was the proceeds of selling down shares. There was a minor sale in
1996,* but the real bonanza began with the listing of Randgold Resources on the
London Stock Exchange in 1997.

In 2003, Randgold & Exploration applied to the South African Reserve Bank to
reduce its ‘required ownership’ in Randgold Resources to less than 36 per cent.
With Kebble fi rmly in the seat, the application clearly signalled a plan to raise
cash. While approval was pending, Randgold & Exploration sold more Randgold
Resources shares, cutting its stake to 31 per cent.

Kebble also used Randgold & Exploration for inter-group deals. On 1 July 2003,
Randgold & Exploration lent $4 million to JCI. On 31 December, the balance of the
loan account stood at $4.7 million, and was miraculously repaid in full on 15 April
2004. Cash was simply being taken out of one pocket and shuffl ed to another.

On 10 July 2003, Randgold & Exploration converted to shares a debt of
$1.8 million it was owed by Continental Goldfi elds Ltd (Australia) for the sale
of Transvaal Gold Mining Estates Ltd in 2000. This was the same Continental
Goldfi elds that featured in the Rawas scam, but yet another fantastically convoluted
Kebble transaction involving the inter-group swapping of debt for paper gave
Randgold & Exploration 40 million shares in Simmer and Jack Mines Ltd – about
18 per cent of the issued stock.

In his new role as CEO, Kebble was a busy man. On 20 June 2003, Randgold &
Exploration entered an agreement with Platgold Pacifi c Ltd and Hazcare to buy the
mining rights for the Rotifunk mineral sands project to mine for rutile, ilmenite
and zircon in the Bradfi eld area of Sierra Leone. Sierra Leone? Remarkably, the
purchase price of $5.2 million was apparently paid in cash. For Kebble, it seemed
that few things were as attractive as buying half-baked obscure assets in dangerous
countries. What kind of business model was he following?

Given Kebble’s history when dealing with offshore assets, the sudden appearance
of such transactions in Randgold & Exploration’s books looked suspicious. In terms
of an agreement dated 22 July 2003, another Australian entity, Notable Holdings
(Pty) Ltd, settled its scrip-lending agreement with Randgold & Exploration through
a cash payment of $3.6 million, to be made no later than 31 December 2004, together
with all accrued interest and the transfer of 660 000 Western Areas shares to Randgold
& Exploration. Like Continental, Notable was pivotal to the Rawas scandal.

During 1999 and 2000, DRD had ‘advanced’ $3.9 million to Notable for
‘operational assistance’. There was no formal agreement, and in 2000, DRD wrote
off $1.9 million of the amount as bad debt. The balance was written off in 2002.
DRD’s chief fi nancial offi cer, Charles Mostert, was a director of Notable when the
original amount was ‘advanced’.

Kebble also leveraged Randgold & Exploration off BEE.* On 28 July 2003,
Randgold & Exploration entered into a ‘partnership’ with Phikoloso Mining (Pty)
* See Appendix K, items 9–13.

Ltd to enhance Randgold & Exploration’s ‘strategic empowerment partnership’.
According to the company’s SEC fi ling:
We issued 8.8 million new ordinary shares, representing 16.4 per cent of our
issued ordinary share capital, to Phikoloso in exchange for the total issued share
capital of and all the shareholder claims on loan accounts, which amounted to
$33.5 million, against Viking Pony Properties 359 (Pty) Ltd. Viking Pony held
235 000 Anglo Platinum shares, 315 000 Harmony shares and 7.3 million shares
of The Afrikander Lease Ltd, or Afl ease. It also owns 75 per cent of Kabusha
Mining and Finance (Pty) Ltd, which in turn holds 23 million shares in Afl ease.
At the Randgold & Exploration stock price of R29.50 a share on the day of the deal,
it was worth R260 million to Phikoloso. Kebble was issuing paper again.*

He said the deal ‘brought on board several new and talented participants’ in
the form of Chris Nissen (a former senior ANC offi cial in the Western Cape),
Brenda Madumise and ANCYL’s Lunga Ncwana, all of whom became Randgold &
Exploration directors. Based on the face value of the transactions, Phikoloso may
have been overpaid to the tune of around R50 million. For Kebble, the deal sealed
off another board of crony directors who would allow him to do as he wished. He
now had in place all the elements that he required, à la JCI, to rip cash wholesale
out of Randgold & Exploration.

