Behind the irony curtain: Blood Diamond, Xolobeni and the real story of MRC.
Shareholder activism for a “new civil economy”.
Preamble
“I am looking at an incredible view right now” says Danny Archer (Leonardo di Caprio), mortally wounded, taking in the beautiful African landscape while speaking on a Satphone to Maddie Bowen (Jennifer Connolly) as the Hollywood blockbuster movie Blood Diamond moves to its resolution.
It truly is an incredible view. The setting is in fact the Mzamba estuary and flood plain on the Pondoland Wild Coast, pretending to be an alluvial diamond mine in Kono Sierra Leone.
They share final farewells as he asks her to assist Solomon Vandy, who has retrieved the enormous diamond that he had buried before being captured at the start of the film. It is that ‘Big Pink’ around which the story revolves, “The kind of stone that can transform a life.. or end it” as the production notes explain.
As his life ebbs away, his red blood mingling with a handful of red earth, he gives her permission to finish her article exposing the dealings of a corrupt South African mining executive Rudolph van de Kaap (Marius Weyers) enmeshed with rebels who have enslaved local villagers to harvest diamonds to fund their civil war in Sierra Leone.
“Its a real story now. And you can write the hell out of it.”
It truly is a real story. But for the fact that it is not conflict diamonds but deposits of titanium and other heavy minerals that are the source of the conflict.
This four and half minute sequence sets the scene for my story. Fetch the tissue box first and watch it.
On 30 May 2018 shareholders of MRC Ltd will again gather in Perth Western Australia for their Shareholders Annual General Meeting. Few of the shareholders of today were among the shareholders who owned the company in 2007. This story is told for the benefit of all investors, both recent and long term. It is the story of MRC’s ill-fated ambition to obtain mining rights for the titanium-rich Xolobeni Mineral Sands project on the Pondoland Wild Coast of South Africa. It is a story rich in both history and mystery, and asks investors to dispassionately consider who poses the greater risk to the return on their investments in South Africa: the seven South Africans whom the company and Mark Caruso are now suing for defamation? Or Mr Caruso himself for attacking the messengers because he didn’t like their messages?
Then
“Engagement is a process of wrestling — seeking not to destroy, but to challenge (and accept being challenged) and to uplift. As Walter Wink says, ‘The Powers are good. The Powers are fallen. The Powers must be redeemed.’ Engagement, then, is about action for transformation. It is not about terminal destruction.”
Alastair McIntosh. Soil and Soul: People versus Corporate Power.
Australian junior mining company Mineral Commodities (MRC) Ltd trades as a so called “penny stock” company on the Australian stock exchange along with some 1200 other small mining exploration companies to secure venture capital. MRC‘s founder Mark Victor Caruso has identified a few minerals and mining prospects, mostly in Africa, but after nearly two decades has only brought one into production.
To better appreciate the role of small mining exploration companies like MRC let’s draw an analogy from nature — the fascinating productivity strategy of a beehive. Apparently, the division of labour of worker bees between scouting and producing is governed by an 85/95:5/15 ratio. Eighty to ninety five percent of the worker bee population fetch the pollen and turn it into nourishing honey while between five and fifteen percent are out scouting for new sources of pollen at any one time. To keep the whole hive supplied with raw material on a sustainable basis requires adherence to the ratio. With a waiting swarm in attendance, upon returning to the hive a scout performs an intricate dance to indicate the direction and distance of a new pollen source. The swarm flies off, but intriguingly some of the workforce are obedient to the flight plan. While they go and collect the raw material and bring it back to transform it into honey, five to fifteen percent fly off randomly. Those that do return again indicate another fresh resource of pollen. The cycle thus repeats itself to leave human observers with a somewhat counter-intuitive rule of thumb principle to ensure the viability of any enterprise: the long-term survival of the hive depends on the random behaviour of a small minority of the productive workforce. (Watch this for a lesson on how the analogy transfers into organisational culture).
Back in 2007, in the context of the global mining industry, MRC was one such bee. Its market capitalisation was very small; it only had three directors, two of whom are brothers, and for some years the board only met once a year at the AGM of shareholders. With few costly overheads, it maintained its listing on the ASX with the part-time services of a professional company secretary who also took care of the obligatory reporting and adherence to ASX rules of other (presumably similar) ‘scouts’.
The Caruso family made their money in earth moving equipment and road construction, and it seems MRC was a sideline venture into a front line mining exploration and operation that piggybacked on the former. Mark Caruso did not have in-depth experience in the wider and more complex aspects of successful mining. It seems he thought Africa would be ideal to exercise his entrepreneurial ambitions to diversify. Two other private family operations are located at the same address as MRC, Zurich Bay Holdings (a major shareholder in MRC and provider of loans) and Simto.
In 2006, Caruso vaunted three promising ‘pollen sources’: a diamond tailings re-treatment operation in Kono, Sierra Leone, and two Mineral Sands ventures in South Africa, The Xolobeni Mineral Sands project on the Eastern Cape Wild Coast, and the Tormin Mineral Sands project on the Western Cape Coast. Caruso and his two co-directors believed these would yield a real share value that was much higher than its listing at the time. On that basis he marketed MRC to investment fund managers and others with money to spare, as an investment worthy of their consideration.
To purchase one MRC share on the stock market on 18 May 2007 only required a lowly 17 Australian cents. In a sudden unexplained change of fortunes, three days before the shareholder AGM, the traded share price dramatically climbed to 26 cents, an increase of some 40%.
Looking beyond the vagaries of the stock market, what was the real value of MRC’s shares at the time?
This question is inspired by comments made by internationally regarded South African retired judge Mervyn King at the Business and Human Rights Conference held in Johannesburg in January 2007 hosted by the Foundation for Human Rights.
A bit about the man. After he retired in 1994 as a judge of the Supreme Court of Appeals, he was invited by the Institute of Directors in South Africa to oversee the drafting of what became known as the King Report on Corporate Governance — the first aspirational corporate code for companies listed on the South African Securities Exchange. King viewed this as an opportunity to educate the newly democratic South African public on the working of a free economy. The committee’s report was to be the first report of its kind in South Africa, and came to be admired internationally. Since 1994 his pioneering work has gone through four iterations, each improving on the previous to shape standards of good corporate governance that appeal to commitment rather than formal legal compliance in respect of guiding principles for corporate reporting on non-financial, environmental and social issues. This was in keeping with growing demand of a globalising world to reframe the accountability of directors of corporations for a planet in a worsening state of ecological crisis. His reputation made on the national stage in South Africa, he was subsequently appointed as chair of the UN-sponsored Global Reporting Initiative and continues to share platforms to educate and inspire leaders in government and industry to raise their game in reporting. He is now Professor Extraordinaire at the University of South Africa and visiting professor at Rhodes university.
