Gold Fields Denies Report Deal Won It Political Influence

Gold Fields Ltd. (GFI) denied a news report that one of its black economic empowerment deals benefited influential people who helped it win a license needed to continue operating the South Deep mine in South Africa.

Carte Blanche, a Johannesburg-based news program, reported on Oct. 21 that the 201O deal, designed to give black South Africans a stake in the South Deep mine near Johannesburg, benefited Kenny Kunene and Gayton McKenzie, both of whom have spent time in jail. The daughter of a politician who served on a parliamentary committee overseeing the mining industry and Jerome Brauns, a lawyer who defended President Jacob Zuma in a rape trial, also gained from it, the program said.

The program “alleged that Gayton McKenzie and Jerome Brauns used their political influence to place politically- connected individuals in the black economic empowerment consortium to influence the awarding of the license,” Gold Fields said yesterday in a statement on its website. “It is critical to note that the South Deep license was awarded before the participants in the BEE consortium were finalized.”

In 2010 Gold Fields said it would sell 10.75 percent of its South African operations to its employees at a cost to shareholders of almost 1 billion rand ($114 million). It also agreed to issue 600,000 shares to a black-owned shareholder group and allowed it to buy 10 percent of South Deep.

South African law requires mining companies to sell at least 26 percent of their local operations to black citizens with transactions that benefit workers, communities near mines and trusts for the poor favored.

Ruthless, Fraud

While the Gold Fields transaction also benefited workers, Carte Blanche said other shareholders will gain more. The company said its 47,100 employees received shares under the transaction without paying for them and that they have received so far 76 million rand in dividends.

“The program was filled with inaccuracies and innuendo and sought to discredit what has broadly been welcomed as a ground- breaking transaction,” Gold Fields said.

McKenzie, a former bank robber, said on the program that Johannesburg-based Gold Fields asked him to find participants for the transaction. He described himself as a former leader of a prison gang and as “ruthless.”

Kenny Kunene, who also spoke on the program, said he had “specialized in fraud” before he was convicted and later became a businessman.

Carte Blanche also showed company documents, which it said proved the motivation for including some of the alleged beneficiaries in the deal.

Car, Nightclub

The program also interviewed alleged beneficiaries including a young woman who said she bought a car with the proceeds from the deal that she knew little about.

McKenzie’s mother-in-law confirmed that she had participated in the deal, while the manager of McKenzie and Kunene’s ZAR nightclub was also named as a beneficiary.

“Gayton McKenzie Pty Ltd. was contracted in an advisory capacity for a number of issues including to compile a list of potential participants that fell within the broad categories of beneficiaries from which we could select,” Gold Fields said. “The final decision about the participants was always the prerogative of the company, and not limited to this pool.”

To contact the reporter on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net

To contact the editor responsible for this story: Riad Hamade at rhamade@bloomberg.net

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