Werner Menges
18 November 2008
DIAMOND mining industry operator Bret Investments, which over the past year has become embroiled in controversy and conflict over its activities in diamond mining on Namibia's Skeleton Coast, is facing bankruptcy.
An order for the provisional winding-up of Bret Investments due to its alleged inability to pay huge debts was given by Judge Nate Ndauendapo in the High Court in Windhoek on Thursday.
The order for the company's provisional winding-up is in effect until January 23, when Bret Investments should show to the court - if it wishes to do so - why a final order for its liquidation should not be made.
The company's current woes have their roots in fraud charges that are pending in New York against the directors of one of its major shareholders in South Africa.
Company records kept at Bret Investments' registered address in Windhoek show that a South African-registered company, Rapicorp 35 (Pty) Ltd, holds 97 of the 200 issued shares in Bret Investments.
This makes it the company's single largest shareholder.
Among its minority shareholders, each holding a one per cent stake in the company, are former Cabinet Minister Andimba Toivo ya Toivo, who has two shares in the company, the Minister of Works and Transport, Helmut Angula, who also has two shares in the company, and local businessman Naeman Amalwa, who likewise has two shares in the company.
Amalwa and Ya Toivo are also directors of Bret Investments - as is a South African businessman, Michael van der Merwe.
Van der Merwe is also a director of another South African-registered company, Pure Africa Minerals (Pty) Ltd, which in turn is a 30 per cent shareholder in Rapicorp 35, it is stated in court documents that are part of the case that was heard by Judge Ndauendapo.
In Namibia, Bret Investments has been engaged in a volatile business relationship with the company Nambib Resources, which had diamond mining licences over areas of the Skeleton Coast, including Toscanini.
Nambib Resources last year concluded an operators' agreement with Bret Investments that saw the latter company carry out mining work in Nambib's concession areas on Nambib's behalf.
The business relationship between the two companies descended into acrimony by late last year, though, with Nambib unsuccessfully suing Bret Investments in the High Court in an attempt to have the agreement between them annulled.
Earlier this year, Nambib's controlling shareholder, Malaysian businessman Subramaniam Ragubathi, also accused Bret Investments of having illegally removed diamonds from its Toscanini concession area and passing it off as originating from another mine in the south of Namibia.
In South Africa, Pure Africa Minerals is also involved in the diamond mining industry.
Pure Africa Minerals however was provisionally wound up in South Africa in September, the court was informed.
Bret Investments owes more than 36,8 million rand to Pure Africa Minerals, and despite a demand for the repayment of this debt, it has not been paid, it is stated in the court papers in which Pure Africa Minerals' three provisional liquidators were asking the High Court for an order winding up Bret Investments as well.
One of Bret Investments' minority shareholders, Fanie Nel, joined the provisional liquidators in asking for the company's provisional liquidation.
Nel stated in an affidavit that he knew that Bret Investments had ceased operations in March or April this year, after the mining licence held by Nambib Resources expired and was not renewed.
Nel also stated that he knew that Bret Investments still had about 5 000 carats of diamonds, originating from Toscanini, in stock at a place of safekeeping.
With the price of diamonds having fallen by around 50 to 70 per cent over the last two to three months, according to Nel, the estimated value of the 5 000 carats in Bret Investments' possession is about N$6 million, the court was informed.
According to Pure Africa Minerals' provisional liquidators they had received word that Bret Investments' Michael van der Merwe and Nambib Resources' Ragubathi met in Namibia early this month for negotiations on the sale of the diamonds.
With available information indicating that Bret Investments was involved with or was operated by "individuals who may have been involved with large scale international dealings (including the sale of diamonds)", it had become necessary that a provisional liquidator be appointed as a matter of urgency to take control of Bret Investments and its assets, it was stated to the court.
The court was informed that Van der Merwe and two American nationals, Steven Byers and Joseph Shereshevsky, were the only directors of Pure Africa Minerals.
In the United States of America, Byers and Shereshevsky have been facing fraud charges since being arrested on August 11 following a probe by the Federal Bureau of Investigation.
Byers and Shereshevsky are accused of having raised millions of dollars from investors.
Instead of using the raised money for the investments they were claimed to be intended for, they appropriated funds for themselves, it is claimed.
One of the companies run by Shereshevsky and Byers, WexTrust LLC, holds a major stake in Pure Africa Minerals, the court was informed.
Shereshevsky, Byers and WexTrust raised at least US$225 million from investors, it is stated in the documents filed with the High Court.
It is alleged that they fraudulently misrepresented to investors that US$11 million that had been obtained from investors was to be used to pay the costs of a WexTrust-controlled mine in Namibia and to buy new equipment and two other mines in Namibia, the court was also informed.
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