His 2011 explanation of Integrated Reporting elaborates.
My notebook from the 2007 conference reveals Prof King to have explained his vision as follows:
“We are now in an era of a ‘new constitution of commerce’ with a new civil economy …when you buy a share in a company that is listed on the Securities Exchange the price does not equal book value. Over the last few hundred years accounting standards, principles and methods have been developed in the trading of things, like this glass in my hand. But now we are recognising that intangible things — non-financial aspects — have become extremely important in valuing a company. Issues like the reputation of management; the reputation of board members; how the company treats it people; how it relates to it suppliers and so on. Does it really meet the expectations of its stakeholders? Has it really become a member of this constitution of commerce, of this new civil economy?
We unwittingly make these estimates in valuing shares. We must, because the real value, the price we pay, for the share is not equal to the nominal book value. We are paying for that intangible quality, which I call ‘forward looking information’ so we can make an estimate of the true value of that company, and the institutions of trade make that estimate today on a long-term sustainability basis.
We are in the era of governance, the era of a new civil economy. There is a new constitution of commerce, which is a holistic approach in the way we direct corporations because they belong to you and me.”
To ears still somewhat wet behind, this was music for drying them. Two months earlier, on 28 November 2006, MoneyWeb had published a damning expose of MRC’s false claims and promises with respect to the Xolobeni mining venture. In a report headlined “Go Home Aussies” financial journalist Julius Cobbert had been tasked by his editor Alec Hogg to investigate after I had shown him evidence that sharply contradicted Mark Caruso’s version of what was happening on the ground in the Amadiba community at the time.
Judge King’s inspiration helped shape a Shareholder Activism strategy over the ensuing six months that, had he been correct about the emergence of a “new constitution of commerce in a new civil economy”, would have shut down MRC, avoided the deaths of at least three local residents and allowed eco-tourism to again flourish to create income generating opportunities for the Amadiba community and others living on this spectacular stretch of coastline.
How so?
MRC traded entirely on ‘forward- looking information’ and relied on investor faith in intangible qualities to attract capital for the transformation of opportunity into actuality. Like any other venture capital enterprise, MRC could remain in business only for as long as its gambles paid off, and its prophecies acquired the requisite self-fulfilling character to build a momentum of investment — an investor bubble. It is easy and relatively painless to buy and sell shares in MRC for those with money to spare. Playing the stock market as a recreational pastime has an advantage over trying one’s luck in a casino. Those disposed to the rationalisations of neo-liberal economic theory can at least comfort themselves with the thought that their cash is going into a shared entity that heralds some long term, added-value, holistic benefit to society. The odds in a casino are stacked against the gamblers who know that the ‘house’ will never lose the zero-sum game. And the ‘house’ winnings simply enrich the shareholders of the gambling enterprise. Gambling contributes nothing to the common good.
Listed companies like MRC need to attract investors who, while motivated by the same gambling incentive, are ultimately only going to keep ‘gambling’ if their investment yields real dividends. In the meantime, management must inspire confidence.
Negative publicity created by the Hollywood blockbuster Blood Diamond that exposed the violation of human rights in diamond dealing activity in Africa made Mark Caruso’s job a lot harder. This is particularly so because in late 2006, oblivious of the imminent release of Blood Diamond he chose to describe the company’s Kariba Kono diamond tailings dump retreatment project in Sierra Leone in terms that echo the theme from the screenplay.
“The No 11 tailings dump resulted from alluvial diamond operations in the 1960’s by the Sierra Leone Diamond Trust. Although the plant was advanced for its time, investigation into the operating history of the plant after the fortuitous discovery of the 969.8 carat “Star of Sierra Leone” diamond (my emphasis) indicated that the initial plant design was flawed and it is believed the operating efficiency would have been reduced with time, leading to the loss of diamonds to tailings.”
Another ‘big pink’ perhaps?
MRC’s website turned up information that told us that MRC’s auditor had to qualify his audit report because the set of books that MRC had inherited in purchasing Erebus Plc Ltd (which owned the Kariba Kono Diamond tailings dump) were in shambles.
But such things are often put down to bad luck rather than bad judgement. The most successful entrepreneurs will turn these setbacks to their advantage, re-framing them as tests of courage and character. These provide the stage for them to redouble their efforts to convince a sceptical investor audience that a project is beyond reproach in financial as well as non-financial standards of accountability.
But it was the Xolobeni Mineral Sands ‘pollen source’ located on the Pondoland Wild Coast of South Africa that was testing the resolve of MRC directors and staff most severely. MRC hoped to receive a licence to mine a 22 km stretch of coastline for heavy mineral deposits that would fetch an estimated US$ 1,6 billion in revenues over its 22-year lifespan (this rare symmetry between space and time dimensions is not an error).
It was proving extremely controversial because, in another strange symmetry, its rare concentrations of non-renewable minerals happen to occur in what is known as a global biodiversity hotspot. The area known as the Pondoland Centre of Plant Endemism is the habitat of plants that only grow here. If interfered with they are threatened with extinction.
Would these survive the mining operation as well as the associated socio-cultural upheaval that would invariably be left in its wake?
It is such matters that constitute the “forward-looking information” which Mervyn King highlighted as necessary to assess the intangible component of any company’s real share value. At the time I thought it reasonable to assume that, once they had been appraised of the facts, even the most crassly ignorant ‘casino capitalist’ would think twice about investing in any company which threatened biodiversity. Given King’s confidence in a new era of accountability, enlightened investors of the ‘new constitution of commerce of a global civil economy of accountability’, would surely listen and act appropriately.
Although not using these precise words, MRC corporate policies, of course, claimed all the predictable noble intentions that presented the company as an organisation true to the norms and values of the emergent “civil economy”.
Caruso confidently assures his investors and the media that the Xolobeni venture would scrupulously avoid threatening such rare biodiversity. He asserted that mining would, in fact, achieve a net environmental gain by ‘rehabilitating’ the ‘degraded’ dunes in which the heavy minerals lay.
Environmentalists regarded such ambitions as fanciful and the use of the word ‘degraded’ pejorative and misleading. There was no scientific evidence then, or now, to back up theories that the exposed sands were due to anything else besides an entirely natural process of interaction between the primal elements of Earth, Wind, Fire and Water, which combined to produce heavy concentrations of certain minerals over long geological time horizons. Moreover, the discovery of Stone Age artefacts in the supposedly ‘degraded’ dunes date back to the Sangoan Era (between 150,000 to 300,000 years ago) provided another sound reason for making the dunes off-limits to any mining operation, at least until a full heritage assessment had been completed.
