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This was one of the key findings of a forensic accounting report by KPMG Forensics, into JCI, the mining house ran by Brett Kebble from 1997 to 2005.
The report also found that between 2002 and 2005 JCI directors benefited to the tune of R200m. It is understood these were monies spent on personal lifestyles including the purchase of houses and helicopters.
"These [misappropriations] arose from various transactions conducted through the company that were either irregular or not for fair value," Peter Gray, CEO of JCI and RG&E, told miningmx.com .
All in all, about R1.1bn would be paid by JCI to RG&E leaving total net assets in JCI of R800m, equal to 36c/share. This excludes mineral rights worth an estimated R200m. At the time of its suspension, JCI was trading at 16c/share.
Audacity, scope of fraud breathtaking
"The sheer audacity and scope of the fraud at JCI was breathtaking," Gray said.
The major misappropriations in JCI related to R266m worth of JCI shares issued for worthless transactions and R40m of misappropriated Western Areas shares.
The forensic report showed that JCI owns 24.5% of Western Areas, while RG&E owns 5%.
In other disclosures, Gray said that Investec, the bank that had loaned R460m to JCI in August in order to keep in liquid, had been partly repaid. It also emerged that Investec had loaned a further R375m to JCI in order for it to honour the repayment of debentures in January.
Of the total R835m loaned by Investec, there was an outstanding balance of R387m of which a further R320m would be paid from the sale of Boschendal (R120m) and other non-core assets (R200m).
Over and above the R835m that would be paid back to it, Investec would book a profit of R360m excluding interest.
Commenting on Investec's anticipated profits, Gray said: "There has been a massive turn around in the net asset value and I don't think we should begrudge Investec their share of the upside".
JCI, R&E, Matodzi merger?
There may be proposals to merge JCI, RG&E and Matodzi Resources, Gray said. "My personal view is that it would make little sense to have three listed companies where their assets overlap to this extent.
"The sustained and comprehensive failure and manipulation of the company's internal administrative, financial and management control over many years," Gray said.
Of the R3bn that washed through CMMS, a portion was legitimately used to fund JCI's portion of the development of South Deep, a mine half owned by Western Areas.
"Hundreds of millions of rands passed through CMMS, including funding for numerous suspect transactions for the benefit of certain directors and a number of related parties," said Gray.
Claims were being formulated against the estate of Brett Kebble and others who benefited from the misappropriation of assets, Gray said. - miningmx.com
