ICT scandal: ArcelorMittal delays vote

ArcelorMittal shareholders will no longer vote this week on a controversial R9.1-billion broad-based black economic empowerment deal, because a due diligence on Imperial Crown Trading 287 is still under way.

ICT is accused of forging part of its application for the prospecting licence it holds on Kumba's Sishen iron ore mine.

ArcelorMittal's BEE shareholder, the Ayigobi consortium, consists mainly of ICT shareholders, with 50%-ICT shareholder Jagdish Parekh, who works for the well-connected Gupta family, as the main beneficiary. Ayigobi members include Duduzane Zuma, son of President Jacob Zuma, and the Guptas, who are closely linked to the Zumas. They own Sahara computers and have various other mining interests.

A number of damning allegations against ICT have been made by Kumba-owned Sishen Iron Ore Company (SIOC), which is taking the Department of Mineral Resources, the minister and ICT to court over the department's granting of a 21.4% prospecting licence over the Sishen mine. ArcelorMittal originally owned the 21.4% mining right, but failed to apply for its conversion in 2009, when old-order rights lapsed.

Vanessa Lickfold, Kumba's head of geosciences, said in her affidavit that ICT's application was "so inadequate, incomplete, internally inconsistent and in parts nonsensical that it is simply not consistent with an authentic desire by ICT to engage in genuine prospecting operations".

Lickfold was particularly critical of work programmes allegedly submitted by ICT contractors, geologist Ezra Nkosi and drilling company Touchstone Drilling & Exploration. It has since been reported that the documents from these parties, which formed an important part of ICT's application, have allegedly been forged, possibly from previous applications done for diamond prospecting in the Kimberley area.

Archie Luhlabo, one of the original members of ICT and a signatory to the prospecting licence application, declined to comment on the allegations of forgery this week. "It's sub judice, I can't comment on that," he said.

Luhlabo, who stands to benefit handsomely from his membership of Ayigobi, is an erstwhile diamond miner and former member of the Mineworkers Investment Company, and has served as one of the vice-presidents of the International Diamond Manufacturing Association.

ArcelorMittal, which announced in August that it would buy ICT for R800-million, said in response to queries about the postponement of the general meeting that "a comprehensive and thorough due diligence process is under way. Given the importance of this issue, it is important that the due diligence process is given the appropriate length of time to garner a full understanding and analysis of events. ArcelorMittal South Africa has, of course, read the various media articles, but due diligence cannot be completed solely based on media reports."

No money has been paid to ICT to date, an ArcelorMittal spokesman said.

Talks about the composition of the Ayigobi consortium, which still needs to appoint broad-based beneficiaries, were still under way, the spokesman said.

Other allegations contained in Kumba's court papers include that ICT "apparently obtained access to documents which formed part of SIOC's confidential mining right application" over the long weekend of May 1 to 4, 2009. ICT allegedly copied title deeds from SIOC's application, but did not entirely conceal the original stamps of the commissioner of oaths used by Kumba, Robert Botha, the head of Kumba's legal affairs, stated in his affidavit.

Botha also said ICT's application was irregular and incomplete, that the company had not consulted with interested and affected parties as required by law, and that a prospecting licence for a mineral could not be awarded in an area where the stated mineral was already commercially mined.

ArcelorMittal, which needs 50% of shareholders to support the BEE deal, still needs to publicise the financial effects of the transaction. With the London-based ArcelorMittal Group holding 46.9% in the local operation, it seems like a done deal should the due diligence be favourable. The minister of mineral resources, Susan Shabangu, cleared the awarding of the prospecting licence in August.