The archaeological aspect suggested that Judge King might have added “backward-looking information” as of equal importance for the proper determination of the intangible aspects, in assessing the real value of a corporate entity in an emergent global civil economy. Looking back in time I discovered that besides rare plants and rare minerals, the AmaMpondo people who live in this beautiful place are also somewhat unique. Sinegugu Zukulu, born into an Mpondo clan on the Wild Coast, is as remarkable as the rare endemic “nKhomba” Palm (Jubaeopsis caffra) which grows below his ancestral home in the Mntentu River Gorge.
Sinegugu and some 28,000 proud Mpondo live in isolated rural households within and adjacent to the proposed dune mining area. Few besides Sinegugu are aware that the heritage of endemic plants, like the nKhomba palm (and numerous other rare endemic plants) heritage of endemic plants has an intangible value that no share price could possibly factor in its commercial trade value. Sustaining the Wild Coast stalwart Val Payn, another prophetic voice alarmed at the failure of the global economy to account for the value of biodiversity, asked in an article, “At what cost the loss of Pondoland Centre of Endemism?
In assessing the relative merits or not of development projects, traditional methods of economic assessment give a false accounting in that they seldom, if ever, accurately account for the value and benefits of natural resources to communities, nor adequately reflect the loss of these to the economy when ‘balancing the books’ of potential development schemes. This gives rise to a weighted accounting of the relative merits or not of any particular development.
Perhaps this is because, historically, the abundance of natural resources had made us perceive them as ‘for free’ (and often ‘free’ seems to serve as a pseudonym for ‘limitless’). With the global environment in crisis as a result of the abuse of natural resources, partly because the true value of them has never been properly accounted for, traditional economic methods clearly fall short when used to assess the merits of proposed schemes.
For instance, mining is traditionally considered a highly profitable industry, and some people, and countries, have amassed great wealth on the produce of mines. But the accounts of mining companies never reflect the losses that mining causes to the environment and to society–the permanent loss of productive land to mine dumps, the economic cost to society of air and water pollution as a result of mining activities and the health implications thereof, the social and development costs when mines close because the resource is depleted or through mine-related injuries, or the social and economic costs when communities are moved or disturbed because of mining activities. If mining companies had to bear the cost of these factors and pay compensation for the loss of these to society, would mining be considered such an economic ‘gold mine’?
Considering that the wellbeing of all of humanity depends upon the optimal functioning of natural systems this seems a horrendous oversight.
It would be a pity if the future economic development potential of Pondoland were gambled away on short term stakes. One cannot bring species back from extinction, and the communities that depend for a livelihood upon the PCE cannot afford development mistakes. Nor, for that matter, can South Africa.
Plausibly, the dune mining project would boost the local economy, at least until the minerals run out. Besides jobs and infrastructure development, a local empowerment partner the Xolobeni Empowerment Company Pty Ltd (Xolco) had been set up in 2003 to channel revenues from dividends from the obligatory 26% Broad-based Economic Empowerment shareholding in the venture to a number of charitable trusts.
At risk of taking this story along a long and winding detour, the birth and ‘DNA’ of Xolco needs to be explained, not only to understand where the soft underbelly of the Xolobeni mining scheme lies, but also as a lens through which to understand the utterly perverse nature of South African mining policy embodied in the Mining Charter and Mineral and Petroleum Resources Development Act of 2002 (MPRDA). Let it suffice to reference this film on YouTube, the Mtentu Moment (2003) and say in passing that, although MRC may own a controlling majority of shares in South African mining ventures, unless their local empowerment partner is committed to the idealistic norms and values of Mervyn Kings “new constitution of commerce in a new civil economy”, foreign shareholders who may aspire to such, might as well take their money elsewhere. MRC was dependent on Xolco to give them traction on the ground. Whatever potential value the partnership promised as a truly uplifting enterprise in 2003, its founder directors Zamile Qunya, Maxwell Boqwana and Patrick Caruso, proceeded to quickly squander it by deceit, manipulation and worse.
It was plainly obvious to everyone that the Amadiba coastal residents would need to adopt a formal communal land rights resolution that gave their consent to the proposed mining. Even Mr Qunya said as much in the 2003 interview. Nine minutes into the interview he says “Our government I trust even now will come to us before they come up with a recommendation. There will be no resolution without considering our views… There will be no road or mining that will happen without our consultation”
He said “consultation” rather than “consent” but seems to have realised that consent would be required when five years later he engineered the fraudulent submission of 3087 names of local residents (many of whom had long passed away) with forged signatures claiming their “prior, free and informed consent” to the mining. As this story will show, that criminal act spelled the death knell for MRC’s chances of securing mining rights, and Mark Caruso’s attempt to smother that detail suggests that he knows that too. Whatever analysts make of all the other scandalous information that surrounds MRC’s conduct in South Africa, Mark Caruso seems particularly anxious to try and distance himself from it.
I am able to offer that analysis because by May 2007, even though the fraud had not yet been committed (that act of desperation occurred in August/September 2008, and only came to light in 2009) I had already developed a close trusting social work relationship with a spectrum of local residents and community leaders who made it clear to me that they were overwhelmingly opposed to the mining scheme and would never consent to it. It was also clear to me from my interaction with Zamile Qunya that he showed clear symptoms of an anti-social personality disorder and was capable of doing whatever it took to achieve his personal agenda.
MRC shareholders weren’t to know that when they gathered in Perth for the scheduled AGM. All they knew was that MRC was nominally compliant with the law by having a empowerment partner that had been allocated the minimum 26% shareholding required as precondition for any successful mining rights award. Mark Caruso cited this as an inducement for other investors to have confidence in securing a return from investing in the 74% balance. However, he could not indicate how long it would take before the capital and technology-intensive operation yielded a dividend to MRC shareholders but did hint that, since Xolco did not have any money to pay for their 26% share, a contingent shareholder loan agreement had been signed between them whereby the 26% share was valued at AU$18 million. The loan will have to be repaid as a priority over other distributions of revenue once mining commenced. From the perspective of investors in Xolco, this meant they would score from the interest charged on the loan as well as from the revenues from the mining.
From the perspective of Xolco and the Amadiba coastal community they professed to serve, the loan repayment would further push the time threshold that Xolco shareholders would break even on their ‘investment’ into the future. Before getting into the ‘black’, they would have to settle the AUS$18 million plus interest all for the pleasure of having MRC mine their ancestral lands.