Nothing in the company’s underlying business changed between 2002 and 2003,
but from just four directors, it ended up with eight in the space of a year: the two
Kebbles (with Roger as chairman), Buitendag, Miller, David Ashworth, Madumise,
Ncwana and Nissen.

Just as Kebble had been forced to absorb the likes of JCI Gold into JCI, so he
remained under pressure to mop up other parts of the debris he had created. On
22 December 2003, Randgold & Exploration acquired a 55.1 per cent interest in
Free State Development and Investment Corporation Ltd, or Freddev, which held
mineral and mining participation rights, in exchange for 1 531 030 Randgold &
Exploration ordinary shares. The paper tiger had roared once more.

While the selling of shares in Randgold Resources had never really stopped, the
sales, aimed exclusively at raising cash, had been regular and orderly for years. That
changed after Kebble moved in as CEO of Randgold & Exploration, and during
2004 the apparent sales were both unauthorised and on a massive scale. According
to investors closest to the action, the bulk of the disputed shares, fi rst offi cially
spotted by Randgold Resources itself, was sold during the third quarter of 2004.

Initial indications were that cash proceeds from the sale of the stock had disappeared into a BEE entity named Bookmark and Inkwenkwezi. But what had they done with the cash? Had either entity in fact received any cash? No one was saying. As was to be expected, although a private rather than a listed company, Bookmarkwas in many ways a Kebble clone. Two of the directors – Mafi ka Mkwanazi and Thabo Mosololi – were also directors of Matodzi. Other Bookmark directors
were Eric Molefe, who had a history of involvement with Kebble’s companies,
and Muthanyi Robinson Ramaite, a former director-general in public service and
administration. Bookmark Investment Holdings (Pty) Ltd, described as ‘formerly
Matodzi Investment Holdings (Pty) Ltd’, was listed in Matodzi’s 2005 annual report
as that company’s single biggest shareholder, with 24.3 per cent.

JCI’s 2004 annual report (to 31 March) came into sharp relief in fi nding clues
about the meltdown. According to this document, on 9 June 2004, JCI and Randgold
& Exploration undertook to lend Inkwenkwezi ‘suffi cient Western Areas shares’ to
raise the necessary funding for acquisition of 13.7 million Western Areas shares
(11.6 per cent of the total) from Anglo American. Inkwenkwezi, it was said, had to
pay Anglo by 1 November. Just a few paragraphs later, JCI stated with excruciating
amphibology that ‘Inkwenkwezi has a twelve-month call option on the Randgold
shares’, yet nowhere else in the annual report were the ‘Randgold shares’ explained.

Was the reference to Randgold & Exploration or Randgold Resources?
According to Anglo American’s annual report for 2004 (to 31 December), the
group had disposed of an 8.5 per cent holding of Western Areas for $48 million
in December. The buyer’s name was not disclosed.

Yet the 2004 Western Areas annual report stated categorically that Inkwenkwezi
had ‘acquired an effective 11.6 per cent of the equity of Western Areas’. This did
not match the 8.5 per cent fi gure published by Anglo American.
The Western Areas report postulated: ‘Inkwenkwezi empowerment transaction
successfully restructured and required fi nancing imminent’ and ‘Discussions with
an institution to fi nance Inkwenkwezi’s obligation are progressing, and should be
satisfactorily concluded shortly’.

On 29 April 2005, Randgold & Exploration’s preliminary results for the year to
31 December 2004 claimed that 9.9 million Randgold Resources shares had been
‘lent’ to Inkwenkwezi. On the same day, investors were told that Inkwenkwezi’s
intended purchase of 19 million Western Areas shares from Anglo American
was ‘currently’ in its fi nal stages. This contradicted the earlier statement that
Inkwenkwezi had to pay Anglo American by 1 November 2004.

