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» Randgold survives “massive fraud”

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Brett Kebble’s odyssey of abuse
David McKay
Posted: Fri, 31 Mar 2006

[miningmx.com] -- THE forensic investigation into the accounts of Randgold & Exploration (RG&E) hinges on six separate instances of malfeasance between 2002 and 2005, one of which is an audacious scrip-lending scam to conceal a portion of the misappropriation of Randgold Resources shares worth R1.5bn, and a further R115m of DRD shares (now called DRDGOLD).

The first misdirection to shareholders, however, was in the presentation of RG&E accounts for the period to end 31 December, 2002 which mis-stated the value of RG&E’s total investments, including its 48% stake in Randgold Resources. RG&E said the assets were worth R1.8bn, but the forensic investigation shows they were worth R1.56bn.

By the end of the 2005 financial year, the total value of assets in RG&E, including the Randgold Resources shares, had fallen to R674m. What happened in the intervening three financial years?

Most of the corporate abuse identified by the forensic audit involved the issue of new RG&E shares, the proceeds of which rarely ended up being put to their stated use.

For example, RG&E issued new shares to buy Pikoloso, an empowerment company that claimed to have investments in a number of mining companies, such as Harmony Gold, Aflease and Anglo Platinum. But Pikoloso never actually owned these shares. In any event, RG&E CEO, the late Brett Kebble, had an interest in Pikoloso by means of a complicated ownership structure. This suggests that Kebble was just issuing RG&E shares to himself.

Pikoloso also swapped a 75% stake in Kabusha Mining in return for 23 million Aflease (Aflease Gold & Uranium Resources) shares, but never actually paid for the Kabusha stake. And those involved in the deal have since admitted it was a simulated deal.

Aflease has since been divided into two companies, the Toronto-listed sxr Uranium One, and Aflease Gold, a Johannesburg firm.

The forensic report reveals other dealings involving Aflease in which RG&E swapped about 9.4 million of its shares worth R94m for Aflease shares worth R161.7m. Most of the proceeds from selling the Aflease shares were funnelled back to RG&E although R17m found their way into JCI’s coffers among others.

New shares were issued again by RG&E to buy shares in gold producer, Western Areas. But the purchase of Western Areas shares was never actually concluded.

Once again, eight million new shares in RG&E worth R162m were issued to buy diamond prospects in Angola. Owing to its conduct, the mining prospects have since been expropriated by the Angolan government bar one which current RG&E management has sold for about R6m.

As for scrip-lending deals, this proved to be an elaborate cover involving a number of RG&E employees.
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According to the forensic audit, shelf companies called Kimonshey and Notable Holdings were established by Kebble. These were the companies through which the various scrip-lending deals were supposed to be conducted. The scrip-lending was designed to book a profit on the swap of shares in Randgold Resources for shares in other companies.

But the deals never existed. This is notwithstanding documentation, that later proved to be forged, ordering the swaps. This misdirection was not discovered by the RG&E audit team until about four months into the six month-long investigation.

Scrip lending by Kimonshey concealed the fact that shares in Randgold Resources had been sold into the market worth R64m. Notable Holdings appeared to have swapped R115m worth of DRD shares owned by RG&E.