Swaziland’s absolute monarch King Mswati III took
US$10 million from an iron ore mine for his personal use months before it
collapsed with debts of US$4 million putting 700 people out of jobs.
It was described as a ‘loan’ but the money was never
repaid.
It happened at the Ngwenya
Iron Ore Mine which was owned by SG Iron Ore Mining (PTY)
Ltd. (previously called Salgaocar Swaziland (PTY) Ltd). SG Iron was 50 percent owned by Southern Africa Resources Ltd
(SARL), the King held 25 percent ‘in trust for the Swazi nation’ and the
Swaziland Government owned a further 25 percent.
King Mswati took a US$10 million loan from the company
less than six months after it started trading which he refused to pay back when
it hit difficulties.
The mine was forced to
cease trading in August 2014 after a series of events orchestrated by Sihle
Dlamini, Director Administration at the King’s Office and Assistant Private
Secretary to the King. He was also the King’s personal representative on the SG
Iron board of directors.
In June 2011, King
Mswati, who as absolute monarch in Swaziland has sole control over mining
rights in the kingdom, granted SG Iron a Mining Lease for seven years. The
company agreed to pay the King ‘in trust for the Swazi Nation’ a royalty of 3
percent. It also gave the King 25 percent of the total company issued share
capital at no cost. It also gave a further 25 percent of the issued share
capital to the Swaziland Government, again at no cost. The remaining 50 percent
of issued share capital went to SARL.
The King holds shares ‘in trust for the Swazi Nation’,
but it is widely
reported outside of Swaziland that he has also received
millions of dollars from international companies such as phone giant MTN; sugar
conglomerates Illovo
and Remgro; Sun International hotels and beverages firm SAB Millerto, which he
spends on himself and his family.
The King, who rules over an
impoverished kingdom of only 1.1 million people, has 13 palaces, two private
jets and a fleet of top-of-the range BMW and Mercedes cars. At his 50th
birthday party on 19 April 2018 he wore a watch worth US$1.6 million and a suit
studded with diamonds. Meanwhile, seven in ten of his subjects exist on incomes
of less than US$2 per day.
SG Iron’s stated goal was to reprocess iron ore dumps at
Ngwenya left over by the Anglo American Mining Company in the late 1970’s, when
it ceased mining operations in the area, and to secure the main mine lease for
30 years once the iron ore dumps had been cleared.
It was agreed SARL, being the 50 percent shareholder
of SG Iron, had management control of SG Iron, which was in charge of, and
responsible for, day-to-day running of SG Iron. SG Iron put up approximately
US$50 million to start the mining operations and added further capital. The
King and the Swaziland Government made no financial contributions.
The official inauguration of operations was on 21 October
2011 with the dispatch of ore to Maputo Port in Mozambique. On 21 December
2011, the first shipment was carried out from Maputo Port and on 9 March 2012,
a rail services from Mpaka to Maputo Port, Mozambique, started.
Less than six months after operations began, King
Mswati, through his representative Sihle Dlamini, asked for and received an
advanced payment / loan of US$10 million on the King’s future dividend. This
was at a meeting of the Board of Directors of Salgaocar Swaziland held in Mbabane, Swaziland, on 16 April 2012.
The money was to be repaid from future dividends
payable to the King.
There was no public
announcement made that the King received the money which he held ‘in trust for
the nation’ and it is not known how he spent it. This later fuelled speculation
that he had used the money to fund his own personal lavish lifestyle.
On 21August 2014 Sihle Dlamini, representing the King at
SG Iron, wrote to the CEO of SG Iron, Sivarama Petla, instructing him not to
sell any more cargo. He did this without consulting the major shareholder,
SARL. Since that day all attempts by SG Iron to sell cargo were blocked.
Contrary to the terms of the Mining Lease, the Board
of Directors was not consulted about the decision to stop sales of iron ore.
The Chairman Shanmuga Rethenam who was to chair all board meetings under
Article 6.7 of the Mining Lease, and who also possessed a right of veto, was
not even informed of the King’s decision.
