• Biggest expenditure item was building $5.8 million palace
  • South Africa Public Protector vows to trace missing money

South Africa’s Bapo Ba Mogale community has exhausted almost all the proceeds it received from platinum miner Lonmin Plc over the past 20 years, including spending $5.8 million on a leader’s palace, a corruption probe has found.

The fund currently has little more than it had in 1994, when South Africa’s first democratic elections were held, despite 617 million rand ($44 million) of royalties from Lonmin, Public Protector Thuli Madonsela told community members Friday, according to a statement from her office.

“What this means is that, basically, all of the money earned has been spent,” said Madonsela, whose term as the country’s graft ombud expires in October. Members of the Bapo community had asked her office to investigate after “allegations of systemic looting,” the public protector said.

Lonmin, the world’s third-largest platinum producer, paid into the fund for 20 years before the community’s royalties were converted into equity in a series of so-called black economic empowerment deals in 2014. BEE legislation requires companies to be part-owned by racial groups who were disadvantaged under whites-only rule.

Palace Spending

The biggest item of the fund’s expenditure was a palace for one of the community’s leaders, the public protector said. Its initial budget was 20 million rand but eventually 80 million rand was spent.

Further investigation “will establish who the beneficiaries were, if procedures were followed and if there was value for money,” the public protector said.

Calls to Lonmin and the Bapo Ba Mogale community weren’t immediately returned.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE