[miningmx.com] — WESIZWE Platinum CEO Mike Solomon has been cleared by his Board over various allegations following forensic investigations by independent auditors Deloitte & Touche and legal firm Deneys Reitz.
The finding of the review was that, “there was no evidence of fraud, material financial loss, theft or a material breach of fiduciary duty on the part of the Company’s chief executive officer, Michael Solomon.’
Despite this, Solomon is sticking to his decision announced in November to step down when his contract ends on September 30.
He will be replaced by current finance director Arthur Mashiatshidi but will remain a non-executive director and will continue to consult to Wesizwe for a further six months.
Solomon’s decision to step down comes at a critical juncture for Wesizwe which is in the process of nailing down the contractual nuts and bolts of the agreement struck in May to sell 51% of the company to a consortium of Chinese investors for R6.6bn.
Wesizwe chairperson Dawn Mokhobo told a media briefing in Johannesburg on Wednesday that Wesizwe’s top management would leave for China on Sunday to update the Chinese consortium on the latest developments.
Mashiatshidi stressed this meeting was one of a number that had been scheduled to complete the contractual process following the signing of the term sheet which had settled the commercial terms for the deal.
He said he “hoped’ to have everything concluded by the end of the year.
Issues that would also be discussed with the Chinese included the latest management changes at Wesizwe as well as the company’s black economic empowerment (BEE) situation.
Solomon played the major role in negotiating the deal struck with the Jinchuan group and China Africa Development so his departure may well be a controversial topic in the discussions.
Mokhobo stressed that Mashiatshidi had also been heavily involved in the negotiation of the deal with the Chinese.
Solomon added, “I will be around for as long as I am needed and for as long as is appropriate.’
Asked why he was leaving despite being cleared of the all the allegations levelled against him Solomon replied, ” after six years at the helm I think it’s time for a change in leadership.
“Wesizwe is shifting from being an exploration and development company into one that will now build a platinum mine. That will require a different management team with different skills.’
Solomon was fired along with former chairman Rob Rainey in November last year and then re-instated at an extraordinary shareholders’ meeting on December 17.
That meeting – which truly was extraordinary because of the ill-tempered exchanges between various parties and the frequent disruptions to proceedings – revealed deep rifts amongst various factions in the Bakubung-Ba-Ratheo Tribe which holds a direct 12.58% stake in Wesizwe.
Precisely who controls those shares and what their BEE status is are also issues of contention following deals struck by the Tribe which has placed them in various special purpose vehicles (SPVs) on the advice of private equity firm Musa Capital.
Matshiatshidi said Wesizwe’s information was that the entities holding the shares were BEE compliant.
Solomon added, “we have alternative strategies but these cannot be used until we are informed that the entities are not BEE compliant. As you know, there is a legal action underway concerning this at present.”
Asked whether his decision to step down had been influenced by this confrontation Solomon replied, “that’s an interesting question. I think that Wesizwe is a good company which has been unduly affected by the sideshows taking place around it.’
A total of 128 transactions over a three year period were investigated out of which Deloitte & Touche was unable to reach a definitive conclusion concerning 17.
Reasons for that were poor record keeping at Wesizwe and no formal policy by Wesizwe on credit card expenditure and international travel until October 2009.
Deloitte & Touche could find no evidence to substantiate allegations that the company paid for helicopter flying lessons for Solomon nor any transaction where Solomon bought jewellery for his wife on which the report commented, “it is not clear where this allegation comes from.’
The 17 transactions were referred to the Wesizwe board for a final decision.
Mokhobo commented, “the Board has resolved to fully exonerate Michael Solomon and Robert Rainey.’
She described the items as “insignificant in the bigger scheme of things’ and stressed Deloitte’s finding that the original internal audit report had been completed in a very short time and Mr Solomon was not given an opportunity to refute the allegations.
“Had the report been completed the matter would not have warranted so much of the Board’s attention.’
Mokhobo pointed out the cost of carrying out the forensic reviews was enormously greater than the cost of the irregularities alleged against Solomon although she declined to give a specific figure.
The writer owns shares in Wesizwe Platinum.
