South African billionaire Patrice Motsepe responds to being sued for R3.4 billion
South African billionaire Patrice Motsepe has strongly dismissed a $195 million (R3.4 billion) lawsuit filed against him and his associate companies in Tanzania as baseless and nonsensical, according to a Sunday Times report.
The lawsuit, one of the largest to be heard by Tanzania’s commercial court, involves allegations of breaching a non-compete contract and centres around investments in mining projects in the East African nation.
The legal action was brought by Tanzanian mining firm Pula Graphite Partners, which claims Motsepe’s companies, including African Rainbow Minerals (ARM), African Rainbow Capital (ARC), and ARCH Emerging Markets, violated a non-compete agreement.
Pula asserts that these companies invested in Australia’s Evolution Energy Minerals, whose project is adjacent to Pula’s graphite site, during the period covered by the non-compete clause.
According to Charles Stith, chairman of Pula and a former U.S. ambassador to Tanzania, the claim is based on a third-party valuation of the losses Pula allegedly incurred due to this competitive disadvantage.
Motsepe and his companies have vehemently denied these allegations, insisting that Pula’s claims have no merit.
An ARM spokesperson explained that the company had considered investing in minerals it had not previously mined when Pula’s graphite project was presented for evaluation.
Following a confidentiality agreement, ARM ultimately decided not to pursue the project and communicated this decision to Pula.
Pula contends that a two-year non-compete agreement was in place and that Motsepe’s companies engaged with and finalised a deal with the Australian company within this restricted period.
Stith has argued that the case highlights broader systemic issues in the mining sector, where the dominance of foreign entities, particularly Australian and Canadian firms, creates challenges for local companies.
He described the alleged actions of ARM as perpetuating predatory practices that undermine Tanzanian interests, emphasising that the lawsuit could set a crucial legal precedent for protecting local mining businesses in the face of international competition.
Despite these assertions, Motsepe has characterised the lawsuit as both far-fetched and desperate.
Speaking at ARM’s annual general meeting, he expressed disappointment with Stith’s public statements and criticised the accusations as an affront to the integrity and governance of his companies.
He described the allegations as an insult to the ethical foundations of ARM and its associated entities.
“Our integrity, our ethics, our governance, and our good name are all that we have as a company and as a board,” Motsepe stated.
Motsepe explained that ARCH’s involvement stemmed from an agreement with an Australian company to acquire land near Pula’s site.
He stressed that ARM and ARCH were not connected or communicated regarding the matter apart from his role as a shareholder in both entities.
“What ARCH did was to conclude an agreement with an Australian company,” he said, reiterating that the claims of collusion or breach of a non-disclosure agreement (NDA) were baseless.
Further complicating the legal proceedings, Pula has accused the Motsepe group of delaying tactics, including challenges to the jurisdiction of the Tanzanian courts and claims of improper service of legal documents.
Stith alleged that ARM’s legal team had, on occasion, failed to appear in court.
However, Motsepe dismissed these claims and affirmed his companies’ commitment to defending their rights through legal channels.
Motsepe’s dismissal of the lawsuit underscores his belief in the integrity of his company’s actions.
Describing the claims as “absolute rubbish” and “absolute nonsense,” he maintained that there was no wrongdoing and expressed confidence in the legal system to resolve the matter fairly.
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