Randgold & Exploration’s preliminary results reiterated that the company
owned 18.4 million shares in Randgold Resources. Kebble and Buitendag signed
the results, and Randgold & Exploration stated that its auditors, Charles Orbach &
the slush funds

Company, had reviewed them and that ‘a copy of their unmodifi ed review report
on the fi nancial statements’ was available.
During our last face-to-face meeting on 7 July 2005, Kebble assured this author
that Randgold & Exploration’s 18.4 million shares in Randgold Resources were ‘safe’.
He insisted that Randgold & Exploration was the benefi cial owner of the shares.
Kebble conceded that 9.9 million ‘lent’ Randgold Resources shares had in fact been
sold, but said that they would be returned to Randgold & Exploration in mid-2006.

Beyond the 9.9 million shares tied up with Bookmark or Inkwenkwezi or both, two
million Randgold Resources shares (3.3 per cent of the total) were being held in
escrow, under Randgold & Exploration direction, by a potential Angolan diamond
concession vendor. This left Randgold & Exploration holding 6.5 million Randgold
Resources shares (10.9 per cent) directly and indirectly at the end of 2004.
Kebble said he had instructed the custodians of millions of Randgold Resources
shares under Randgold & Exploration’s name to correct the Randgold Resources
register. Odiously, he also said that Inkwenkwezi boasted a R400 million NAV, which
included its stake in listed Matodzi, along with ‘valuable’ platinum and diamond
concessions.

Details of the fi nancing arrangements and legal agreements between Randgold &
Exploration, Bookmark, Inkwenkwezi and other third parties remained unavailable
in the public domain. The opacity over the fi nancing of the 9.9 million Randgold
Resources on-lent shares had a signifi cant impact on the valuation of Randgold &
Exploration’s stock price.

In apparent recognition that investors had more questions than answers, Kebble
vowed that within weeks Randgold & Exploration would appoint two non-executive
independent directors. This undertaking was fi rst given on 29 April, and in May,
Randgold & Exploration had announced that Stephen Tainton and Gordon Miller
had resigned as directors.

From an asset-quality viewpoint, the nucleus of the imploding Kebble empire
remained Western Areas, with its 50 per cent interest in South Deep, west of
Johannesburg. By 2005, development of the South Deep twin-shaft complex had
been in progress for ten years at a cost of R4 billion ($580 million), leaving Western
Areas deeply in debt, and was yet to be completed. When the gold bullion price
hit $500 an ounce in 2005, the total value of the option premiums payable, plus
projected losses on outstanding derivative positions, left the Western Areas hedge
book $500 million under water.

Western Areas was technically bankrupt, but such is the quality and life of
its ore body that it simply could not be allowed to go down. Given that there
was no way cash-strapped Western Areas could fi nance its own BEE transaction,
06_BK.indd 206 06_BK.indd 206 4/12/06 3:50:59 PM 4/12/06 3:50:59 PM
play it again, brett Kebble had been forced to mount cash raids; Randgold & Exploration had been
the hapless victim via its valued holdings in Randgold Resources. Kebble’s clear
motive was to fi rst attempt to protect Western Areas, and, secondly, hopefully
protect his stockholding in JCI.

On 7 July 2004, JCI had coughed up R288 million in cash following a Western
Areas rights issue that raised R402 million in total. But where had the cash
come from?

On 30 August 2005, an avalanche of news hit the market:
Kebble had stepped down as CEO of JCI, Randgold & Exploration and Western
Areas. He was to stay on as a non-executive director of JCI, no doubt in
recognition of his shareholding in the entity.

The boards of JCI and Randgold & Exploration were dissolved and reconfi gured
to house members mostly connected directly or indirectly with Investec, the niche
fi nancial services outfi t that had agreed to provide JCI with a R460 million
standby loan facility. The fi nancing was conditional on Kebble stepping down,
and its main purpose was to enable JCI to follow its rights in terms of a new
Western Areas offer. Investec also agreed that should other shareholders not
take up their rights, JCI could take up additional Western Areas shares to a
maximum of R250 million.

Peter Gray, former head of Société Générale SA and Tlotlisa Securities, or T-Sec,
became CEO of JCI and Randgold & Exploration, while Chris Lamprecht was
appointed chief fi nancial offi cer at both companies.