Considering that as at 31 December 2006 MRC’s total consolidated book value amounted to only $19 million, I explained all the above to a clandestine meeting with four directors of Xolco who had approached me for advice. They had been hastily co-opted by Zamile Qunya and Max Boqwana to try and give a more respectable face to Xolco following media reports that Xolco was “simply a group of businessman out to make a quick buck” as the Queen of the AmaMpondo alleged. I explained that it was not for me to try and dissuade them if they genuinely thought mining was a good idea, but that since MRC’s book value was only a few dollars more than the loan agreement, it would be in their interests to find another financial backer to lend them $19 million and buy the whole of MRC. That would secure ALL the shares in the Xolobeni Mineral Sands project, as well as prospects of returns from MRC’s other projects (if indeed there were any).
Disbelievingly they sought a second opinion from an independent mining analyst, who confirmed my analysis. Three of the four directors resigned from Xolco, realising they had been misled by Qunya and the Xolco attorney Max Boqwana (who had resigned as a founding director but remained as their attorney). This YouTube instalment The Truth About the Xolobeni Empowerment Company (2011) explains.
Those resignations happened some months after the 2007 Shareholders AGM. While Sinegugu and other local community leaders, Mzamo Dlamini and Nonhle Mbuthuma were busy exposing Qunya’s lies and deceits at the local level, I was tasked to get answers at the global level by continuing to scrutinise MRC’s reports to shareholders that are posted on the Australian Securities Exchange listing. Reports only tell you so much. We needed to make contact with the actual shareholders. And if we could not find any willing to talk, well, there was nothing stopping us from buying shares in MRC ourselves, and demanding answers at the AGM. This would both test the credibility of MRC’s management, and test the belief of Judge Mervyn King in the virtues of the emergent “global civil economy”.
A sympathetic contact in Australia found out from the share register that the most substantial shareholder was an investment fund operated by a Hong Kong based fund manager, Ward Ferry Ltd, called the Asian Reconnaissance Fund which owned 12% of MRC’s equity.
I confess a deeply ingrained prejudice and judgemental attitude to global capitalists who make vast sums of money by entirely speculative transactions on the stock exchanges of the world. But I was trying to follow the teaching of theologian Walter Wink in his three-stage strategy: Name the Powers, Unmask the Powers, Engage the Powers, advocated by Scottish Quaker Pacifist Alastair McIntosh who had been advising me. ‘Engaging the powers’ implies a willingness to engage in the hope that some common ground might exist upon which to develop a better way.
Is ‘engagement’ a milder form of confrontation? Or is confrontation a stronger form of engagement? McIntosh continues the opening quote above:
The Powers do have a rightful and necessary place in life. But when power ceases to be predicated on service, when it ceases to be carried lightly and held responsibly and accountably, its fallen nature shows.”
I wrote a lengthy report to Ward Ferry. It provided information on the Xolobeni Mineral Sands Project that MRC CEO Mark Caruso neglected to tell them in his reporting, and traced some links between bits of information that were present in the report but discreetly separated. I made the case for Ward Ferry, as a responsible fund manager accountable to its own investors, to make a “strategic intervention” in MRC, with both its investors and my clients interests in mind. It seemed that there was a convergence of interest to get to the unvarnished truth.
I didn’t specify what ‘strategic intervention’ should be made, since my professional code of ethics as a social worker obliges me to uphold the right of client self-determination, and I was careful to make it clear that my intervention was simply part of the process of connecting with all significant parts of the broader client system within which I was working. This led to an extremely revealing phone call with an anonymous staffer within the company. He confirmed that his bosses had received my report and were “considering its contents”, but that I shouldn’t expect any formal reply as they were somewhat “publicity shy”.
Suffice to say the conversation was very interesting. He knew Mark Caruso personally and said his company was becoming increasingly alarmed by his management decisions. “We have lost 40% of our shareholder value already.”
The identity of the mystery man remains a mystery. But a bigger mystery ensued. Shortly after my phone call in early April 2007, MRC’s share price started to pump. It rose in a steep and unusual upwards trajectory precipitating a query from the ASX authorities for an explanation for the sudden increase in volumes traded. In a letter to MRC dated 30th May 2007 they said in a letter to MRC, “We have noted a change in the price of company’s securities from $ 0.17 on 25th May 2007 to $0.23c today. We have also noted an increase in volumes trading in the securities during this period”.
Several questions were put to MRC effectively aimed at finding out if there had been insider trading. The ASX does not have many rules to constrain the free trade in shares, but does expect listed companies to request a trading halt on shares if information of a price sensitive nature becomes known.
In reply the Company Secretary said MRC was not aware of any information of a price sensitive nature that should have been announced, and could offer no explanation for the sudden pump in the price. He assured the ASX of the company’s compliance with all the rules of the game.
We then decided to insert another oar in the water. Besides having aroused Ward Ferry’s interest in MRC’s management decisions, we decided to get someone to attend the Annual General Meeting to ask some pointed questions.
As the day of the Shareholder AGM approached, and still believing the utterances of Judge Mervyn King urging civil society to build the momentum toward a “global civil economy of accountability” we found a sympathetic Australian businessman who offered to buy some shares in MRC so that we could empower two proxies to attend the AGM scheduled for 30th May 2007 on his (our) behalf, to ask some questions.
Expecting to ‘take one for the team’, he ‘sacrificially’ bought 3500 shares priced at the time at AUS $ 0.17 on 18 May 2007, and jokingly commented, “I hope I have made a good investment”. ‘Arthur’ and ‘Martha’ (not their real names) were duly authorised by him as his proxies to ambush Mark Caruso at the AGM.
He never saw it coming.
Arthur reported back as follows.
Hi John,
Just got back from the AGM. The first half hour was tedious administrivia which the directors raced through. At the end Mark Caruso gave a number of briefs on the various projects outlined in the annual report. When it came to Xolobeni he mentioned some negative media but assured us that he had met personally with the highest ranking Dept of Minerals and Energy (DME) officers who supported the project “but he could not publicly say that”.
About twenty shareholders were in attendance but Martha and I were the only ones to ask questions. Using your questions as a basis I asked about the negative publicity coming out of SA about the project particularly with the blood diamond screening and so on, and even the King and Queen of the region coming out against it. He basically said ‘don’t believe what you read in the papers and that he had the full backing of the King and Queen for the project. He admitted it is a very environmentally sensitive area, ‘but didn’t want to dwell on that’.
Martha asked about the BEE issues and Xolco and how the funds were to be distributed to the community. Martha will no doubt tell you about his response which was that the company. had been accused of all sorts of things so they changed representation on Xolco board to be more representative. “Even installing a woman!”
