THE CEO of Chinese-owned South African gold mining company Heaven-Sent has dismissed allegations made by whistleblowers of “gross misconduct”, nepotism, and fraud levelled against him and two of his top managers, saying the claims are “baseless”.
They include allegations of wasteful expenditure on residential improvements, the purchase of expensive laptops, a hunting trip and a golfing trip to Mauritius.
Phillip Spencer, Heaven-Sent Gold South Africa financial director, and Stephanus de Koker, vice president for financial reporting, made these allegations in court documents filed with the Labour Court in Johannesburg on October 1 as part of a legal battle with the company.
The allegations were levelled against Heaven-Sent Gold South Africa CEO, Jeff Dong, his COO, Johan Jansen van Vuuren, and chief commercial officer Mattheus Pieterse.
Dong in a statement issued to Miningmx on Tuesday that the disciplinary charges brought against Spencer and De Koker followed “several forensic investigations”. These probes related to alleged “irregularities” at the company and its subsidiaries during the tenure of the Heaven-Sent’s previous management, he said in a statement.
Insiders told Miningmx that from late January this year, soon after the company failed to list on the Hong Kong Stock Exchange in December, the company purged many of its top managers. Dong took over as CEO in February. Gerhard Botha, the lawyer for Spencer and De Koker, declined to comment without seeing Dong’s full statement.
In an e-mailed response to Miningmx questions, Botha added that his clients had denied the Heaven-Sent allegations of impropriety under oath.
Dong declined to answer 26 questions by Miningmx put to him in an e-mail on Monday which relate directly to the allegations.
The public relations firm hired by Dong for ‘crisis’ communication told Miningmx on Tuesday that: “We do not have a reply to your questions” as he was sick in hospital after screening positively for Covid-19 disease. But the communications consultant added that Dong had reviewed the statement he issued from his hospital bed.
Heaven-Sent owns the Tau Lekoa and Kopanang gold mines through subsidiary, Village Main Reef (VMR). Heaven-Sent Gold South Africa’s ultimate controlling shareholder is the Chinese private equity company Heaven-Sent Capital Management Group.
Up to 7,000 jobs were at risk earlier this year but the company said this week that it had recalled employees at Kopanang whilst the recall of employees to Tau Lekoa was in progress.
Spencer said in documents filed in court that from the end of March this year, he witnessed a “… complete breakdown in internal control and governance” at Heaven-Sent Gold South Africa.
In contrast, before Dong took over in February, “high-quality internal controls” were in place and “operating effectively”, Spencer claimed.
Spencer alleged in court documents that in April this year, those involved in the monthly stock take found that someone had taken assets worth between R8m and R12m from a storeroom at the Kopanang West Gold Plant and transferred to another part of the company without the proper paperwork in place.
In July this year, Spencer alleged that Jansen van Vuuren made him a “highly unusual offer” of a vehicle and that if Spencer didn’t accept that offer, then Jansen van Vuuren said he would have him excluded from the management of the company.
Spencer stated in court documents that he rejected the offer as he alleged that Jansen van Vuuren wanted him to “overlook several breaches in internal governance”.
He noted that the National Prosecuting Authority (NPA) had criminally charged Jansen van Vuuren in a matter lodged at the Stilfontein Magistrates’ Court.
NPA North West spokesperson Henry Mamothame said that Jansen van Vuuren was one of the accused in a criminal matter. But the NPA withdrew the charges against him after one of the other accused pleaded guilty to the charges and received a sentence, he said.
Under Dong, the company disbanded its tender committee, and there were signs of “potential malfeasance” through the allocations of tenders and jobs to friends and family, Spencer alleged in court papers.
He alleged that there was a “high likelihood” that Heaven-Sent diverted gold smelted from ore mined at the Kopanang and Tau Lekoa mines to South Bay Trading (SBT).
SBT manages Heaven-Sent’s surface mining operations and has Pieterse as its sole director. “If proven to be correct, this would amount to gross misconduct,” Spencer alleged in the court filing.
He alleged that instances of nepotism became rife at the company once Jansen van Vuuren arrived, including six such cases.
Spencer raised the alarm about Jansen van Vuuren’s refusal to allow the company to submit an insurance claim following an armed robbery at the company’s West Gold plant on March 10 this year that resulted in a loss of R9.3m.
He alleged that Pieterse instructed him to set up a trust to evade tax, despite advice from lawyers and tax professionals that this was illegal.
Spencer also in the court documents identified an alleged fraud in that Jansen van Vuuren’s wife issued Covid-19 travel permits to people who the company did not employ.
He alleged that Dong, Jansen van Vuuren and Pieterse manipulated matters such that the company paid for most of their personal costs and disguised these expenses as business-related spending.
In court documents, Spencer listed instances of this alleged enrichment paid for by the company:
– R5m on renovating residential properties in Stilfontein for Dong, Jansen van Vuuren, Pieterse and their partners when they visit the company’s mines,
– R614,000 on credit card expenses that Dong and the two managers did not provide any supporting documentation,
– Wasteful entertainment expenses of at least R320,292 during this year,
– a hunting trip costing at least R222,974,
– luxury Apple MacBook laptops for Jansen van Vuuren and his wife,
– the hiring and purchase of luxury vehicles for Dong, Jansen van Vuuren and Pieterse,
– the installation of Wi-Fi at Jansen van Vuuren’s residence,
– the rental of luxury residences for Dong, Jansen van Vuuren and Pieterse,
– and a trip to Mauritius including golf, luxury hotels and duty-free purchases.
On 30 July, Dong e-mailed staff at the company’s Johannesburg office, where Spencer and De Koker worked, announcing that the office was closing on August 3 and everyone was to move to the company’s offices in the North West province, Spencer said in court papers.
However, the company failed to consult with the staff about this decision, and the closure cost of almost R6m was “commercially irrational”, he added.