Mud flies as Umthombo Resources battle rages

MINING company Umthombo Resources' director Vuslat Bayoglu claims he has evidence to prove a startling array of offences by former director of the company and its subsidiary, Umthombo Coal, Matodzi Nesongozwi.

Bayoglu's allegations came in response to Nesongozwi's claims that the coal division was hijacked from him and that Bayoglu had engaged in various criminal activities himself.

With a collection of documents, including letters, e-mails and bank statements, Bayoglu alleged this week that Nesongozwi was a delinquent who had failed to show up at work meaningfully for more than a year.

The company's articles of association allow for the removal of a director who has not attended board meetings for more than six months. Bayoglu said he provided the Companies and Intellectual Property Commission with the relevant documentation for Nesongozwi's removal as a listed Umthombo Resources director. He added that Nesongozwi handed in a signed resignation letter when he stepped down from Umthombo Coal in 2009. Bayoglu also alleged that Nesongozwi:

• Failed to disclose direct or indirect interests in more than 10 companies in direct competition with Umthombo.
• Attempted to sell Umthombo Resources group companies' prospecting rights, illegally attempted to broker a deal with a major iron ore company and tried to sell the coal division's coal-export allocation at the Richards Bay Coal Terminal to a major domestic company.
• Had a lifestyle well beyond his means, owning more than 12 luxury cars and five properties.
•  Sought and was paid a R800000 kickback by Andru Mining while a multimillion-rand contract was being negotiated.
• Awarded his friends tenders at multiple times the going rate.
•  Brought a team of evaluators to the company offices in a bid to get it valu ed and sold without approval of the board.
• Re-registered company vehicles for his own benefit, including a Maserati.
• Received a shareholders' loan from Umthombo of R1.5-million and now owes the company R14-million.
•  Illegally arranged for a transfer of R1.8-million of the company's money into his personal account, while using his power as co-signatory to block payroll and clients payments.

Bayoglu laid a charge and Nesongozwi was arrested for this last-mentioned payment and released on R50000 bail, although his lawyers have said the criminal charge was withdrawn and the bail repaid.

Bayoglu has also claimed that Nesongozwi had an uncle in the police service who helped him break into Umthombo's offices to steal a computer, and that this police captain harassed Bayoglu and the Umthombo Resources' general manager.

Nesongozwi was allegedly photographed buying the police captain liquor as a reward.

Bayoglu claimed Nesongozwi accused him of racism, likening the Turkish national to Jan van Riebeeck, and physically threatened him.

Nesongozwi's lawyers have advised him to refrain from responding to the allegations, saying these issues have been raised on previous occasions, including in existing litigation.

The lawyers said the allegations were a diversionary tactic aimed at a "never-ending process" of allegations and counter-allegations via the media.

While he refused to comment this week, earlier this month Nesongozwi publicly accused Bayoglu of fraudulently removing him as director of the company in 2009 and installing himself as sole director.

Nesongozwi also claimed that Bayoglu opened bank accounts in the name of Umthombo Coal, into which he was diverting proceeds from the sale of coal instead of allowing the money to flow back to Umthombo Resources.

Nesongozwi's lawyers claim Bayoglu has so far diverted R128-million, of which R50-million allegedly remains offshore in a foreign bank account.

Bayoglu has denied this.

Nesongozwi alleged that Bayoglu had prevented him and auditors from conducting a forensic audit at Umthombo Resources and that, after racking up a R61-million account with its mining contractor, Andru Mining, Bayoglu switched the contract to Close-Up Mining without providing Nesongozwi with a copy of the contract.

Bayoglu has denied this, saying BDO Incorporated, appointed by Nesongozwi, completed a forensic audit on the company's accounts up to March 2011.

He said KPMG was appointed auditor of both Umthombo Resources and Umthombo Coal, and a special purpose audit had been performed by KPMG on all accounts.

According to Nesongozwi's lawyers, both Bayoglu and Nesongozwi filed civil suits early this year. The applications were postponed indefinitely.

A third application by Nesongozwi against Bayoglu and others has called for mining activities to cease and judgment is awaited. Nesongozwi's lawyers have said an application for the appointment of an independent board of directors will be brought next week.

Bayoglu responded by saying such a cessation would result in more than 500 people losing their jobs.