…
The directors basically launched themselves at Martha as soon as the meeting finished so I shot through to talk to some shareholders outside. The two I spoke to were nervous about the media ‘image problem’ that was developing in Xolobeni and were considering selling out their shares.
… More soon, Cheers,
Arthur
‘Martha’ (who had by the way never met ‘Arthur’ until the day of the event) in turn wrote.
Hi John,
As Arthur states….the directors Caruso together pounced on me the very second the meeting closed and kept me cornered in my seat so that I couldn’t get to speak to any of the others — needless to say I played “sit on the fence” with them to see if they would come out with anything. As no other directors had asked any questions about Xolobeni it was only Arthur and I that had the floor. We managed to raise a number of socio-political and community issues which I am sure the shareholders would not have previously been familiar with. Unfortunately, we did not get to discuss all of them as Mark Caruso tended to hold the floor for ages every time we asked a question.
Their main “selling point“ both to the shareholders and to me later on was that they, an Australian mining company, were essentially bringing much needed relief in the form of jobs and wealth to a starving, impoverished and neglected community. They felt that if SA was that passionate about upliftment why were no South African companies or indeed, their own Xhosa leaders such as Tokyo Sexwale etc, providing healthcare, employment, schooling, water etc to these areas. Thus, it was taking an Australian company to show the South Africans how to do it. He referred to Xolobeni as one of the top 10 undeveloped deposits in the world and pointed out that Illuka here in WA was running out of minerals and moving over to the Murray Basin on the East Coast of Australia.
Caruso was very open about the tediousness of the negotiations the company was being subjected to and tried to convince the shareholders that this “pot of titanium” was well worth the wait. However, he also openly stated that “ if, at the end of the day, we have to walk away and we have left a school, access to water and nothing else…so be it. At least we tried.” He said they have full support of all the councils (6) and Oliver Tambo District Municipality was in full support of the project.
My question regarding the subsidy of the Xolco shareholding to the tune of $18m revolved around where this was reflected in the financials and secondly how was this going to be paid back to the company — bearing in mind most Broad-based Economic Empowerment (BEE) initiatives have no money. The answer was that the amount is in the quarterly statements and that it would be paid back out of dividends once mining commenced. I laboured the point by saying this was a substantial amount of money considering the business did not have mining approvals. He said that it was the DME / BEE requirement which meant that shareholding had to be finalised before applications — probably not what shareholders wanted to hear but this would have made them realise that minus $18m was now sitting in the books and could possible not be recouped should mining not go ahead.
I then asked how the company was going to ensure that the community actually befitted from the mining dividends and not just the directors of the BEE or a few elite or it was just lost in administrative management of the BEE. Caruso was adamant that the company had an “unbeatable formula” which would see the community directly benefit through support of infrastructure projects and community upliftment programs. He again gave the meeting the hero sob story about dying babies and no water which the company would remedy. However, quickly adding the company was in this to make money as well!
This conversation around BEE’s and community support for the program continued when they cornered me and basically expanded on all their plans to build schools, support eco-tourism ventures, SMME’s and had already started sending people on hospitality training. They talked about Barnes and I said I remembered him from Richards Bay Minerals days and they said he was running their programs for enviro / social. I said it was all fine, but getting it right and delivering would take a lot of understanding of the tribal politics and the corruption that money could bring to these areas. For “outsiders” to really know who was playing who on the ground is almost impossible in Africa and the company was likely to face many obstacles and a lot more time before getting approvals (both social and environmental).
Regarding enviro issues — I pointed out that SA has an exceptionally high standard of legislation surrounding protection of the environment and that it was strongly enforced — unlike in Australia where mining companies can get away with all sorts of nonsense. He said their company was going to prove you could mine in an environmentally sustainable manner. He referred to RBM and said the company was right to stop mining at St Lucia and should never have mined there in the first place as it was so sensitive. I pointed out that there was a similar case for the Wild Coast as this is such a beautiful unspoilt area.
Overall my feeling was that the company is becoming increasingly disillusioned by the drawn out process of approvals and finding the resistance extremely annoying to manage. Their inability to “sell their virtues” in the region ..and the fact that they are not being welcomed as hero’s to the starving masses is , to say the least, very confusing. They display the usual arrogance of Australian companies who think they have superior policy, practises and legislation and should be welcomed by third world countries like RSA and not fronted with legislative obstacles when they want to invest in the country. As Mark said…the country should be welcoming foreign investment and be grateful that we are coming in to provide much needed employment in this area which was neglected during apartheid and is still being ignored by its own people.”
In a long distance telephone call with Martha I asked if any mention had been made of the concerns posed by the ASX, which had appeared on MRC’s listing coincidentally on the same day as the AGM. She said nothing was mentioned but it could explain why Mr Caruso was looking “as if he was about to have a heart attack”.
The purpose of the ‘shareholder activism’ ambush strategy having been achieved, the kindly shareholder was eager to sell his shares before the expected crash. He sold at 25cents, making a very satisfying 40% profit. Had he held on for another ten days he would have almost doubled his money. The share price peaked at an all-time high of 35 cents before the “pump and dump” (a fraudulent practice of encouraging investors to buy shares in a company in order to inflate the price artificially, and then selling one’s own shares while the price is high) swindle came to an end.
There can be little doubt looking at the following chart of MRC’s share price that somebody was responsible for doing so. A close study of the listing of shareholders before and after the rise and fall will surely identify suspects. The ASX needs to do that. I have established that the WF Asian Reconnaissance Fund is no longer a shareholder in MRC, but I do not know at which point the disinvestment came.
I did dutifully inform the ASX about my conversation, and offered them my theory as to why this “pump and dump” episode happened. Apart from a polite letter of thanks I don’t know if any further questions were asked.
Perhaps they thought that free market forces of the “new civil economy” were dealing with any dishonesty and manipulation given that MRC’s share price sank from an all-time high of 35 cents to an all-time low of 3 cents over the next 16 months.
But as the chart below discloses, when MRC was trembling on the edge of bankruptcy toward the end of 2008 somebody started buying up the shares cheaply and the share price started to recover. It slumped again in 2009 -2010 but 2011 marked the start of another episode.
Who was that mystery buyer?
Everything that Qunya and his fellow Xolco directors did following the 2007 AGM seemed calculated to depreciate rather than enhance the intrinsic value of MRC shares. Instead of an inclusive process to address concerns, the mining protagonists conspired with corrupt government officials and politicians to use coercion, manipulation, intimidation and outright fraud to try and engineer things in their favour.
In my e-books The Promise of Justice Parts 1 and 2 (2014) I narrate the extraordinary turn of events that brought Mark Caruso and I into an increasingly confrontational relationship due to his stubborn refusal to listen.
