Skeleton gem fight in Court

THE first salvo in a legal battle for control of four Skeleton Coast diamond concessions was fired on Friday when the High Court struck an urgent application brought by Malaysian businessman Subramanian Ragubathi from the court roll due to a lack of proven urgency.

Ragubathi was not around to hear Acting Judge John Manyarara dismiss his application with costs and so possibly set in motion the beginning of the end of the fight over the fabled Toscanini diamonds. The application was first brought on October 26, when Nambib Resources approached the court to grant an urgent interdict against Bret Investments in order to cancel an operators’ agreement the parties had entered into earlier this year.Bret had been mining the Toscanini claim for Nambib since April this year on a 65-35 split, but Nambib sought to have the contract annulled.Ragubathi had first tried to get Mines and Energy Minister Errki Nghimtina to cancel their operator’s agreement.Nghimtina declined to get involved and told him to approach the courts instead, it emerged on Friday.The court then directed Nambib, which was taken over by Ragubathi in 2004 from the previous Indian shareholders, to set out their arguments on paper and return to court on Friday.Nambib consists of Ragubathi, who assumed control of the company in 2004, with other Malaysian directors and shareholders including Prince Tunku Naquiddin and local Malaysian High Commisioner Hayaati Ismael’s husband, Sani Abdul Ghani.Bret Investments includes three South African shareholders and a Namibian BEE minority shareholding consisting of Andimba Toivo ya Toivo, Helmut Angula, Naeman Imalwa and Nancy Mupinye, a daughter of former Prime Minister Hage Geingob.On Friday, the court directed that it just be addressed on the issue of urgency, and ultimately Nambib’s bid faltered on this issue.Nambib and its owners now have to join the end of the legal queue and settle legal bills amounting to hundreds of thousands of Namibia dollars before the real legal battle can begin.For Bret Investments, which has been doing the actual mining at the Skeleton Coast since April, this amounts to a major victory as it can now move for control of the only assets that Nambib owned – the Exclusive Prospecting Licences (EPLs) held over Toscanini, Palgrave Beach, Terrace and Torra Bay areas.The latter three EPLs have in fact expired, Mines and Energy records show.Nambib counsel Chris Mouton argued at length that his client had tried to involve the Ministry in every possible way to resolve their contractual disagreement on the basis that the contract was signed on behalf of a director who should have been disqualified because of a previous criminal conviction.He also argued that by unilaterally changing a security plan for the mine in September, Bret had exposed his client to a possible legal liability under the Diamonds Act of 1999, which could see Nambib’s directors fined up to N$100 000 or two years’ imprisonment.These continuous violations were what constituted the urgency of their application, Mouton submitted.Senior Counsel Louis Wepener, assisted by Reinhardt Toetemeyer and instructed by Ellis & Partners’ Jurie Badenhorst on behalf of Bret, argued that the contract between the parties contained remedial measures to resolve disputes.Nambib however chose to ignore those contractual mechanisms and tried to get the Minister to use his position to cancel a deal that the Malaysians were now unhappy with, he contended.Wepener also challenged the authenticity and origin of the alleged criminal record of a former Bret director, saying there was no Diamonds Act in South Africa.Ragubathi had also known about the alleged criminal record of the former Bret director before entering into the agreement in April this year, Wepener said.Instead, his staff at the mine deliberately sabotaged the plant at Toscanini in order to wreck their production agreement, Wepener told the court.Moreover, Ragubathi had lured his clients – specifically the MD of the main South African shareholder Pure Africa Mining, Michael van der Merwe – to Hong Kong where Van Der Merwe was falsely assured that their mutual agreement was satisfactory.But a week later, Nambib suddenly sprang a legal surprise on Bret by filing the urgent application, Wepener argued.Acting Judge Manyarara, in a spirited exchange with Mouton, made him recite the legal chestnut of Section 214 of the Companies Act, which holds that if someone enters a legal agreement without being entitled to do so, it does not automatically render that contract illegal.Giving his ruling on Friday afternoon, Acting Judge Manyarara said he accepted Bret’s argument that Nambib’s urgency was self-created, ruling against Nambib and awarding costs on client-attorney basis to Bret Investments but excluding costs associated with the 26 October postponement.This will in all likelihood now set in motion legal further and final proceedings that could see Bret file for a winding-up order against Nambib.Van der Merwe afterwards welcomed the ruling as a positive step towards bringing the Skeleton Coast mining venture into full production, some 10 years since mining exploration resumed there after being suspended in the late 1970s by the colonial administrators.Ragubathi refused to speak to the press after the hearing.