Billionaire Patrice Motsepe back in hot water over R3 billion court case

Mining firm Pula Group filed an appeal to challenge the outcome of a $195 million (R3 billion) case for damages in a Tanzanian court against South African billionaire Patrice Motsepe and his affiliate companies.   

Pula and its Tanzanian unit sued Motsepe and his associate firms — African Rainbow Minerals, African Rainbow Capital Investments and ARCH Sustainable Resources — for allegedly breaching a non-compete contract when it invested in Australia’s Evolution Energy Minerals.

Evolution’s Chilalo project is located next to Pula’s graphite project, according to court documents.

Judge F.M. Mirindo struck the case off the roll in a 7 August judgment because Pula didn’t join the Evolution companies he considered necessary parties.

He didn’t determine if the confidentiality contract was breached and didn’t award any damages. 

Pula has now filed a notice of appeal that states it “was dissatisfied with the decision of the High Court of the United Republic of Tanzania” and that the group appealed “against the whole of that decision.” 

African Rainbow Capital is aware of the notice of appeal, it said in response to questions, adding that the notice doesn’t set out the grounds of the appeal and that it was therefore too early to comment further. 

African Rainbow Minerals said it respects both the court’s decision and Pula’s appeal, and that it won’t comment further, allowing the judicial process to take its course. 

Pula Group Chairman Charles Stith, a former US ambassador to Tanzania, confirmed that the company made the appeal filing on Aug. 24.

“While Evolution is a party to the transaction, the investment was made into the company, and Evolution did not sign a non-compete agreement,” which is why it wasn’t included in the suit originally, he said.

“Only the investor — in this case, the companies linked to Motsepe — could decide whether they can make that investment with a non-compete contract in place.”

The judgment confirmed that Tanzania had jurisdiction over the case, and that Motsepe had the capacity to materially influence decisions through his controlling stake in African Rainbow Capital, which is linked to African Rainbow Minerals. 

Stith said that beyond the appeal, the group could also refile the case. 

He added that the $195 million it sought in damages could be higher after Evolution issued an investor document showing that the deal valued the entire firm at $340 million. 

The initial $195 million figure was a valuation by Bowline Professional Services of what Pula had to lose due to the competitive disadvantage from the Motsepe-linked firms’ violation of a two-year confidentiality and non-compete agreement when the companies signed with Evolution, Stith said.