Charles Cornwall, Roger Kebble, John Stratton and Hennie Buitendag stepped
down as JCI directors, while Roger, Buitendag and Lunga Ncwana relinquished
their board seats at Randgold & Exploration.

At Western Areas, Sello Rasethaba (previously non-executive director) resigned;
Mafi ka Mkwanazi quit as non-executive chairman, but remained on the board
as a non-executive director. Western Areas cast around for a new independent
non-executive chairman and directors, as well as a CEO.

Kebble argued that the fi nancial demands on JCI came at a time when some
companies in the group were involved in various ‘bold empowerment initiatives’.
He claimed that, in addition to the proposed R640 million rights issue for Western
Areas, ‘it became clear to me that JCI would have to be recapitalised. I have thus
been involved in recapitalisation discussions with a number of fi nancial institutions
over the past several months’.

If there was any sentimentality about the dismissals, it would have been limited
to Buitendag, fi nancial director of a number of Kebble companies, including CMMS.
•
•
•
•
•

Curiously, while Kebble had not acquired CMMS until 1999, Buitendag had been
a director of what was previously known as MIMIC* since 1988, when Kebble was
but a callow youth. Kebble was neither qualifi ed nor experienced in accounting and
came to rely heavily on Buitendag, who seemed to regard Kebble as an overgrown
schoolboy who often teetered out of control. Buitendag may yet be required to
answer numerous questions about the various sets of accounts, but he would be
the fi rst to point out that independent auditors had signed off on those that were
published. In fairness, there was no real evidence of malice in Buitendag’s behaviour,
though there was an old-world arrogance about his attitude.

The August 2005 shake-up deprived certain individuals, who were forced out
of some major lifelines. Kebble had long been in the habit of rewarding his cronies
with excessive compensation. Even at the detectable level, scavenging individuals
had been paid millions. JCI’s directors had received R12 million in the year to
31 March 2004. This was not only an obscene amount for board members in a
passive investment company, it was also double the fi gure paid in 2003. Consulting
and management fees, the nature of which was not explained, exited JCI to the
tune of R54 million in 2004, against R23 million in the previous year. Kebble was
grotesquely milking the public company coffers, let alone those hidden from prying
eyes in CMMS.

Senior executives from the Investec stable moved into the companies that
had been removed from Kebble control. David Nurek became independent nonexecutive
chairman at both JCI and Randgold & Exploration; Donn Jowell was
appointed independent non-executive director at both, while Peter Thomas assumed
the same position at JCI, and Sam Abrahams did likewise at Randgold & Exploration.
It was proposed that Abrahams and Nurek be appointed independent non-executive
directors of Western Areas.

Between them, Nurek, Abrahams, Thomas and Jowell assumed some eight
board positions at the three companies. Sandy McGregor, an executive at Allan
Gray, would watch over the money manager’s 25 per cent stake in each of the three
ex-Kebble listed entities, and stayed on as an independent non-executive director
at Western Areas.

On the question of possible confl ict of interest, Investec CEO Stephen Koseff
said the two individuals short-listed as CEO and chairman of Western Areas were
‘absolutely’ independent of the fi nance house.
Even so, problems arose. Afl ease Gold and Uranium Resources (later renamed
SXR Uranium One), a 12 per cent shareholder in Randgold & Exploration,† raised
concerrns over Peter Gray becoming CEO of both JCI and Randgold & Exploration,
as well as Lamprecht’s position at these companies and Western Areas.

Afl ease wanted to realise its investment in Randgold & Exploration at optimal
price, and while it had ‘no issue with the individuals’, it was adamant, with reference
to Gray and Lamprecht, that it was ‘inappropriate to purposely place individuals
in a position of confl ict when there are related party transactions between these
companies’. Afl ease complained that Gray and Lamprecht had ‘strong historical ties’
to Kebble and had been associated with some of the transactions that Afl ease raised
in a requisition to the board to call an extraordinary general meeting of Randgold
& Exploration. Afl ease said it was not satisfi ed that Gray and Lamprecht were ‘the
appropriate people to provide us with an independent assessment of the recent
dealings of Randgold & Exploration. We would prefer independent new appointees
who would act independently and in the interests of all Randgold & Exploration
shareholders.’

