The Directorate on Corruption and Economic Crime (DCEC) is reportedly investigating a number of transactions at the embattled BCL mine. On Wednesday assistant Minister of Presidential Affairs and Public Administration Dikgang Makgalemele informed parliament that 18 cases were classified for investigation, nine were closed due to lack of evidence while eight were still under investigation. He said the reports involved issues of conflict of interest, corruption in security tenders and corruption in the recruitment process, payment of bribes relating to transportation tenders, and payment of bribes in maintenance contracts. Information gathered by this publication has revealed the main cases investigated by the corruption burst unit revolves around the ambitious POLARIS II project, which was launched by the state-owned mining company few years ago.
The Norilsk Nickel assets
After paying off government, BCL embarked on an ambitious expansion programme known as POLARIS II and as part of diversifying its products the state-owned mining company reached an agreement with Norilsk Nickel to buy stakes in two nickel mines in South Africa and Botswana for $337 million from Russia’s Norilsk Nickel, the world’s top nickel and palladium producer. The decision to embark on the ambitious project is the brainchild of its Managing Director Dan Mahupela after they managed to pay government P3.3 billion of which P2.3 billion was converted into equity shares while BCL paid P1 billion. According to close sources to the deal, DCEC is now investigating on how the deal was reached and whether some of the top executives didn’t engage in unorthodox methods during the negotiations. Information unearthed by this publication has shown that BCL Management used more money for travelling to and from South Africa though they were using the company’s private jet.
At one point one executive allegedly requested that P20, 000 be deposited into his account after hours and was never accounted for. Another issue that has raised eyebrows is the exorbitant charges from the consultant who was engaged in the Norilsk Nickel deal. The auditor, who was engaged by the board of directors, is said to have questioned why BCL limited chose to engage a consultant when buying both Nkomati and Tati Nickel Mines when they have experts to carry out the deal. According to the deal, BCL was to take over from Norilsk Nickel subsidiary Metal Trade Overseas AG (MTO) a commitment to buy the concentrate from the Nkomati operation while at the same time Norilsk’s MTO was to enter into an agreement to buy nickel matte from BCL, which the Russian company was to process at its Harjavalta refinery in Finland.
As part of diversifying from copper nickel, BCL which was now loaded with cash, bought 50.5 per cent into a shelf company Pula Steel Casting and Manufacturers while CEDA owned 26%, the Verma Group 17% while citizen-owned company Wealth Generation Holdings (Pty) Ltd holds 6.5%. In 2014 an audit report questioned why BCL Limited would go against the company policy of not partnering with private companies on any business. In their defence BCL management argued that they partnered with the Verma family as they have experience in steel manufacturing. The report questioned why BCL didn’t start a steel manufacturing plant on its own. BCL injected P89 million for the construction of the plant which was the initial budget but the money was gobbled within three months forcing the company to seek additional P38 million funding. They have been allegations that some of the funds could have been diverted to Recycled Energy and Fuels, a company owned by Deepak Verma – one of the directors at Pula Steel Casting and Manufacturers and Sarah Mahupela wife of BCL Managing Director. In his answer to Parliament Minister Makgalemele revealed that some of the cases involve conflict of interest.