Swaziland’s absolute monarch King Mswati III took US$10 million from an iron ore mine for his personal use months before it collapsed with debts of US$4 million putting 700 people out of jobs.
It was described as a ‘loan’ but the money was never repaid.
It happened at the Ngwenya Iron Ore Mine which was owned by SG Iron Ore Mining (PTY) Ltd. (previously called Salgaocar Swaziland (PTY) Ltd). SG Iron was 50 percent owned by Southern Africa Resources Ltd (SARL), the King held 25 percent ‘in trust for the Swazi nation’ and the Swaziland Government owned a further 25 percent.
King Mswati took a US$10 million loan from the company less than six months after it started trading which he refused to pay back when it hit difficulties.
The mine was forced to cease trading in August 2014 after a series of events orchestrated by Sihle Dlamini, Director Administration at the King’s Office and Assistant Private Secretary to the King. He was also the King’s personal representative on the SG Iron board of directors.
In June 2011, King Mswati, who as absolute monarch in Swaziland has sole control over mining rights in the kingdom, granted SG Iron a Mining Lease for seven years. The company agreed to pay the King ‘in trust for the Swazi Nation’ a royalty of 3 percent. It also gave the King 25 percent of the total company issued share capital at no cost. It also gave a further 25 percent of the issued share capital to the Swaziland Government, again at no cost. The remaining 50 percent of issued share capital went to SARL.
The King holds shares ‘in trust for the Swazi Nation’, but it is widely reported outside of Swaziland that he has also received millions of dollars from international companies such as phone giant MTN; sugar conglomerates Illovo and Remgro; Sun International hotels and beverages firm SAB Millerto, which he spends on himself and his family.
The King, who rules over an impoverished kingdom of only 1.1 million people, has 13 palaces, two private jets and a fleet of top-of-the range BMW and Mercedes cars. At his 50th birthday party on 19 April 2018 he wore a watch worth US$1.6 million and a suit studded with diamonds. Meanwhile, seven in ten of his subjects exist on incomes of less than US$2 per day.
SG Iron’s stated goal was to reprocess iron ore dumps at Ngwenya left over by the Anglo American Mining Company in the late 1970’s, when it ceased mining operations in the area, and to secure the main mine lease for 30 years once the iron ore dumps had been cleared.
It was agreed SARL, being the 50 percent shareholder of SG Iron, had management control of SG Iron, which was in charge of, and responsible for, day-to-day running of SG Iron. SG Iron put up approximately US$50 million to start the mining operations and added further capital. The King and the Swaziland Government made no financial contributions.
The official inauguration of operations was on 21 October 2011 with the dispatch of ore to Maputo Port in Mozambique. On 21 December 2011, the first shipment was carried out from Maputo Port and on 9 March 2012, a rail services from Mpaka to Maputo Port, Mozambique, started.
Less than six months after operations began, King Mswati, through his representative Sihle Dlamini, asked for and received an advanced payment / loan of US$10 million on the King’s future dividend. This was at a meeting of the Board of Directors of Salgaocar Swaziland held in Mbabane, Swaziland, on 16 April 2012. The money was to be repaid from future dividends payable to the King.
There was no public announcement made that the King received the money which he held ‘in trust for the nation’ and it is not known how he spent it. This later fuelled speculation that he had used the money to fund his own personal lavish lifestyle.
On 21August 2014 Sihle Dlamini, representing the King at SG Iron, wrote to the CEO of SG Iron, Sivarama Petla, instructing him not to sell any more cargo. He did this without consulting the major shareholder, SARL. Since that day all attempts by SG Iron to sell cargo were blocked.
Contrary to the terms of the Mining Lease, the Board of Directors was not consulted about the decision to stop sales of iron ore. The Chairman Shanmuga Rethenam who was to chair all board meetings under Article 6.7 of the Mining Lease, and who also possessed a right of veto, was not even informed of the King’s decision.