For a visual and acoustic feel for the story, this video produced by the SABC Environmental Program 50/50 explains the issues.
To further educate the growing international audience who are now following the story I re-published articles I had written for various South African online media outlets in an omnibus e-book titled “Survivor Wild Coast: Before and Beyond the Shore Break” published in June 2015.
Still attracted by Judge Mervyn King’s visionary belief in the emerging global civil economy of accountability, I hoped that the international publicity would be enough to convince MRC’s investors that their shares were headed for terminal decline for as long as the Xolobeni venture featured on MRC’s books.
Alas, the violence intensified: not because MRC was necessarily driving it, but because their structural reliance on a local BEE partner without any real traction with the community meant Xolco was desperately running out of options. Desperate times, desperate measures.
On 21 March 2016 I celebrated Human Rights Day among my Amadiba friends on the Wild Coast with a group of school boys embarking on a hike. Deputising for my friend Sinegugu Zukulu who was unable to do the usual introduction, it was meant to be a festive occasion where I would start them off on their Amadiba Adventure. An event ideally suited for me to entertain the youngsters with the many stories I have accumulated since my first Amadiba Adventure sixteen years before. They were only glints in the eyes of their parents back then, and there is nothing more satisfying than inspiring the next generation with a good news story about environmental conservation.
However, as we sat around the campfire in a local homestead, their hosts Nonhle and Mzamo were somewhat reserved and anxious. I was further puzzled the next morning when, after receiving a phone call from the Chair of the Amadiba Crisis Committee ‘Bazooka’ Radebe, they insisted on sending Nonhle’s young cousin to accompany me on the five km walk back to my car, on the other side of the Mzamba gorge. I had done the walk countless times before. I did not need a guide, and was well known to the Sigidi village. I wanted to be alone to marvel how peaceful the Mzamba gorge was in 2016 compared to the manufactured mayhem in 2006 that Blood Diamond producer Ed Zwick had created in the culminating scenes of that film when Danny (Leonardo di Caprio), Solomon (Djimon Hounson) and his son Dia (Kagiso Kuypers) scramble up the steep banks of the gorge with soldiers in hot pursuit.
I knew better than to question or interrogate Nonhle about the phone call, and accepted Nalo Mbhutuma to be my guide. I was grateful both for the company and his help in holding the camera while I filmed myself at different spots explaining the remarkable synchronicity of Life and Art converging in the Blood Diamond and the Amadiba narratives, which I thought might be worth telling in another of my amateur films on YouTube. What better way to spend Human Rights Day than contemplating the miracles of how those rights had enabled the Amadiba to succeed in their struggle without the bloodletting that Blood Diamond portrays?
That film ends with Solomon addressing a conference on Blood Diamonds to supposedly wrap up the Kimberley Process within which Global Witness had played a key role to clean up the diamond trade. The Kimberley process had been launched in 2003, and the release of Blood Diamond in 2006 was meant to seal the deal. In 2011, “persistent and unresolved concerns about loopholes and a failure to address a broader range of human rights concerns”, led Global Witness to withdraw from the process. Still, I was hopeful that at least in South Africa in 2016, a happier ending would come to the Amadiba than Ed Zwicks film produced. The King IV protocols for corporate governance were about to be published, and the United Nations Convention on Business and Human Rights was making slow but apparently steady progress toward stronger accountability measures being implemented by member countries like Australia to ensure the likes of MRC was more tightly regulated by their Securities exchanges and corporate governance systems. Despite the failure of the Kimberley Protocol Zwicks motivation for making the film had been a great inspiration to me because South Africa’s institutional frameworks were in place to supposedly change the prevailing tendency. He had said,
‘It seems that almost every time a valuable natural resource is discovered in the world — whether it be diamonds, rubber, gold, oil, whatever — often what results is a tragedy for the country in which they are found. Making matters worse, the resulting riches from these resources rarely benefit the people of the country from which they come.’
Ed Zwick, Director of Blood Diamond
When I arrived back in Johannesburg the following day I got a phone call from Sinegugu Zukulu. It explained why Nonhle and Mzamo had insisted on a body guard. Their leader, the chair of the Amadiba Crisis Committee ‘Bazooka’ Rhadebe had been shot eight times by gunmen posing as policemen. The phone call had been from him, alerting them that he had got wind of a plot to assassinate leaders of the Amadiba Crisis Committee. He was first on the list, with Nonhle and Mzamo second and third.
Blood titanium?
Update as at May 2017.
It is scarcely necessary to have to detail what has happened since then up to the present moment, because the effect of Bazooka’s murder has been to raise the media profile of the story even higher than either Blood Diamond or The Shore Break managed to do. Neither has it been necessary for me to make another amateur documentary to tell of the ironic convergence of the fiction of Blood Diamond with the fact of the Wild Coast “Blood Titanium”.
Under pressure from human rights activists in South Africa, Australia and London, MRC was eventually pressured into divesting from Xolobeni. An announcement was made to that effect by Mark Caruso on the 18th July 2016. The following day he served court papers on me suing for defamation claiming that I had made public statements accusing him of being responsible for Bazooka Radebe’s murder.
That might have rattled me if he had stopped there. However in the following weeks his attorney was kept busy drafting papers to sue another six South Africans for statements they had made with respect to his Tormin mining operation.
MoneyWeb broke the story of Caruso’s deceits in 2006. It is thus fitting and fair that they get the last word again. In a report dated 23 June 2017 Ciaran Ryan wrote of Defamation Suits fly over mining controversies.
Excerpts.
Australian mining company Mineral Commodities Limited (MRC) and its CEO Mark Caruso are suing six environmental activists and attorneys, including social worker John Clarke and environmental lawyer Cormac Cullinan, alleging the mining company and its CEO were defamed. Also being sued for defamation is Mzamo Dlamini, a spokesperson for the Amadiba Crisis Committee, an organisation formed in 2007 to stop mining of titanium in the Wild Coast area.
MRC has been involved in a long-running dispute with Pondoland community members over its plans to mine mineral sands at Xolobeni on the Wild Coast. Last year the Amadiba Crisis Committee lodged a high court application to have the Xolobeni Mining project on the Wild Coast ruled as unconstitutional. If successful, it will have far reaching implications for the mining industry in South Africa, as it will require companies to adhere to the international human rights benchmark of “prior, free and informed consent” of local landowners before any mining project can proceed (my emphasis).
Last year MRC announced its decision to disinvest from the Xolobeni Mining project and sell its shares to its BEE partner. It was originally granted a mining licence at Xolobeni in 2008, but this was revoked in 2011 because of unresolved environmental issues. Some environmental activists argued that MRC’s disinvestment was strategic, and will retain a crucial though low-key role in the mining project going forward. A new application to mine the area is currently with the Department of Minerals and Energy Affairs.
