A rival grouping within the Bapo Ba Mogale Traditional Community, in the North West, is advancing its bid to have a landmark 2014 empowerment agreement negotiated between the community’s traditional leadership and platinum miner Lonmin declared null and void, filing an application in the High Court last week to have the R564-million equity deal reviewed and, ultimately, set aside.

This came only nine months after the inking of the black economic-empowerment (BEE) deal, which saw the platinum belt community gaining a 3.6% stake in Lonmin and additional cash flows of R100-million payable over five years.

Further procurement opportunities worth at least R200-million will be provided on a preferential basis for Bapo community members over an initial 18-month period, while a Bapo Community Trust has been created to hold 0.9% of the shares in Lonmin’s operating companies.

This entitles it to 0.9% of the profits achieved by the miner in any given financial year, irrespective of whether a dividend is paid to other shareholders.

Opposition to the agreement has, however, emerged from within the Bapo from the outset, with a grouping of community members claiming that the community was inadequately consulted prior to the agreement being signed and questioning the lawful- ness of the traditional council’s right to enter into the agreement on behalf of its members.

Addressing the media last week, the Liaison Committee of the Bapo Ba Mogale Traditional Community and the Serodumo Sa Rona community-based organisation, which collectively claim to represent the interests of “over half” the Bapo’s 40 000-strong population, argued that the community members had been unaware of the implications of the BEE deal prior to the endorsement of the transaction at a kgotha kgothe – a formal gathering of the community – in July last year.

The parties argued that the community had also not been provided with any of the relevant documents related to the transaction – including the agreements themselves or the due diligence reports – and was, thus, not aware that the transaction would, in effect, compel the community to “give up both rights and assets”.

“At the kgotha kgothe on July 29, the attendees were required to vote on the deal without having had sight of these agreements, despite a resolution that the documents had been made available.

“Without being given an opportunity to view and interrogate the relevant documents relating to this deal, the community has no idea whether or not it is in a better or worse position than before the deal was entered into and could never have been expected to take properly informed decisions about its future,” Liaison Committee of the Bapo Ba Mogale Traditional Community chairperson Julius Manyama told journalists.

He added that the traditional council did not have the authority to enter into the transaction on behalf of the community, given that it was not properly constituted at the time and was only gazetted a week after the decision to enter into the transaction was taken.

Manyama further cited an “utter” failure to comply with customary law and a voting procedure that was marked with several instances of procedural “unfairness”, including a lack of information and transparency.

“No proper reliance can be placed on the community resolution [to accept the deal], which was taken by a negligible portion of the community,” he remarked.

Serodumo public relations officer Kholisile Dingiswayo further alleged last week that the traditional council misled the community about the possible benefits of the transaction by making “generalised promises” that were not kept.

He added that the earlier mismanagement of community funds accrued from previous Lonmin royalties was used to validate the decision to exchange royalty and land rights for an equity share in the miner.

“But nothing can replace the value of land ownership . . . and it is not the prerogative of the traditional council to discuss and decide ownership of land without full and proper consultation with the community.

“The community was tricked into buying [a small portion] of Lonmin’s shares with everything it had, including its land. This is unacceptable. “This case is not about the size of the equity stake, but is an opportunity to allow the community to have a genuine say in a transaction linked to their land,” he averred.

According to Manyama, the parties had made several unsuccessful attempts to engage Lonmin and the traditional council over its grievances and had since requested the court to order a process of court-supervised engagement to determine a common way forward.

“We hope this engagement will lead to an open and transparent process characterised by an exchange of information and a sharing of ideas and that it will avoid the need for the applicants to seek to have the transaction set aside,” he said.

Defending its decision to enter into the equity agreement on behalf of the 40 000-strong local population, Lonmin reiterated in a statement to Mining Weekly last week that the Bapo ba Mogale community had “overwhelmingly” endorsed the transaction, after which it was reviewed and endorsed by the Rural Development and Land Reform Minister and the Mineral Resources Minister.

The transaction had been under discussion for several years and, in addition to securing Lonmin’s BEE ownership levels, the intention was to assist the community in structuring a transaction to reduce the community’s reliance on inevitably declining royalty payments, as well as to stimulate economic development and self-reliance in the region, it noted.

“In Lonmin’s view, it would be an injustice to the Bapo community were a small minority with vested interests to succeed in blocking a transaction that promises to make a material and positive difference to the lives of this community,” the miner said.

It further defended the legitimacy of the traditional council, which it described as legally constituted and gazetted by the provincial government of the North West.

The Bapo Ba Mogale Traditional Community and the Serodumo Sa Rona community-based organisation were represented in their review application by the Legal Resources Centre and law firm Bowman Gilfillan.