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Zim, Guptas part ways

Feb 12 2012 11:09 Mpho Sibanyoni and Andile Ntingi

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KUMBA IRON ORE LIMITED [JSE:KIO]

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LAZARUS Zim and the controversial Gupta family have cut business ties.

The well-respected businessman confirmed this week he severed all business ties with the Gupta family last year, ending a relationship plagued by controversy ever since a company with close links to the Guptas won lucrative iron ore mineral rights.

Zim played down the separation, saying it was a move in the interest of using his time better.

“I am out of The New Age and other (Gupta) businesses. I have limited time and it’s a question of reprioritising my efforts to focus on key projects. I will announce these in due course. The separation happened last year,” Zim told City Press this week.

Zim is the second high-profile South African to go on record about cutting business ties with the wealthy Gupta family, which comprises Ajay and younger brothers Atul and Rajesh.

Essop Pahad, a former minister in the presidency under Thabo Mbeki and one-time ANC bigwig, broke all business ties with the Guptas last year after they stopped funding his political magazine, The Thinker.

Both Pahad and Zim were in 2010 appointed as directors of TNA Media, the publisher of the The New Age newspaper, which said at its launch that it would be “broadly sympathetic to the government”.

Zim was also a shareholder in the New Age and Sahara Computers, another Gupta-owned company.

Another prominent businessman, who declined to be named, also confirmed to City Press that he had cut ties with the Guptas, but refused to say why.

The relationship between Zim and Guptas extended beyond the New Age and Sahara Computers. The Guptas, through a family investment vehicle Oakbay Investments, owned 30% of Zim’s Afripalm Holdings. If the relationship was over, this implied that the Guptas were bought out of Afripalm.

Gupta family spokesperson Gary Naidoo said Zim left purely for business reasons.

“I have read your questions and they seem to be another fishing expedition.

“All businesses reshape their investments from time to time. Lazarus Zim remains a friend of the (Gupta) family,” he said.

Zim is highly regarded in business circles. He is a former Anglo American SA chief executive. In 2000 he was appointed chief executive of M-Net and a year later was made managing director of MTN international. He relinquished the position in 2003.

Zim had to field some tough questions about his proximity to the Guptas ever since a little-known shell company Imperial Crown Trading (ICT) snatched a 21.4% mining right in Sishen iron ore mine from under the nose of Kumba Iron Ore [JSE:KIO], which owns the mine. Kumba is a subsidiary of mining giant Anglo American [JSE:AGL].

At the time of the awarding of the mining right by the department of mineral resources, Zim was the chairperson of Kumba Iron Ore, which also applied for the mining right in 2009 but lost it to ICT.

Because of his association with some shareholders of ICT, Zim was seen as being conflicted.

In 2010, he hogged headlines in the furore over the awarding of the mining right to ICT.

An article in the Mail & Guardian accused him of a potential conflict of interest because of his business dealings with the Guptas.

Jagdish Parekh, an executive of Gupta companies, held half of ICT – the firm that was awarded the 21.4% stake in Sishen iron ore mine.

Zim resigned from the Kumba board in December 2010 even though the board came to his defence and said it saw no conflict of interest.

Recently Zim, who is a chairperson of Telkom, came under fire after Telkom sponsored presidential breakfast briefings hosted by The New Age newspaper. Zim was the director of the newspaper at the time.

The Gupta family rose to prominence because of its close relationship with President Jacob Zuma and even roped Zuma’s children, Duduzane and Duduzile, into its business deals.

The Guptas, Duduzane and ICT were part of the Ayigobi consortium that tried to acquire a 26% in steel producer ArcelorMittal SA [JSE:ACL] for R9bn.

ArcelorMittal, which used to own the rights that fell into the hands of ICT, roped ICT into the consortium in order to wrestle back the iron ore mining right.

Following intense public criticism and a determined legal objection from Kumba, the deal was cancelled by ArcelorMittal, leaving the consortium, dominated by people close to Zuma, empty-handed.

 - City Press 

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