Also being sued for defamation are two attorneys at the Centre for Environmental Rights (CER), Tracey Davies and Christine Reddell, and activist Davine Cloete, who are accused of making defamatory statements about MRC’s subsidiary company Mineral Sands Resources (MSR) and its director Zamile Qunya during presentations at the University of Cape Town in January this year. This relates to comments during the presentation claiming poor environmental practices by the company’s Tormin mineral sands project on the West Coast.
All six are defending the summonses, claiming these are nothing more than SLAPP suits (Strategic Lawsuit Against Public Participation) intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defence until they abandon their criticism or opposition.
Cullinan, in his reply to the summons, says the defamation action constitutes an abuse of the court process, as “there is no reasonable prospect of a court finding that (Cullinan’s) statements constituted wrongful defamation…”. He defends his public statements as protected speech in that his comments were true or substantially true, a genuine expression of opinion, and in the public interest.
In papers before the Cape High Court, Caruso and MRC claim Clarke insinuated that the company was involved in the murder of Pondoland community activist Sikhosiphi “Bazooka” Rhadebe, who was gunned down last year by unknown assailants. This claim of defamation was based on an interview Clarke gave the Daily Maverick.
“The intention of (Clarke) in making the statements as aforesaid was to convey the innuendo that (MRC) had been involved in the murder of Rhadebe and resorted to criminal conduct, including murder, as a means of silencing and pressurising opposition to its operations and, by so doing, facilitating its ongoing operations, including the acquisition of mining licences,” says Caruso’s summons. “The innuendo is wrongful and defamatory of (MRC) and was made with the intention of injuring (MRC) in its reputation.”
Clarke, in his reply, says he was quoted inaccurately in the article and did not insinuate that MRC was involved in the murder of Rhadebe. Caruso appears to have doubled down on Clarke, expanding the numbers of defamation claims against him from seven to 18, representing a total damages claim of R5 million. This was after Clarke filed his response to the summons issued by Caruso and MRC.
Dlamini is also accused of defamation after apparently claiming in a radio interview that the company was involved in the assassination of Rhadebe…
[Clarke] says he never insinuated that Caruso or MRC were behind the murder of Rhadebe, though says his life has been threatened by certain community members opposed to the work he is doing (Moneyweb is in possession of the name of the individual alleged to have threatened his life).
Caruso also claims Clarke defamed MRC in a Cape Talk radio show when he accused it of human rights abuses, and of the “rapacious exploitation” of the Tormin mineral sands project, a beach sands project 400km north of Cape Town in which Caruso is involved.
Clarke replies that other than the misquote in the Daily Maverick, all other comments he made in respect of Caruso and MRC were substantially true and were made in the public interest…
The summonses served on the activists and lawyers claim MRC’s reputation has been damaged by the alleged defamations and it has suffered financial damage as a result. Clarke denies any financial damage has been suffered by MRC as a consequence of what he has said, and that any damage incurred was self-inflicted.
Cullinan, a prominent environmental lawyer based in Cape Town, is also accused of defamation over an interview he gave on Cape Talk radio where he alleged MRC was engaged in a policy of buying off certain traditional leaders as part of a colonial-style divide and rule tactic. Cullinan also alleged that lists of supposed supporters of mining activity in the area contained forged names as well as dead people. Caruso argues that listeners are led to believe that MRC resorted to “criminal conduct, including fraud, to overcome opposition to its operations at Xolobeni (where the mineral sands operation is based)”, and that it bribed and corrupted third parties to support its mining operations. MRC and Caruso are each claiming a total of R1.5 million from Dlamini and Cullinan.His family and the ACC are still awaiting an arrest. A moratorium on any mining activity has been declared by the Minister of Mineral Resources, which expires in December this year.
Recalling Judge Mervyn Kings explanation about the difference between the book value and real value of shares in corporate entities, the important questions that shareholders need to ask are:
- What is the current book value of MRC’s 56% share in the Xolobeni venture? It appears as if Xolobeni has assets of AU$6m and liabilities of AU$5.9m leaving a Net Asset Value of $100k.
2. What is the real value of MRC’s shares in the Xolobeni mining project?
Given the above narrative, if Judge Mervyn King had money to invest in MRC what “forward-looking information” would be significant to help him decide if the current 26 cent market price was a good buy?
It is not enough for Mark Caruso to state that “the company fully supports the ongoing development of the Xolobeni Project and its decision to divest is in no way a reflection of its commitment to its mining interests in South Africa.”
It is reasonable to assume that until current litigation processes are concluded MRC is going to be hard put to find any investor willing to throw good money after bad. Apparently MRC needs to recoup about R80 million spent fruitlessly since they became enmeshed in the deluded dream two decades ago.
Caveat emptor! (let the buyer beware).
Conclusion
In the media frenzy following Bazooka’s murder on 7 April 2016 Redi Hlabi managed to get Mark Caruso onto the talk radio show that she hosted on Radio 702. Fifteen minutes into the discussion, in the course of his explanation of MRC’s position, he distanced himself from the conflict and said tellingly “Firstly we are under a mining right application process, which has been stalled due to the situation on the ground and for the mining companies refusal to engage in any form of confrontation (my emphasis).”
After Mzamo Dlamini confronted him with the allegation that MRC provided resources that were being used to cause conflict and violence, and was paying for legal fees of people arrested and charged for attempted murder and assault, Caruso again stated “The company has continued to support non confrontation.” Redi Hlabi expertly handled the interaction, but Caruso chose to terminate his participation before the confrontation yielded a peace-building outcome.
Listening again to the podcast two years later is very interesting, because the passage of history has shed enough light to show Caruso to have been wrong in his confident assertion that only a small minority of local residents were opposed to the mining, and that no families would be resettled. All of that is now being ventilated in court with the start of proceedings to secure a judicial declaratory order for right of the community to say no to mining, or failing that for the mining rights applicants to pay full compensation for the land value. Judgement is awaited but readers can view a full recording of the proceedings and make up their own mind.
For present purposes, and draw this story to conclusion, I wish to contemplate the word ‘confrontation’.
Caruso says MRC does not support any form thereof. Social workers are trained to employ confrontation as part of their skills set in making an intervention. After a decade of trying to confront him and build a relationship of understanding, his response has been mockery, ridicule and insults.
I bear Mr Caruso no personal malice. Social workers are trained to handle all personality types and not to take things personally. I have empathy for him. His dream of scoring in the big league with “company making” Xolobeni Minerals Sands project has become a nightmare. His application for membership of the South African Chamber of Mines was turned down, and besides having to contemplate the end of his relationship with Xolobeni he leaves a string of broken relationships in South Africa, including a short lived partnership with Cape Town businessman Andrew Lashbrooke.
