SALGAOCAR BOSS ACCUSED OF ROBBING SD BILLIONS
MBABANE – City Press has alleged that the Swazi government has been robbed of billions of Emalangeni in the mining deal of iron ore at Ngwenya mine as the funds were siphoned off to the Seychelles in an abusive transfer pricing scheme.
Financial statements of Shanmuga Rethenam’s companies have revealed that government was allegedly robbed of large amounts of money in a transport scheme whereby prices were inflated.
The report was carried by the publication which based the allegations on the ongoing court case against the Swazi government and Shanmuga Rethenam.
Rethenam, the businessman who ran the mine in the country, is trying to claim restitution for E69 million worth of payments he made to allegedly secure the mining rights. Rethenam stands accused of inflating transport costs to shift profit from the Swaziland mining operations of Ngwenya Mine to his own company in the Seychelles.
The accusations were made by Rethenam’s own business partners, a claim backed up by internal financial statements of Rethenam’s company as well as documents and emails filed in court papers, which provide new insight into why the Swaziland mining operation was struggling financially.
In 2011, Rethenam’s SG Iron was granted a seven-year licence to reprocess ore dumps that were left behind when Anglo American stopped mining there in 1977.
SG Iron was 50 per cent owned by Southern Africa Resources Limited (Sarl), a company that Rethenam controlled in the Seychelles and 25 per cent by the government of Swaziland.
Over a three-year period, SG Iron shipped E2.28 billion worth of iron ore out of Ngwenya Mine.
But for all the iron ore leaving Swaziland, the country earned no tax, and saw little in the way of dividends and royalties because roughly E2.21 billion was eaten up by a single line item, ‘transport and production’.
“It costs us a lot of money to process the waste. It’s not like a coal project in South Africa, where somebody else has already done coal. This was our learning curve,” Rethenam is quoted by the City Press.
The financial statements audited by PwC in Singapore provide no breakdown of these enormous costs, but internal financial records show that for every E1 earned in sales, roughly 94c to 97c was spent on transport.
And through a deal that Rethenam struck, the sole provider of transport was Rethenam’s company in the Seychelles, Sarl.