King Mswati
III was the only person who stood to gain from the closure of the Ngwenya Iron
Ore Mine in Swaziland, because he had been given an advanced loan of US$10
million, that he did not want to pay back.
This was
stated by William Kirtley, attorney to Southern Africa Resources Ltd (SARL),
the company at the centre of a US$141 million arbitration dispute with the
Kingdom of Swaziland.
Kirtley was
responding to accusations made by the Observer on Sunday, a newspaper in Swaziland in effect owned by the
King.
SARL held a
50 percent stake in SG Iron Ore Mining (PTY) Ltd (SG Iron), which had formerly
been known as Salgaocar Swaziland (PTY) Ltd. The mine was forced to cease
trading in August 2014.
On 29 January
2015 SARL issued a media
statement
announcing it was to bring a notice of dispute and that it would bring
international arbitration proceedings against the Kingdom of Swaziland at the
International Centre for Settlement of Investment Disputes (ICSID).
The Observer called the announcement a
‘bluff’ and reported that no notice had been published on the ICSID website.
The newspaper
quoted Sihle Forward Dlamini, Director Administration at the King’s Office and
Assistant Private Secretary to the King, saying ‘Please note that there is no
case at ICSID that has been lodged. This (notice of ICSID Arbitration against
Swaziland) was sent to internet publishing sites to damage our reputation.’
Dlamini who was
also the King’s representative on the SG Iron board, called SARL’s statement a
‘smear campaign’.
In an
unpublished letter to the Observer
dated 1 February 2015, Kirtley said the notice of dispute had been filed. ‘A notice of dispute is first filed to see if
the amicable resolution of a dispute is possible. Only when it is clear
that the amicable resolution of a dispute is not possible is the Request for
Arbitration filed. Once the Request for Arbitration has been filed, ICSID
registers the Request for Arbitration and publishes the dispute on the ICSID´s
website.’
King Mswati
and the Swaziland Government held 50 percent of the shares in SG Iron. The King
personally held 25 percent ‘in trust for the nation.’ However, the King is an
absolute monarch and in practice he chooses how the money is used and this helps
finance his lavish lifestyle. The King, who rules over an impoverished kingdom
of 1.3 million people, has 13 palaces, a fleet of top-of-the range BMS and
Mercedes cars and enjoys a lavish lifestyle that includes international travel.
In its notice of investment dispute
dated 22 January 2015, SARL said on 21 August 2014 Dlamini issued an order that
no more iron ore should be sold.
The notice stated this was ‘a deliberate attempt
to create an artificial
cash crisis’ at SG Iron in order
to gain control of the company and expropriate the company of
its investments.
It stated Dlamini acted without the
agreement of the company’s Board of Directors, even though
under terms of the Mining
Lease the chairman had a right to veto the
decision.
SARL linked the move to destroy the
company to 6 April 2012
when a request was
made by King Mswati III, through Dlamini, for ‘an advance payment/loan of US$10 million’ on his future dividend.
‘It appears to be the desire
to avoid the repayment of
this advance dividend/loan to HMK [the King] that lies at the root of the
expropriation of [SARL’s] investments in Swaziland,’
SARL stated.
The notice
stated that blocking the sale of iron ore cost the company ‘many millions’ of
dollars in working capital.
It stated sales could have resumed avoiding financial disaster at any time
as a considerable
amount of iron ore remained at Maputo Port, Mpaka
Railway Siding and at the
Mine Stockyard.
SARL stated it was later discovered that
Swaziland was stockpiling
the cargo in order to create an artificial cash crisis
since even when there were
no sales working capital was still needed to keep the company running.
At this time SARL requested that King Mswati
should repay the full or
part of the US$10 million loan/advance
dividend ‘to continue operation for the good of SG Irons employees and shareholders,
as well as Swaziland
itself.’
However SARL stated, ‘Rather than working with
[SARL] for the good of
SG Iron’s employees and
shareholders, as well as
Swaziland itself, [the King’s] representatives demanded
further capital injections
from [SARL], in effect holding [SARL] as hostage to
[the King’s] unilateral
decision to stop shipments.
SARL stated the cash crisis soon spread
through its entire operations and the company collapsed.
In his letter to the Observer, Kirtley, the attorney to SARL, said, ‘The only person who stood to gain anything from
this was HMK [the King], since the joint venture had provided an advance
payment/loan of US$10 million and,
indeed, during one of the final board meetings it was repeatedly requested that
this be written off SG Iron´s books.’
Kirtley added SARL owed creditors about E42 million (about US$4 million). ‘Although that amount seems large, [SARL] would
very easily be able to pay these creditors if it were in a position to sell the product that it currently has and more so if the price of iron ore recovers.’
See also
‘KING AT CENTRE OF IRON
MINE FAILURE’
http://swazimedia.blogspot.com/2015/02/king-at-centre-of-iron-mine-failure.html