In October 2014, in a founding affidavit at the Swaziland High Court to have the company placed under Judicial Management, Sihle Dlamini would state that a shareholders’ dispute at SARL in Singapore had made it impossible for management decisions to be taken at SG Iron. He also stated that the fall in the world price of iron ore had made production at the mine uneconomical.
Blocking the sale of iron ore meant no trade could take place and SG Iron’s operations were brought to an abrupt standstill. Since no money was coming into the company from the sale of cargoes there was a cash-flow crisis.
Sales could have resumed at any time because more than 100,000 tonnes of iron ore remained at Maputo Port, Mpaka Railway Siding and at the Mine Stockyard. In a High Court affidavit in October 2014, Sihle Dlamini revealed he had given instructions for ore to be stockpiled until the price of iron ore recovered.
SARL also requested that the King repay the full or part of the US$10 million loan / advance dividend to allow SG Iron to continue operating. The King refused to do this, instead the King’s representative Sihle Dlamini demanded that SARL inject more capital into the business, something it would not do while shipment of cargoes remained blocked.
SARL would say in January 2015 that it felt it had been held hostage by the King’s representative’s decision to unilaterally stop all shipments of cargo.
On 22 September 2014 at a board meeting of SG Iron held in Mbanane, Sihle Dlamini representing the King and Mbuso Dlamini, representing the Swazi Government, expressed dissatisfaction at the status of the company, saying that a shareholder dispute at SARL was impacting on SG Iron, something which was disputed by SG Iron.
The two men gave an ultimatum that fresh funds should be injected into the project no later than 26 September 2014. The Chairman of SG Iron, appointed by SARL, was present at this board meeting, and he requested that management allow the sale of the cargo, which would release sufficient funds to keep the company operating.
SARL again requested that the King should, ‘for the good of the company’s workers, its shareholders and the kingdom of Swaziland’, repay the full or part of the US$10 million loan / advance dividend to allow the continued operation of SG Iron. Sihle Dlamini, the King’s representative, refused.
Subsequent to the meeting, Sihle Dlamini, representing the King, asked SARL to wipe out the US$10 million loan.
In a letter dated 29 September 2014, SARL refused to write off the King’s debt. SARL said in January 2015 that in response to this, Sihle Dlamini took a unilateral decision to stop operations and place the company into Judicial Management and then liquidation. This decision was taken without discussions with the major shareholder or considering the voting rights in place at SG Iron.
On 3 October 2014 Sihle Dlamini representing the King and Mbuso Dlamini, representing the Swaziland Government, called for a meeting of the Board of Directors and despite being told by the Chairman of the Board Shanmuga Rethenam that he could not attend, they went ahead with the meeting without him.
This was the first Board Meeting that had been held without the Chairman’s presence in the history of SG Iron. Sihle Dlamini, the King’s representative, served as the Chairman of the meeting, although he represented only 25 percent of the company’s share capital and SARL, the 50 percent shareholder, was supposed to have control of the board.
Sihle Dlamini and Mbuso Dlamani both resolved to place SG Iron under Judicial Management, without seeking the Chairman’s consent, rather than permitting operations and cargo sale to continue.
SG Iron was placed under provisional Judicial Management by an Order of the High Court of Swaziland dated 10 October 2014. On the request of the Judicial Manager the Court ordered the provisional liquidation, or winding up, of SG Iron by an Order dated 16 December 2014.
As a result of the closure King’s US$10 million dividend / loan was written off. The closure of the mining project cost 700 people their jobs in Swaziland and it was estimated that several hundred jobs were also lost at the Port of Maputo, Mozambique
HOW KING DESTROYED AN IRON MINE
SWAZI KING AND QUEENS OF BLING
KING WEARS WATCH WORTH US$1.6-million
KING WEARS SUIT BEADED WITH DIAMONDS
SWAZI ROYALS SPEND, SPEND, SPEND