South Africa's Gold Fields says under U.S. SEC investigation
JOHANNESBURG (Reuters) - South African bullion producer Gold Fields said on Tuesday it was being investigated by the U.S. Securities and Exchange Commission over a $210 million black empowerment deal involving a senior member of the ruling party.
Gold Fields, which is also listed in the United States and so subject to scrutiny from U.S. regulators, said in a statement it was being probed over the 2010 deal and the granting of a mining license for its South Deep mine near Johannesburg.
The 2.1 billion rand ($210 million) transaction saw Gold Fields give a 9 percent stake in South Deep to a group of black investors to meet government targets for black economic empowerment (BEE), including black ownership.
The ruling African National Congress has championed BEE to redress the inequalities left by white-minority rule, which ended in 1994.
Critics say BEE has mainly benefited a narrow elite of politically connected individuals and failed to transform what is still one of the world's most unequal societies.
The South Deep deal has come under particular scrutiny because the beneficiaries include ANC chairwoman Baleka Mbete, as well as relatives of anti-apartheid heroes including Nelson Mandela.
The ANC said in a statement it was considering legal action against the Mail & Guardian newspaper for an article last week that alleged Mbete used her political clout to benefit from the deal.
Gold Fields, South Africa's second-biggest gold producer by revenue, said last month an independent investigation found the implementation of the transaction did not meet its own standards and Chief Executive Nick Holland has waived his 2013 bonus as a result.
The company has not released the results of the investigation, which it commissioned following local press reports about the deal.
Former Gold Fields chairwoman Mamphela Ramphele - who has since founded a party to challenge the ANC - told the Business Day newspaper in March the firm had come under government pressure to include specific shareholders in the deal.
Gold Fields has said Ramphele's comments represent her personal view.
Holland himself told Business Day in 2012: "In discussing the details around South Deep we got stuck: there were certain people who decided they had a lot of power and authority and they were going to wield it."
The company has said it wanted to identify people who had "contributed to the successful and peaceful transition to democracy in South Africa," as beneficiaries for the deal.
The deal has also made headlines because of the participation of Gayton McKenzie, a flashy ex-convict-turned-businessman and motivational speaker.
McKenzie wrote in his 2013 book "A Hustler's Bible" that he was "appointed to lead the Gold Fields mining license application".
"I made them understand that they had a big problem at their company with their license application," he wrote.
Gold Fields has dismissed allegations that McKenzie used his influence to place politically connected individuals in the deal in order to secure a license for South Deep.
"It is critical to note that the South Deep license was awarded before the participants in the BEE consortium were finalized," the company said in a statement last year.
Shares of Gold Fields were down 0.9 percent at 51.80 rand at 1418 GMT. ($1 = 9.9795 South African rand)
(Editing by Pascal Fletcher and David Cowell)
- Alabama man gets $1,000 in police settlement, his lawyers get $459,000
- Probe: Athletes took fake classes at University of North Carolina
- Ottawa pushes for business as usual after shootings |
- Man arrested after jumping White House fence, causing lockdown
- U.S.-led air strikes killed 521 fighters, 32 civilians in Syria: monitor