It is fraud more than the low POG that probably best explains why DROOY is now below $1.
mips1.net
mips1.net
<<A source close to the company said: "Someone was siphoning cash from the company, between R40 million to R50 million. The cash, raised from DRD's rights offerings, was being put into companies that did not exist. A DRD employee was responsible and he had accomplices working for him". DRD has issued almost half of its share capital in the last 18-months.>>
mips1.net
Posted: 2000/11/2 12:38 PM EST
DRD to hunt down Australian miner for 'financial irregularities'
Durban Roodepoort Deep's (DRD's) investigation into the siphoning of company funds by former director Charles Mostert is being extended to the boardroom of Australian company, Continental Goldfields.
Continental Goldfields is controlled by John Stratton, an Australian entrepreneur who is also a non-executive director of South African gold investment company, JCI Gold. Stratton also has a business relationship with the Kebbles, Roger and son Brett, a well-known South African mining family.
DRD's investigation - which is being led by DRD chairman Mark Wellesley-Wood as part of an image clean-up – was primarily internal, focusing on the activities of Mostert. Mostert was the managing director of DRD's Australasian division, and is believed to have been involved in irregular transactions worth up to $7 million (R50 million).
However, further investigation now points to John Stratton. In fact, Stratton is believed to be at the root of DRD's aimless Australian walkabout.
Stratton is identified as a non-executive director of JCI Gold in the company's latest annual report. He is also on the board of Jersey-registered Consolidated African Mines (CAM Jersey), another South African gold investment company in the Kebble stable. Stratton was drafted in by the Kebbles to help direct their Australian investments.
Stratton is also implicated to events earlier this year in which attempts were made to head off Harmony Gold's hostile takeover of Randfontein Estates. It is thought this matter is being pursued by the Financial Services Board (FSB), however FSB director Rob Barrow said he could neither confirm nor deny whether the investigation extended to John Stratton.
The nub of DRD's allegations into Stratton is that he had a conflict of interest in each transaction on which he advised DRD. In other words, he had shares in the companies in which he advised DRD to invest. Not one of these companies proved to be a commercial success for DRD.
In some bizarre cases, DRD agreed to carry loans owned by Stratton's companies to banks; in another instance, to the Indonesian government, according to DRD's investigation.
South African shareholders of DRD will remember the names of these Australasian investments including DRD's well-known Emperor Mines and Hargraves debacles and the lesser known, but nearly as damaging, Rawas and Awak Mas gold mines.
Mostert is suspected to have known about these transactions, benefited from them, and concealed them from his Johannesburg-based colleagues while DRD's management and shareholders puzzled over the company's woeful track record in Australian investments. (See appendix for full list and details).
If DRD's investigation is successful, Stratton may face criminal charges. Several attempts were made on Thursday (02 November) to contact Stratton in Perth for his right of reply. He has indicated through his secretary that he will be interviewed on Monday, 06 November. He could not comment at present owing to travel obligations.
John "Bangles" Stratton
Stratton, a UK-born entrepreneur, is nicknamed 'Bangles' by some in his Western Australia base owing to his penchant for heavy gold rings and bracelets. He lives in Perth's plush Applecross suburb and has had a long track record with junior miners.
His most recent involvements involve directorships of Laverton Gold, Platgold Pacific, Continental Goldfields, Masmindo Mining as well as CAM Jersey and Simmer & Jack Mines.
Stratton's first involvement with DRD comes in the wake of the group's move into Australia when the company bought a stake in Emperor Mines in 1998. At the time, Stratton was an Emperor Mines shareholder and it was through this relationship that Stratton established contact with Mostert.
DRD's bid for Emperor Mines was aborted following hostile shareholder reaction, but Stratton had already struck a relationship with the Kebble family.
Stratton and the Kebbles
Stratton's involvement with the Kebbles extends beyond DRD. It is Stratton, for example, who is alleged to have implemented Brett Kebble's strategy to halt the hostile takeover of Randfontein Estates by Harmony Gold – a move deemed terminal to Kebble's plans to restructure his investment in the Randgold group of companies.
Stratton executed the strategy of share purchases using the DRD Treasury (without DRD management's knowledge) and funds supplied from Western Areas. His own company, Continental Gold Fields, was also involved in the share trading.
Brett Kebble, recently re-appointed chief executive of Western Areas and a director of JCI Gold and CAM, says that he will take action if any of the accusations against Stratton are proved. "He will be off the board (of JCI Gold) very quickly, but until I see hard proof I have to assume people have an agenda against Stratton," he said.
By: David McKay |