Koseff ’s take on providing a cash lifeline for JCI was simple: ‘We are an investment
bank,’ he told the author, ‘and we are in this to try and make money.’ Flagging
Investec’s entrepreneurial spirit, Koseff said the transactions announced as part of
the rescue package aligned Investec’s interests with those of shareholders in each
of the three target entities. Proposals for the composite transactions had hit his
desk seven weeks prior to the announcement on 30 August, he said.

In the grand traditions of investment banking, Investec would take a raising
fee for the R460 million facility. This would be the greater of R50 million or the
aggregate of 30 per cent of the increase in value of ‘the assets’, and 10 per cent of the
gain in the market value of JCI between 16 August and the due date for repayment,
which Investec could extend for up to 18 months. If all went well, Investec stood to
make more than R100 million, but, at the very least, it would be R50 million to the
good. Crucially, the R460 million facility appeared to be secure. The assets referred
to were those that JCI had agreed to push into an SPV, to be constituted as a wholly
owned subsidiary.

These assets, which were ceded and pledged to Investec, included JCI’s interests
in the Letšeng diamond mine and Matodzi, 15 million Western Areas shares (which
were already pledged to another fi nancial institution), rights in the Boschendal
wine estate and Jaganda (representing indirect exposure to shares in listed Simmer
and Jack Mines), a further 6.5 million Western Areas shares that had been pledged
to the Industrial Development Corporation, and the property portfolio of JCI and
its subsidiaries.

In a nutshell, Investec had been placed in the position of preferential creditor,
a development that increased the risk attached to other lenders’ exposure to JCI.

Koseff contended that the value of the assets in the SPV was more than three times
the R460 million facility, giving Investec gloriously comfortable cover in extending
the facility in the fi rst place.

The Western Areas rights issue proved fully successful,* not least because JCI
agreed to underwrite up to R250 million of the R639 million issue; Allan Gray gave
an irrevocable undertaking to follow its rights. The issue was pitched at R18 per
share, almost half the 12-month high of R35. Koseff brimmed with confi dence
over prospects for the stock prices, insisting ‘we want proper governance’.

Investec had an established association with Western Areas. In mid-2001 (at the
nadir of the gold price cycle), it had been among a consortium of international
banks that had set up that hedge book for the company. For Koseff, however, the
risk was immaterial, given the ‘wonderful quality and sheer size’ of the South Deep
ore body. He maintained that Investec’s exposure was ‘smaller than generally
believed’, and pointed out that the exposure was not to Western Areas shares as
such. ‘The hedge book,’ Koseff explained, ‘is secured by the mining asset itself – lots
of gold.’

Elsewhere, the cleaning up of Kebble’s mess continued on a pervasive scale.
Following requests by the author, JCI released the previously unseen accounts
for CMMS in mid-October 2005. Covering the year to 31 March 2004, they showed
that CMMS remained hopelessly insolvent. Accumulated losses had increased from
R530 million in 2003 to R676 million in 2004, while liabilities exceeded assets by
R640 million (R493 million in 2003).† This parlous situation was of little concern
to either CMMS or its auditors, however, given JCI’s history of propping up the
slush fund.

One of the biggest assets at CMMS was the ‘holding company loan’. This was
classifi ed as an asset because it was interest-free, had no fi xed terms of repayment
and was fully unsecured. This amount had decreased from R543 million in 2003 to
R468 million in 2004. These two fi gures were the only two that appeared under the
name of CMMS in the entire published JCI annual report for 2004. Everything else
was hidden, including R68 million from CMMS that Kebble had splashed out on
‘investment properties’. CMMS had paid R37 million in ‘consulting and management
fees’ in 2004, compared to a relatively paltry R7 million the year before. Nowhere
were the consultants named or details given of the services provided.

However,CMMS apparently became of some concern to its auditors, Charles Orbach &
Company, during 2004. The audit fee rose 275 per cent over the previous year to
R1.4 million, despite the lack of evidence of substantial extra work. However, it is
not unheard of for auditors to charge a premium when extra work is required due
to a perceived increase in risk in the entity under audit.
In the six financial years to 31 March 2004, CMMS losses had totalled
R566 million.*

When JCI’s new management released the CMMS accounts, which had not
been signed by Kebble, it said they would not be changed and would be fi led in due
course. Eventually, they were.

