MASERU — The Lesotho government is being sued for a staggering M3 billion by a South African businessman for revoking leases of his five diamond mines when it implemented the Lesotho Highlands Water Project (LHWP) about a decade ago.
The mines’ boss, Josias van Zyl, has dragged the Lesotho government to the Southern African Development Community (SADC) Tribunal to compel it to compensate him for the losses he suffered when LHWP was implemented.
The amount he is claiming in damages is almost half of the amount that the government expected to raise, according to the figures presented in the budget in February this year.
The government’s money comes from taxes that are paid by people in the form of income taxes (from work), VAT (from sale of goods) and customs duty (from importations).
If the government loses the case it means it is the taxpayer who will suffer prejudice.
The LHWP is a joint project between the Lesotho and South African governments.
It includes Katse Dam in Thaba-Tseka and Mohale Dam in Maseru district.
Van Zyl claims that his efforts to get remedy in the Lesotho and South African courts have failed.
Van Zyl told the SADC Tribunal in his affidavit that he suffered losses after the Lesotho government revoked leases for his five diamond mines — Matsoku, Motete, Orange, Patiseng and Rampai which were under the holding company Swissbourgh Diamond Mines.
He also said his two family trustees — Josias Van Zyl Family Trust and Burmilla Trust — suffered losses because of the government’s actions.
The Lesotho government revoked the mines’ leases in 1991in preparation for the LHWP.
Van Zyl’s claims include close to M2.3 billion for the cancellation of Rampai mining lease plus interest calculated in terms of international law principles.
In respect of the other four leases of Patiseng, Matsoku, Motete and Orange Van Zyl claims M958 702 281 plus interest in terms of international law principles calculated from October 1, 1992 to date of payment.
Van Zyl further claims M9 279 673 for the loss of the mining plant and equipment.
He further claims M958 702 281 for the extension leases on the five mines.
He also claims that the Lets’eng-la-Terae Kimberlite pipes drain their diamonds into the Pitseng, Matsoku, Orange and Rampai mining lease areas.
The mining operations presently conducted at Lets’eng-la-Terae, owned partly by the government and the London Stock Exchange-listed Gen Diamonds, allegedly are returning diamond recoveries yielding hundreds of millions of Maloti, according to Van Zyl’s affidavit .
Van Zyl seeks the SADC Tribunal to compel the Lesotho government to provide a detailed analysis of all the diamonds recovered and sold from Lets’eng-la-Terai since it was reopened by the Johannesburg Investment Company and thereafter being taken over by Gem Diamonds.
A few of such discoveries at Lets’eng-la-Terae include a 602 carat diamond called the Lesotho Brown.
Another one was a 478 carat Light of Lets’eng.
There was also 630 carat and 493 carat stones discovered.
The 630 carat stone has sold for more than M120 million while the 478 carat fetched M184 million.
Lets’eng mine had as at 2008 produced four of the world’s twenty largest rough gem diamonds and the three largest recovered in this century.
The mine allegedly is expected to produce 105 000 carats in 2009 at an average price in excess of USD 2 000 per carat relating to sales of USD210 million converted to approximately M2 billion.
Van Zyl says Motete received diamonds from the Kimberlite pipes and dykes located within and feeding into the Kao, Lemphane and Liqhobong main pipes.
Van Zyl says the mining operations at Lets’eng, Liqhobong and Kao confirm the presence of diamonds in economically viable quantities in Lesotho resulting in sales amounting to billions of Maloti.
“It is an undisputed geological fact that these diamond pipes and many others drained large quantities of their diamonds into the applicants’ five registered lease areas as well as the extension lease areas for millions of years.”
Van Zyl claims that he is aware that the government of Lesotho is currently considering several applications for mineral rights in respect of areas covered by the extension mining lease areas.
“These applications are based on the information originally contained in the geological reports prepared on behalf of the first applicant, (Swissbourgh Diamond Mines) and the breakthrough made in the identification of the areas now applied for by others,” he says.
Van Zyl seeks a furtherM14 858 330 as at December 30, 2000 for legal costs.
Interest is to be calculated at the ABSA Bank rate on its annual rate yields on investments from January 1, 2001 to date of payment.
The total liquidated claim is M260 937 370 based on foreign capital expenditure, legal costs and tributing values.
Van Zyl also claims moral damages to the tune of M80million from the government of Lesotho.
He writes that Swissbourgh Diamond Mines has suffered serious loss of credit, reputation and prestige and has been unable to pursue any other mining or other business opportunities since the cancelation of the leases.
Van Zyl says he has suffered “severe humiliation and indignity, insult, damage to his good name and reputation, and fear and anxiety caused by harassment and intimidation.”
“In the 18 years since 1991 I have been denied my fundamental rights and in the process suffered the indignity of losing everything I had.”
“I was treated in the most iniquitous manner by officials of the governments of the Kingdom of Lesotho and the Republic of South Africa and in the municipal courts of both countries.
“During 1995 I was evicted from my home with my wife and small children when my livelihood was destroyed following the cancellation and revocation of (Swissbourgh Diamond Mines) mining lease contracts,” he says.
Van Zyl tells the Tribunal that his life was threatened by the armed forces of the government of Lesotho who also wanted to kill his employees and contractors.
“I had no doubt that the direct threats that I would be killed together with the employees were seriously intended and would have been carried out unless I ensured that (we) complied with their unlawful demands.
“I was never able to secure an income from any gainful employment or to pursue alternative business opportunities due to the false and defamatory statements made by officials of the Kingdom of Lesotho in the national newspapers of South Africa and Lesotho.
“I have been crippled financially in an effort to finance the ongoing costs to maintain the litigation.”
Before approaching the SADC Tribunal, Van Zyl claims he had exhausted all local remedies both in Lesotho and South Africa but without success.
Van Zyl says he petitioned heads of state of the two countries, wrote responsible ministers and members of parliament but nothing materialised.
Talks with all relevant authorities including the LHDA, the Commissioner of Mines and the Natural Resources Principal Secretary did not bring results, Van Zyl claims.
On July 18, 1991 Van Zyl launched an urgent application in the High Court of Lesotho for an interdict against the LHDA, restraining it from performing certain LHWP works in the Rampai lease area.
The application was not opposed.
An interim interdict was granted against LHDA.
“The lives of the applicants’ legal representatives and my own were threatened unless we agreed to lift the interdict,” writes Van Zyl.
Once the interdict was lifted, however, representatives and officials of both the governments of Lesotho and South Africa allegedly demonstrated that they had no intention to resolve the matter by negotiation, he further alleges.
“On 2 October 1991 the LHDA’s legal representatives confirmed in writing that it had refused to meet with first applicant’s (Swissbourgh Diamond Mines) representatives on 26 September 1991, as it “saw no benefit to be guided from such a meeting” and it denied owing the first applicant any compensation.”
He claims that he was precluded from instituting any legal proceedings to vindicate his and the applicant’s rights in Lesotho.
In view of the LHWP treaty and related agreements, Van Zyl and his companies instituted action against South Africa and relevant organs of state as defendants.
South Africa filed its plea in October 1993 in which it denied that the plaintiffs held any rights under the laws of Lesotho.