Alex Alexander, the sole director of the company which owned Lerala Diamond Mine, has filed a P347 million claim for loans allegedly made to the Tswapong operation, a move that liquidators of the mothballed mine have challenged.
According to documents accessed from the High Court, the liquidators have said no proof exists that Mantle Diamonds, a UK-based entity that wholly owned Lerala, made any loans of that nature to the Tswapong operation before its inglorious closure in May last year. Kimberly Diamonds, in which Alexander is a principal shareholder, wholly owns Mantle Diamonds. Kimberly Diamonds is also in liquidation in its home country of Australia.
According to the documents, the Master of the High Court is set to officially oppose the P347 million as investigations have not proven that any amount of that nature was loaned to Lerala.
The loan, in the claim submitted to Lerala’s liquidators, is referred to as a ‘parent loan’ but the deed of notation provided to support the claim is for US$147.1 million (approx P1.4 billion). Kimberly Diamonds bought Lerala in February 2014, kick-started production in April 2016, recovered about 70,100 carats, before filing for liquidation in June 2017 citing weak sales, high operational costs and lack of capital.
The documents filed at the High Court argue that Mantle has failed to show any evidence, including bank statements, to prove that a parent loan of P347 million was made to Lerala.
The amount claimed by Mantle represents by far the largest claim against the estate of Lerala, as all the other creditors combined are seeking about P30 million.
The troubled Mine, which has operated in fits and starts since 2008, goes under the hammer on May 24 via a public online auction where bidders are required to pay deposits of P5 million.
Bidders will compete for mining rights, key equipment such as the processing plant and diesel generators, tailings dams, workshops, offices and mining camp, with proceeds going towards the creditors.
Alexander, who is due before a Sydney, Australia court next week facing four counts of misleading investors in that country, is also facing more trouble in Botswana, according to High Court documents.
High Court documents show that despite the existence of management at Lerala and a board, the Tswapong mine appears to have been run via Whatsapp group chat and emails from Alexander, who held significant control over local officials.
Should Alexander be found guilty in his Sydney case, he could face fines of up to 136,000 Australian Dollars (about P1 million) and/or a jail term of up to 20 years.
Local liquidators have meanwhile recommended seven charges against Alexander, his wife and other directors involved in the Lerala debacle. The charges, many of them under the Companies Act, include failing to keep proper accounts, failing to attend creditors’ meetings and the removal of property in an effort to defraud creditors.
The last charge pertains to a parcel of 53,000 carats spirited away from Lerala just before its closure last year and sold via a network of Alexander’s other companies. The parcel of diamonds wound up in Belgium before government successfully stalled its movement by arguing that it was the result of improper transactions.
Mmegi has learnt that ahead of a ruling in the dispute in Belgium in September, local liquidators filed papers to join the case, using a local High Court judgement from March that set aside the transaction.
High Court documents show that the diamonds were sold for US$22 per carat, instead of the official valuation of US$51.9, as officials attempted to quickly finalise the deal before shutting the Mine.
“This week, we will get all the information that’s required then go ahead with our application to join the case,” Lerala liquidator, Kopanang Thekiso told Mmegi.
He declined to shed more light on the matter, saying the liquidation was still the subject of High Court proceedings.