Roger Kebble and the little-known Lieben Hendrik Swanevelder had been
directors of CMMS since 1999. Swanevelder resigned in November 2004, when
the registrar triggered the process for deregistration of CMMS for failure to fi le
accounts. Stratton and Lamprecht were elected to the board, but the latter quit on
5 July 2005, only to be reappointed on 30 August, when Brett and Roger Kebble, as
well as Stratton, were forced off the CMMS board. After reconfi guration, the board
comprised Peter Gray, Lamprecht and Benita Morton, a lawyer.

There was no sign or suggestion that any of the various regulatory or law
enforcement authorities were going to take action in respect of the Kebble debacle.
Rob Barrow, CEO of the Financial Services Board, would neither confi rm nor
deny an investigation into the billion-rand scandal. In February 2005, the FSB had
added the Securities Services Act (SSA), a particularly powerful piece of legislation
with huge, sharp teeth, to its arsenal. Solid chunks of Kebble’s most questionable
behaviour had occurred after the new law came into force, and from June 2005,
details that emerged about his conduct pointed toward the investigative side of
Section 76 of the SSA, which deals with ‘false, misleading or deceptive statements,
promises and forecasts’.†

On 22 September, just fi ve days before Kebble died, Randgold & Exploration’s
new management said in a statement that it did not ‘currently believe that signifi cant
infl uence over Randgold Resources Ltd can be demonstrated’. The company withdrew
the entire results announcement of 29 April with a warning that it should not
be relied upon by investors. On the same day, Charles Orbach & Company resigned
as Randgold & Exploration’s auditors, and there was a fl ood of notices from other
companies cancelling their connections with CMMS.
It was simply not possible to count the number of times that Kebble had lied.
*

† Section 76 of the SSA states: ‘No person may, directly or indirectly, make or publish in respect of listed securities, or in respect of the past or future performance of a public company any statement, promise or forecast which is, at the time and in the light of the circumstances in which it is made, false or misleading or deceptive in respect of any material fact and which the person knows, or ought reasonably to know, is false, misleading or deceptive.’ A person who commits such an offence is liable on conviction to a fi ne not exceeding R50 million or to imprisonment for a period not exceeding ten years, or both.

He had carefully concealed the vital fact that if Anglo American was not paid by
1 November 2004 in terms of the Inkwenkwezi deal, a penalty of R70 million was
payable by Randgold & Exploration.* Throughout the fi nal chapter of his life, Kebble
had recklessly and wantonly used Randgold & Exploration as yet another slush fund.

On 14 December, JCI’s new management announced that forensic auditors
appointed on 11 October to assess various transactions and any other issues
identifi ed during the audit and/or by the directors had made ‘substantial progress’.
JCI further advised that the scope of the investigation had been revisited to address
issues not originally identifi ed. It came as no surprise when JCI confi rmed that
the ongoing investigation had ‘revealed prima facie evidence that there has been
misappropriation of company assets, including during prior fi nancial periods’.

This indicated that accounts published for prior periods were in line to be declared
not just misleading, but plain fraudulent. Work was in progress to determine the
exact extent of the misappropriation, ‘which could be substantial, as well as to
initiate, if necessary, the relevant legal processes, including the necessary actions
for the recovery of misappropriated assets’, the JCI statement said.
The abysmal truth about Brett Kebble’s business career was only starting
to surface.

* In its fi ling with the SEC for the fi nancial year to 31 December 2003, Randgold & Exploration referred to a ‘Consortium Sale Agreement amongst Tawny Eagle Holdings (Pty) Ltd and Anglo South Africa Capital
(Pty) Ltd and Chestnut Hill Investments 60 (Pty) Ltd and Randgold & Exploration Company Ltd’. Under the terms of this agreement, Anglo South Africa sold to Chestnut Hill 13 738 507 ordinary shares of WAL [Western Areas] at a price of R37.50 each for a total consideration of R515 194 012.50. This amount was payable by 1 November 2004, and bore interest at the prime rate charged by the Standard Bank of South Africa plus 1.5%. If Chestnut failed to fulfi l its obligations, Anglo South Africa would be entitled to repurchase 5 268 800 Western Areas shares purchased by Randgold & Exploration at a discount of R70 million, or claim a penalty in that amount from Randgold & Exploration. Chestnut subsequently changed its name to Inkwenkwezi Gold Mining Consortium.

