Kebble: R1,5bn found, R900m still missing
No one can deny that the late Brett Kebble had good taste: Ferraris, a couple of private jets, a portfolio of luxury properties, expensive art pieces and all the usual trappings of the billionaire lifestyle to which he aspired.
He also had political friends on the payroll, something that will no doubt cause acute embarrassment for some as the investigations into the missing millions continue.
The problem is that Kebble’s expensive lifestyle was all paid for by others. Investigators wading through the mind-bogglingly complex paper trail left by Kebble are unable to account for R900million. About R400-million appears to have been stolen from Randgold & Exploration (R&E), and another R500-million from JCI, two companies controlled by Kebble before he was given his marching orders in August last year. This excludes the R1,1billion being claimed by R&E against JCI in respect mainly of Randgold Resources shares illegally sold by Kebble to bankroll his crumbling empire. This claim has now gone to mediation.
Kebble was fired from his executive positions at R&E, JCI and Western Areas in August 2005, just a month before he was murdered in suspicious circumstances in Johannesburg.
The question creditors and investigators want answered is: What happened to the missing R900million? Kebble’s estate, worth R70million, is reckoned by executor Jeffrey Closenberg to be “hopelessly insolvent”, so creditors won’t find much joy there. The next step is to call for an inquiry under Section 152 of the Insolvency Act, which would allow the presiding officer to subpoena suspected beneficiaries of Kebble’s largesse. Given Kebble’s proximity to people in political power, it’s safe to assume this corporate scandal will eventually ricochet through the corridors of the Union Buildings in Pretoria.
The recently completed forensic investigation into the Kebble empire identified recoverable assets of R1,5billion out of R1,9billion previously unaccounted for in R&E, which has lodged a claim of R165million against his estate. A further R150million claim is expected from JCI, while the SA Revenue Service is looking for R186million, and other creditors about R30million.
None of these has a snowball’s hope of recovering anything like what they are claiming, but JCI and R&E are going through the motions to reassure shareholders that they are doing everything in their power to recover money on their behalf. They also hope to glean new information about Kebble’s murky financial transactions in the process.
But the real fun begins when the Section 152 inquiry gets under way, assuming that it does. That’s when those who received payments from Kebble will be asked to explain how and why the money was paid.
JCI spokesperson Brian Gibson says it is still unclear whether Kebble managed to spirit some of this money offshore. “That, no doubt, will come out in the inquiry,” he says.
Meanwhile, R&E is attempting to recover about R20million from former JCI company secretary George Poole, who served alongside Kebble until December 2004 and is claimed to have been the recipient of undisclosed or unauthorised payments.
It is now clear that Kebble embarked on a dangerously high-risk game of kite flying from about 2002 to conceal the insolvency he engineered.
Western Areas’s South Deep mine was then under development and required massive infusions of cash. The gold price was low and banks were reluctant to lend money for such a costly and uncertain project. Nor were they willing to lend to projects associated with Kebble, who by now had blown his creditability with the banks.
Canadian gold producer Placer Dome eventually acquired half of the South Deep project, and picked up half of the R5billion capital cost of developing the mine. JCI, which owns 25% of Western Areas, had to pick up its share of the tab, and Kebble was forced to concoct ever more elaborate schemes to keep the cash flowing.
He illegally sold R1,8billion worth of Randgold Resources shares inherited by R&E when the two companies—previously part of the same group—parted ways in 2000. Some of this made its way back to R&E and JCI, but R165million is reckoned to have ended up in Kebble’s pocket. In addition to Randgold Resources shares, he sold other company assets and washed the proceeds through a variety of exotic sounding company names such as Tuscan Mood, Paradigm Shift, Alibiprops and Slipknot. A substantial portion of these asset sales ended up in Kebble’s pocket.
Kebble also engaged in complex scrip-lending schemes—where shares are lent to other investors, usually for a relatively short period of time—to raise cash. This massive mis-appropriation of assets was managed by Consolidated Mining Management Services, which served as JCI’s in-house treasury.
In now appears that Kebble was operating little more than a giant laundry machine. He treated the three companies (R&E, JCI and Western Areas) as one and their assets as his own.
Things are likely to get more interesting should the Section 152 inquiry get under way. Then it will be time to pull up a chair and get out the popcorn as some big names get their opportunity to explain what happened to their share of the Kebble millions.