Sentula reckons R242m stolen

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Robin Berry, CEO Sentula Mining

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Sentula reckons R242m stolen
Allan Seccombe
Posted: Wed, 22 Oct 2008

[miningmx.com] -- SENTULA has provided for R242m to account for stolen cash from the contract mining and coal producing company in what its chairman Sam Jonah described as the worst case of theft he�d come across in his corporate life.

A number of assets within Sentula, in particular in the Scharrighuisen Open Cast Mining Section, were either sold or overvalued and funds diverted into a hitherto unknow company account and siphoned off from there.

The value of those funds is R242m. A number of managers have left the company and have generally participated helpfully in the investigation. There is one individual that Sentula and its auditors KPMG are unable to contact and whom Sentula is most anxious to speak to.

I�ve never seen such nakedness

Documents related to one person in preparation of a civil case have been lodged with the police with the view to them investigating a criminal case and making an arrest. More information related to a "few more" is being prepared ahead of being forwarded to the police, said director Jonathan Best.

Sentula requested a voluntary suspension of its shares on the JSE on 11 September and it will not resume trade before it posts annual reports to shareholders on 12 November, CEO Robin Berry told a presentation in Johannesburg.

�In my corporate life, and I�ve been around the block a few times, I�ve never seen such nakedness in terms of such potential criminality and fraud,� Jonah said.

Director Jonathan Best said a very convoluted scheme had been uncovered.

"Had we found the bank account and the money was there we would have simply debited the bank and credited fixed assets and it would be business as usual," Best said. "But we don't have the money in the bank account, so we've had to drop the value of the fixed assets and raise the debt in the bank account."

"The directors of this company are very happy that the balance sheet is intact and there are no holes," he said, adding there had been an exhaustive verification of the assets within the company.

It was difficult to say how much money Sentula would be able to recover and how much of it actually belongs to Sentula, he said.

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Management stressed that Sentula�s ability to repay its debt, meet its contractual obligations were all unaffected by the initial results of the audit which is still ongoing. Its cash position is unaffected and it hopes that some of the missing money can be recovered, said Berry.

The irregularities came began to surface in the middle of 2007 when management wanted to sell some assets but were told internally that they would make large losses. This despite the fact there had been no impairment of these assets in the results for the year to end-March, said chief financial officer Deon Louw.

There are unlikely to be more impairments or provisions that Sentula has to make, he said.

The net asset value per share is estimated at R8.03 and were it not for the provision it would been just over nine rand. "But this doesn't go to our ability to generate cash flows to service our debt, it does go to our ability to meet our contractual obligations," Louw said.

The bank account was discovered in August and served as a conduit for misappropriated funds.

Management was very circumspect in describing the circumstances for fear of jeapordising the investigation. They used terms such as "irregular manner", "to the detriment of the company" and "misappropriation".

It has decreased the value of its property, plant and equipment by R200m to R2.2bn.

Sentula provides contract mining services on the coal assets of Anglo Coal and BHP Billiton. It is a part owner of BHP Billiton's old Koornfontein mine and has a number of other coal projects that will come into production over the next 18 months.

Berry estimated that with its contracting business and its own coal assets, Sentula is responsible for providing around a fifth of the coal that goes to state-owned electricity supplier Eskom.

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