The final straw The straw that broke the proverbial camel’s back might well have been a
judgment handed down by the Johannesburg High Court on 21 October 2004.
Durban Roodepoort Deep (DRD) scored a stunning R35.7 million victory against
JCI Ltd and its predecessor, Consolidated African Mines (CAM). Indicating the
court’s irritation that the case had ever gone so far, JCI was also ordered to pay
interest and costs, including those of two counsel.

The case was rooted in an undertaking Brett Kebble had given to pay DRD an
option fee for warehousing shares that DRD had acquired as part of Project Eagle,
JCI Gold’s unsuccessful endeavour to incorporate Randfontein Estates Gold Mine
into Western Areas. The case was one of many bits and pieces of collateral damage
spat out after the showdown at Randfontein. DRD had instituted proceedings
after JCI/CAM had paid a small portion of the fee, but refused to come up with
the balance.

JCI/CAM’s counterclaim for recovery of the part-payment was also dismissed
with costs. The court called JCI/CAM’s evidence on the accounting treatment of
DRD’s claim, which accrued over some 14 months, ‘nonsense’ and a ‘deliberate lie’.
It dismissed as ‘manifestly false’ JCI/CAM’s contention that the earlier payment
had been made under the mistaken belief that it was due.

Hennie Buitendag, omnipresent fi nancial director of the core Kebble companies,
was singled out by the judge as a ‘dishonest witness, who in an arrogant manner made
statements, which were manifestly mendacious, and an insult to the intelligence of
this court’. The judgment appeared to give Kebble a severe case of aboulia.

On 15 March 2005, Ilja Graulich, a DRD executive, recalled some dramatic
moments following attempts to execute the court order. He told Alec Hogg, host
of the Moneyweb Power Hour radio show, that ‘we made it quite clear over the last
couple of days and weeks, when the court ordered [JCI] to pay money, that we
would like to be paid that R38 million. [Kebble] did make promises, yes, that he
was going to pay us yesterday and that never happened, so this morning we sent
the sheriff [of the High Court] to start attaching assets. Unfortunately, we didn’t
fi nd much and our next step now is to seek an application for liquidation of the
CAM/JCI group of companies in order to recover the R38 million that they owe us.’
Amid the forfending, some of the money had been paid by a dyspeptic Kebble, who had nobody but himself to blame for the contretemps. Graulich told Hogg:

‘Yes, this afternoon a cheque did arrive in our bank account after we threatened
with the liquidation, and R12 million did arrive, but the order is for R38 million,
so we are still R26 million short.’

Hogg asked when Kebble was supposed to pay the balance.
graulich: Well, the fi rst court order was issued in October and then the Appeal
Court also turned him down, and then the Supreme Court of Appeal. So about
two weeks ago that’s what happened. Then we gave him 48 hours to pay. He
asked for postponement as he believed there was a constitutional issue in all of
this. He then made a statement last week, saying that he wasn’t going to pursue
this and he was going to pay us by midday yesterday – but no money by midday
yesterday. hogg: But R12 million today?
graulich: R12 million this afternoon, yes, so we’re waiting for the R26 million.

But let me make it quite clear, we are continuing with our application to liquidate
the companies until all the money is in there. You would have seen in all his
statements, in the waffl e, that he believes he could help the company, and hopes
for the better good of the company and all these things. You know, if that was so
true, where’s the money that we need to assist these mines that he so dearly loves?

Graulich appeared to have great diffi culty with the half-baked explanation about
how the balance would materialise. Kebble had claimed that a hold-up with a BEE
transaction was the main reason for the delay, and, as far as Graulich could ascertain,
that was the only reason given. In his attempts to stave off liquidation, Kebble had
offered ‘surety’ to DRD in respect of the outstanding balance.
graulich: He gave us, or the company gave us this morning when the sheriff
arrived, about 50 million shares in Matodzi Resources, ordinary shares in Matodzi
Resources. But the share certifi cates were made out in companies’ names that we
didn’t know about, nor do we know whether JCI is allowed to deal on behalf of
these shareholders in those shares, so obviously we couldn’t accept those shares.

If anyone knew Kebble at his most splenetic, it was DRD and, in particular, its
executive chairman, Mark Wellesley-Wood. He was the supreme non-simpatico,
and he was not about to entertain Kebble’s temporisations.

A number of those familiar with Kebble’s foray into business say that his single
biggest mistake was Randfontein. It was a debacle that was easily avoidable, but
it spawned not only a criminal indictment against both Brett and Roger Kebble,
but also against Buitendag. It also irredeemably tainted Kebble’s reputation. Had
he successfully executed Project Eagle, JCI’s board of directors would have been
formidable and palatable for even the most cynical investor: Henry ‘Hank’ Slack,
Wiseman Nkuhlu, Roger Kebble, David Kovarsky, John Fox Brownrigg, Vaughan
Bray, Mark Bristow, John Hick, Frank McKenna, Bill Nairn, Rupert Pennant-Rea,
Royden Richardson, Tokyo Sexwale and, of all people, Mark Wellesley-Wood. It goes
without saying that Kebble would have been the CEO.
Instead, he ended up with a new JCI that boasted himself as CEO and, as
directors, Buitendag, Roger Kebble and Paul Ferguson, and later John Stratton
and Charles Cornwall.

Kebble would never recover from the DRD-inspired near-liquidation of JCI.
From the day Graulich practically set up camp outside the JCI head offi ce, Kebble
launched his fi nal but futile joust against cash starvation.

When JCI’s stock was suspended from trading on the JSE on 1 August at 16 cents
a share, it was 98 per cent down on its lifetime high of 680 cents a share in 1997.
Over the years, the wider body of investors knew nothing even approaching the
full details, but had suffi cient sense of depravity to quit investing in JCI.

After Kebble was forced out as CEO of Western Areas, JCI and Randgold &
Exploration on 31 August, he had no way of cashing in the 244 million shares
(down to 235 million, according to JCI’s 2004 annual report) that he had illicitly
acquired in 1997. Even if JCI had still been trading, there was no way so many
shares could have been sold in the market, and once the stock was suspended, no
one would have touched them.

Kebble’s meltdown had commenced; there was nothing left to feed the wolf;*
there was no styptic agent that would staunch the haemorrhage. He had suffered
his fi nal reversal of fortune, whatever ‘fortune’ was by his defi nition. No longer
could he pay his network of obsequious spongers.

Late in February 2006, Wellesley-Wood recalled some of the dramatic events
that had marked his titanic struggles with the Kebbles. When the DRD special audit
committee met to dissolve on 22 July 2002, he recalled, no fewer than 21 cases
had been outlined against the Kebble rubric. It was just too many; in some cases,
successful settlements were arrived at. For various reasons, some cases were
disregarded or abandoned. Some of the bigger cases remained unresolved, yet
others could still go to trial.

* In Cherokee folklore, an old man tells his grandson about the eternal inner human battle. ‘My son, the battle is between two wolves inside all of us. One is Evil. It is anger, envy, jealousy, sorrow, regret, greed, arrogance, self-pity, guilt, resentment, inferiority, lies, false pride, superiority and ego. The other is Good. It is joy, peace, love, hope, serenity, humility, kindness, benevolence, empathy, generosity, truth,
compassion and faith.’ The grandson considers this for a moment, then asks his grandfather: ‘Which wolf wins?’ The old Cherokee replies simply: ‘The one you feed.’

‘The Kebbles had a sausage machine going at DRD,’ Wellesley-Wood muttered.
He paused to refl ect. Then, with a slight grimace, Wellesley-Wood acknowledged
that he was one of the few people who had ever stood up to the Kebbles, and won.
‘I still bear the scars,’ he said wistfully.