In seeking the advice on this story from one of my many confidential whistle blower sources I was told,
“Mark is somewhat like a Donald Trump where anything goes and the only real weakness is displaying any shame. He has an outcome in mind and simply won’t let any humanity stand in his way. History has shown he wins because he is prepared to do what others won’t or are too embarrassed to do. He will go as low as he needs to. But appealing to anything in Mark to dissuade him from the course he is in has no chance of success as far as I am concerned. I also used to be close to his largest shareholders and has spent time explaining all that Mark is to them. They have decided to let him be. More than that if you look at the annual report they all seem to value him and pay him huge salaries, bonuses and share awards. And the share price is rising. So if you going to take him on and win, it won’t be easy and neat and you’ll have to get dirty in the trenches.
That is why this story is told, leaving MRC’s investors to ponder this question. After everything stated above, do they really think MRC’s fortunes at Xolobeni and Tormin will be restored by suing the messengers because Caruso did not want to believe their messages?
To be continued.
Updates.
November 2018. Judge Annali Basson granted the local residents their application, thereby compelling the Minister of Minerals to first obtain the Free, Prior and Informed Consent of directly-affected local residents before mining rights could be valid. It is a landmark judgment in South Africa’s mining law. The Minister sought leave to appeal, but as at 30 April 2021, had not filed papers.
September 2020. Having won the right to FPC consent the local residents won another court judgement to ensure it is indeed well ‘informed’. See Game-changing Xolobeni judgment orders applications for mining licences to be made public.
October 2020. MRC reports that Mark Caruso, chief executive of Australian listed company Mineral Commodities, faces criminal charges of assault and burglary in Australia, and will step down as a board member pending the outcome of the court proceedings.
February 2021. MRC and Mark Caruso are dealt a “bruising legal smackdown” by the South African legal system, when Deputy Judge President Patricia Goliath finds that they have sought to ‘weaponise’ the law seemingly to bully and silence lawyers and environmental activists. The landmark legal case is set to shape future laws and tame intimidatory legal tactics by corporations, known as SLAPP suits. See Aussie mining magnate gets legal snotklap after threatening to sue SA activists for millions.
April 2021. MRC announces that its relationship with Mark Caruso had “become untenable” and fires him as “a result of a breakdown in the relationship between the Board and Mr Caruso, following commencement of enquiries into a potential related party matter”, but it gave no further details. See Aussie mining company fires Mark Caruso as CEO.
Two weeks later MRC announces the appointment of Zamile ‘Madiba’ Qunya to the board of directors as a non executive director. One of my sources speculates (the same whistleblower source quoted above) that the “related party matter” which precipitated Caruso’s firing had something to do with a scheme he was trying to recruit Qunya into, behind the back of his Board of Directors that would secure for himself and Qunya a majority control of the Tormin Mineral Sands project. My source assumes that Qunya ratted on Caruso to the MRC board, and secured a board position as a reward for his “loyalty”.
The Annual General Meeting of MRC to approve their 2020 Annual Report and Audited Financial Statements is scheduled for 29 June 2021.
What Next?
MRC and Mr Caruso have predictably appealed against Judge Goliath’s ruling. By consent of all parties an application has been made for direct access to the Constitutional Court to hopefully bring finality to the matter sooner, by leapfrogging over the Supreme Court of Appeal. As defendants our star studded legal team led by the father and son team of Advocate Geoff Budlender SC and his son Stephan, are aiming for a landmark judgement that interprets the Constitution and Bill of Rights such that SLAPP suits are ruled to be an unfair abuse of legal process. If we win it will greatly encourage civil society activists, whistle blowers and truth tellers encouragement to know that when they do speak truth to power, the courts will be a safe harbour for them to do so, and not a place of intimidation, high anxiety and unrelenting ‘lawfare’.
Personally and professionally, I have at all times stayed within my lane as a social worker, obedient to the ethical imperatives of my code of practice, which obliges me to “challenge social injustice” in the interests of my clients, who are always vulnerable and disadvantaged, and to ensure that “people in adverse conditions are enabled to participate in decisions that affect them”.
I have simply done my job, and have found it awkward to have become the story to a far greater extent than normal. My job is to support clients to own their stories, find their own voices and seek means through the media for these to be amplified. However when ones clients are murdered, circumstances require bolder action, especially if one has a far greater measure of unearned privilege to play with. It is a horrible fact that in South Africa, and elsewhere in the world, white lives do matter more. That has to change, and I hope that the role I have played is contributing to that change.
On the strength of Judge Goliaths assessment it seems the Judiciary recognizes that too. In the opening section of her judgement she said.
In the Clarke matter it is alleged that Clarke published two defamatory e-books, one during 2014 entitled “The Promise of Justice” and another in 2015 entitled “Survivor: Wild Coast — Before and Beyond the Shorebreak” which are available worldwide. The record reflects that he was actively engaged in criticising the plaintiffs’ mining and excavating activities, and its environmental, ecological and economic impact on the development potential of the Wild Coast. In and during 2016 he participated in radio interviews, posted video clips on YouTube, wrote numerous emails, and had a number of interviews published on various social media platforms online. He also participated in a panel discussion on a television programme 50/50 relating to mining and mineral regulation issues, engaged the Minister of Mineral Resources, posted an article in an online journalism platform called “Medium”, entitled “Behind the irony curtain: Blood Diamond, Xolobeni and the real story of MRC”, and created general awareness around his environmental activism. Summons was issued against him on 18 July 2016. However, he continued with his advocacy work which resulted in further claims and amendments to the summons. The plaintiff provided elaborate details of Clarke’s alleged defamatory conduct, which resulted in 27 separate claims, seeking damages in the sum of R10 million.
Encouragingly, in her analysis in paragraph 62 Judge Goliath adds.
“It is evident that the strategy adopted by the plaintiffs is that the more vocal and critical the activist is, as is the case with Clarke, the higher the damages amount claimed. The mining companies are claiming, inexplicably, exorbitant amounts for damages, which the defendants can ill-afford. They instituted these proceedings fully aware of the fact that there is no realistic prospect of recovering the damages they seek. …This is a signature mark of many SLAPP suits. The conclusion is incontrovertible that the lawsuit was initiated against the defendants because they have spoken out and had assumed a specific position in respect of the plaintiffs’ mining operations”.
With ‘Goliath’ on ‘Davids’ side, it seems unlikely we will lose in the Constitutional Court.
To be continued…
