The court action will take place in the British Virgin Islands (BVI) because the King is immune from the law in Swaziland where he rules as an absolute monarch.
The case is expected to shed new light on the way
the King does business with foreign investors and the control he exerts over
them.
At one point it is said the King took US$1.5 million
from the company running the Ngwenya mine to buy art work from a New York
dealer. He refused to repay the company the money and it collapsed soon after
with the loss
of 700 jobs and debts to creditors of about US$4 million.
The court case to be heard in the Eastern Caribbean
Supreme Court in BVI has been started by Shanmuga Rethenam, a businessman
popularly known as Shan. In an affidavit to the court Shan stated that on 30
June 2011 King Mswati (referred to throughout the document as HMK) granted a
seven-year mining lease to SG Iron, which was formerly known as Salgaocar
Swaziland, to mine iron ore dumps left in the
Ngwenya mining area by the Anglo American Mining Corporation in the
1970s.
Twenty-five percent of the shares were issued to the
Swaziland Government for no payment; 25 percent went to the King ‘in trust for
the Swazi nation’, and 50 percent were issued to Southern Africa Resources
Africa Limited (SARL), which was formerly known as Salgaocar Resources Africa
Limited.
In his affidavit, Shan stated, ‘The arrangement by
which HMK owned 25 percent of SG Iron “in trust for the Swazi nation” is a
familiar one in Swaziland. I am aware that HMK owns the Tibiyo Taka Ngwane and
Tisuka Taka Ngwane funds, which account for about half of Swaziland’s economy,
on that basis. In my experience, HMK takes an active interest in the commercial
success of his investments and commonly issues instructions through his
representatives such as Mr Lutfo [Dlamini] or Mr Sihle [Dlamini], on commercial
issues.’
Shan stated that SARL provided all the capital, more
than US$50 million, and all the expertise to undertake the iron ore operations
at Ngwenya.
He stated, ‘On 6 April 2012, HMK requested through
Mr Sihle [the King’s representative on the company’s board] that SG Iron pay
him an “advanced dividend,” which was in effect a loan of US$10 million. SG
Iron’s directors were given no choice and so, on 16 April 2012, we resolved to
agree to HMK’s “request” and to make the payment of US$10 million. It was HMK’s
desire to avoid repaying this loan that subsequently led to the collapse of
operations at the Ngwenya mine.
Shan added, ‘In about June 2011, shortly before the
mining lease was awarded, I met HMK in Swaziland. He requested that SARL agree
to pay him a personal benefit of US$0.50 per dry metric tonne of iron ore from
the Ngwenya mine exported from Swaziland. SARL’s directors were given no choice
and so we agreed to HMK’s “request”. SG Commodities [a company that trades in
commodities] was to be the vehicle through which payments would be made, and
the payments were always directed to third party recipients on HMK’s behalf, so
that no payments would be made directly from SARL to HMK. Prior to December
2013, SARL paid HMK through SG Commodities approximately US$700,000 pursuant to
that agreement.’
Shan added, ‘In or about October or early November
2013, I met HMK in Swaziland. He requested that SG Commodities agree to grant
him a loan of US$1.5 million, to be repaid to SG Commodities out of the
payments anticipated to be due to HMK pursuant to his agreement with SARL. SG
Commodities was given no choice and so I agreed on SG Commodities’ behalf to
HMK’s “request”. On 18 December 2013 Mr Sihle directed SG Commodities on HMK’s
behalf to advance the US$1.5 million capital sum by making payment to a New
York art dealer, Metropolitan Fine Arts & Antiques Inc, from whom HMK had
purchased certain artworks.’
Shan added that in early 2014 King Mswati told him
he was unable to repay his loan from SG Iron.
In his affidavit, Shan stated, ‘To avoid his
repayment obligations, HMK then set about engineering the collapse of SG Iron
and expropriating SARL’s investment in Swaziland. On 21 August 2014, Mr Sihle
issued an order on HMK’s behalf to SG Iron, without consulting or informing me
or anyone else from SARL, to stop all sales of iron ore cargo from the Ngwenya
mine. Mining operations were progressing satisfactorily and there was no proper
reason to issue any such order. Indeed, the immediate result of the order was
that perfectly saleable cargo began to stockpile. The inability to sell cargo
cost SG Iron millions of dollars of working capital and created an artificial
and wholly avoidable cashflow crisis.’
Shan added, ‘In September 2014, in the midst of the
crisis, Mr Sihle demanded on HMK’s behalf that SARL agree to SG Iron writing
off HMK’s debt to SG Iron, that SARL write off some of SG Iron’s
US$57,186,022.53 debt to SARL and that SARL inject further capital into SG
Iron. None of the steps demanded by Mr Sihle would have been necessary had HMK
simply permitted the sales of cargo to resume, and would have been pointless
since sales were prohibited, and so SARL refused. Mining operations collapsed
shortly thereafter.’
Shan added, ‘Mr Sihle told me that HMK had
instructed him to shut down SG Iron and to start afresh, and that if I did
anything to retaliate then I would be arrested and an Interppol [international
police] notice would be issued against me.’
Shan added, ‘What happened next illustrates the
power of an absolute monarch who exercises complete control over Swaziland’s
judiciary, as well as its legislative and executive branches of government. Mr
Sihle applied on SG Iron’s behalf, without consulting or informing me or anyone
else from SARL (and having intimidated me to prevent me from intervening as
described above) to the High Court of Swaziland for orders which had the effect
of destroying SG Iron and expropriating SARL’s investment in Swaziland. At
HMK’s direction, the court appointed to SG Iron a judicial manager on 10
October 2014, a provisional liquidator on 16 December 2014and a liquidator on
30 January 2015.
Shan added, ‘The expropriation of SARL’s investment
is the subject of an ongoing dispute between SARL and the Kingdom of Swaziland
under the Swaziland Investment Promotion Act (1998) and the Southern African
Development Community Protocol on Finance and Investment (2006).’
Shan added, ‘I caused SG Commodities to make
payments to Metropolitan [the art dealer] because HMK, through Mr Sihle,
demanded that I do so. I understood that demand to come with an implied threat
that, if HMK’s demand was not met, the Ngwenya iron ore mine project would be
placed in jeopardy. SG Commodities therefore also seeks restitution of those
monies by reason of economic duress applied by HMK.’
King Mswati III is one of two respondents in the
case. The other is Inchatsavane Company (Proprietary) Limited. King Mswati is
described as the sole shareholder in this company.
The case is to be heard in the BVI because that is
where SG Commodities is incorporated.
See also
HOW
SWAZI KING DESTROYED IRON MINE
MYSTERY
OF SWAZI KING’S 10m LOAN
KING
AT CENTRE OF IRON MINE FAILURE
ONLY
KING GAINS FROM MINE FAILURE
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