High Court judge, Omphemetse Motumise has found that the ‘spiriting away’ of 53,755 carats to Belgium from Lerala Mine, a day before its closure in 2017, was a collusive deal in which the principal owner sought to gain value ahead of other creditors.
In a long awaited judgement issued recently, Motumise ruled that the transaction was voidable and ordered former Lerala owner, Alex Alexander, to ensure the diamonds return to Lerala’s liquidator.
Alexander, the sole director of the company that owned Lerala Diamond Mine and who reportedly ran the Tswapong Mine via a Whatsapp group, lost the case with costs.
The liquidator, Kopanang Thekiso, acting on behalf of creditors who are reportedly owed about P30 million, filed the suit after suspecting the diamonds were taken away in order to keep them from the assets other creditors would be looking at in the liquidation.
Thekiso also submitted that the diamonds were sold below value to entities under Alexander’s control.
In his judgement, Motumise found that Alexander used his position in Lerala Mine and the related entities to execute a transaction to the detriment of other creditors.
While the reserve price for the parcel of diamonds was US$3.3 million (P36 million), Kimberly Diamonds, Lerala Mine’s owner, sold them to two Alexander-linked companies for US$1.2 million (P13 million). The firms offered to pay government US$100,000 in unpaid royalties and US$250,000 towards workers’ packages in return for withdrawing the court case.
“The controlling mind of the company was Mr Alexander,” Motumise said.
Motumise further found that Alexander and his wife had interests and/or control of the entities that produced the diamonds and subsequently sold them under value.
The judge unearthed no evidence of either the loan or preferential arrangement in favour of the companies involved in the transaction.
Motumise also set aside Alexander’s arguments that his companies had not been properly served with notice of the liquidator’s intent to void the transaction.
The judge also said Alexander and the companies ought to have known that Lerala Mine was “hopelessly insolvent” at the time of the transaction and that not being secured creditors, the transaction was voidable.
In his arguments on behalf of the liquidator last November, Simon Bathusi of Armstrongs Attorneys told the court that the firms had not provided any convincing explanation as to why the diamonds were sold below their value.
Motumise, in his judgement, agreed, saying no proof had been brought forward that the diamonds were of lesser quality than others sold in previous transactions at higher amounts.
The parcel of diamonds has been held in trust by Belgian lawyers since the start of the court proceedings.
Lerala Mine, which remains closed, has a troubled history, having also shut down in February 2009 and July 2012. At its closure at the end of 2017, more than 130 workers were escorted off the premises of Lerala Mine.