* John Grobler is a freelance journalist; 081 240 1587The application was first brought on October 26, when Nambib Resources approached the court to grant an urgent interdict against Bret Investments in order to cancel an operators’ agreement the parties had entered into earlier this year.Bret had been mining the Toscanini claim for Nambib since April this year on a 65-35 split, but Nambib sought to have the contract annulled.Ragubathi had first tried to get Mines and Energy Minister Errki Nghimtina to cancel their operator’s agreement. Nghimtina declined to get involved and told him to approach the courts instead, it emerged on Friday.The court then directed Nambib, which was taken over by Ragubathi in 2004 from the previous Indian shareholders, to set out their arguments on paper and return to court on Friday.Nambib consists of Ragubathi, who assumed control of the company in 2004, with other Malaysian directors and shareholders including Prince Tunku Naquiddin and local Malaysian High Commisioner Hayaati Ismael’s husband, Sani Abdul Ghani. Bret Investments includes three South African shareholders and a Namibian BEE minority shareholding consisting of Andimba Toivo ya Toivo, Helmut Angula, Naeman Imalwa and Nancy Mupinye, a daughter of former Prime Minister Hage Geingob.On Friday, the court directed that it just be addressed on the issue of urgency, and ultimately Nambib’s bid faltered on this issue.Nambib and its owners now have to join the end of the legal queue and settle legal bills amounting to hundreds of thousands of Namibia dollars before the real legal battle can begin.For Bret Investments, which has been doing the actual mining at the Skeleton Coast since April, this amounts to a major victory as it can now move for control of the only assets that Nambib owned – the Exclusive Prospecting Licences (EPLs) held over Toscanini, Palgrave Beach, Terrace and Torra Bay areas.The latter three EPLs have in fact expired, Mines and Energy records show. Nambib counsel Chris Mouton argued at length that his client had tried to involve the Ministry in every possible way to resolve their contractual disagreement on the basis that the contract was signed on behalf of a director who should have been disqualified because of a previous criminal conviction.He also argued that by unilaterally changing a security plan for the mine in September, Bret had exposed his client to a possible legal liability under the Diamonds Act of 1999, which could see Nambib’s directors fined up to N$100 000 or two years’ imprisonment.These continuous violations were what constituted the urgency of their application, Mouton submitted.Senior Counsel Louis Wepener, assisted by Reinhardt Toetemeyer and instructed by Ellis & Partners’ Jurie Badenhorst on behalf of Bret, argued that the contract between the parties contained remedial measures to resolve disputes.Nambib however chose to ignore those contractual mechanisms and tried to get the Minister to use his position to cancel a deal that the Malaysians were now unhappy with, he contended.Wepener also challenged the authenticity and origin of the alleged criminal record of a former Bret director, saying there was no Diamonds Act in South Africa.Ragubathi had also known about the alleged criminal record of the former Bret director before entering into the agreement in April this year, Wepener said.Instead, his staff at the mine deliberately sabotaged the plant at Toscanini in order to wreck their production agreement, Wepener told the court.Moreover, Ragubathi had lured his clients – specifically the MD of the main South African shareholder Pure Africa Mining, Michael van der Merwe – to Hong Kong where Van Der Merwe was falsely assured that their mutual agreement was satisfactory.But a week later, Nambib suddenly sprang a legal surprise on Bret by filing the urgent application, Wepener argued.Acting Judge Manyarara, in a spirited exchange with Mouton, made him recite the legal chestnut of Section 214 of the Companies Act, which holds that if someone enters a legal agreement without being entitled to do so, it does not automatically render that contract illegal.Giving his ruling on Friday afternoon, Acting Judge Manyarara said he accepted Bret’s argument that Nambib’s urgency was self-created, ruling against Nambib and awarding costs on client-attorney basis to Bret Investments but excluding costs associated with the 26 October postponement.This will in all likelihood now set in motion legal further and final proceedings that could see Bret file for a winding-up order against Nambib.Van der Merwe afterwards welcomed the ruling as a positive step towards bringing the Skeleton Coast mining venture into full production, some 10 years since mining exploration resumed there after being suspended in the late 1970s by the colonial administrators.Ragubathi refused to speak to the press after the hearing.* John Grobler is a freelance journalist; 081 240 1587