In October 2014, in a founding affidavit at the
Swaziland High Court to have the company placed under Judicial Management,
Sihle Dlamini would state that a shareholders’ dispute at SARL in Singapore had
made it impossible for management decisions to be taken at SG Iron. He also
stated that the fall in the world price of iron ore had made production at the
mine uneconomical.
Blocking the sale of iron ore meant no trade could
take place and SG Iron’s operations were brought to an abrupt standstill. Since
no money was coming into the company from the sale of cargoes there was a
cash-flow crisis.
Sales could have resumed at any time because more than
100,000 tonnes of iron ore remained at Maputo Port, Mpaka Railway Siding and at
the Mine Stockyard. In a High Court affidavit in October 2014, Sihle Dlamini revealed he had given
instructions for ore to be stockpiled until the price of iron ore recovered.
SARL also requested that the King repay the full or
part of the US$10 million loan / advance dividend to allow SG Iron to continue
operating. The King refused to do this, instead the King’s representative Sihle
Dlamini demanded that SARL inject more capital into the business, something it
would not do while shipment of cargoes remained blocked.
SARL would say in January 2015 that it felt it had
been held hostage by the King’s representative’s decision to unilaterally stop
all shipments of cargo.
On 22 September 2014 at a board meeting of SG Iron
held in Mbanane, Sihle Dlamini representing the King and Mbuso Dlamini, representing
the Swazi Government, expressed dissatisfaction at the status of the company, saying
that a shareholder dispute at SARL was impacting on SG Iron, something which
was disputed by SG Iron.
The two men gave an ultimatum that fresh funds should
be injected into the project no later than 26 September 2014. The Chairman of
SG Iron, appointed by SARL, was present at this board meeting, and he requested
that management allow the sale of the cargo, which would release sufficient
funds to keep the company operating.
SARL again requested that the King should, ‘for the
good of the company’s workers, its shareholders and the kingdom of Swaziland’,
repay the full or part of the US$10 million loan / advance dividend to allow
the continued operation of SG Iron. Sihle Dlamini, the King’s representative,
refused.
Subsequent to the meeting, Sihle Dlamini, representing
the King, asked SARL to wipe out the US$10 million loan.
In a letter dated 29 September 2014, SARL refused to
write off the King’s debt. SARL said in January 2015 that in response to this, Sihle
Dlamini took a unilateral decision to stop operations and place the company
into Judicial Management and then liquidation. This decision was taken without
discussions with the major shareholder or considering the voting rights in
place at SG Iron.
On 3 October 2014 Sihle Dlamini representing the King
and Mbuso Dlamini, representing the Swaziland Government, called for a meeting
of the Board of Directors and despite being told by the Chairman of the Board
Shanmuga Rethenam that he could not attend, they went ahead with the meeting without
him.
This was the first Board Meeting that had been held without
the Chairman’s presence in the history of SG Iron. Sihle Dlamini, the King’s
representative, served as the Chairman of the meeting, although he represented
only 25 percent of the company’s share capital and SARL, the 50 percent
shareholder, was supposed to have control of the board.
Sihle Dlamini and Mbuso Dlamani both resolved to place
SG Iron under Judicial Management, without seeking the Chairman’s consent, rather
than permitting operations and cargo sale to continue.
SG Iron was placed under provisional Judicial Management
by an Order of the High Court of Swaziland dated 10 October 2014. On the
request of the Judicial Manager the Court ordered the provisional liquidation,
or winding up, of SG Iron by an Order dated 16 December 2014.
As a result of the closure King’s US$10 million dividend
/ loan was written off. The closure of the mining project cost 700 people their
jobs in Swaziland and it was estimated that several hundred jobs were also lost
at the Port of Maputo, Mozambique
See also
HOW
KING DESTROYED AN IRON MINE
SWAZI
KING AND QUEENS OF BLING
KING
WEARS WATCH WORTH US$1.6-million
KING
WEARS SUIT BEADED WITH DIAMONDS
SWAZI
ROYALS SPEND, SPEND, SPEND
https://swazimedia.blogspot.co.uk/2018/05/swazi-royals-spend-spend-spend.html
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