Cluff defies South African controversy

Leader of black empowerment movement poised to join the board of London-listed mining group

Algy Cluff, the chairman of right-wing magazine The Spectator, is this week planning to appoint one of South Africa's most controversial businessmen to the board of his London-listed minerals group, Cluff Mining.

Mzi Khumalo, a former cellmate of Nelson Mandela on Robben Island and a leader of the black empowerment movement, is to take a 17 per cent stake in Cluff as part of a deal that will see the group jointly develop a platinum mine in South Africa's Sheba Ridge.

Mr Cluff told The Independent on Sunday that the deal will go ahead despite controversy in South Africa over Mr Khumalo's role in black empowerment company Simane.

Mr Khumalo came up with the finance for Simane, which controls 10.8 million shares in a mining company called Harmony Gold. He was then found to have used six million of the shares as part of a deal to raise money for another of his businesses.

This broke an agreement not to transfer or sell the Harmony shares. Last week the South African government issued a deadline of 7 August for Mr Khumalo to return the shares to Simane.

Some South African commentators have speculated that the Simane controversy could derail the Cluff deal. However, Mr Cluff said the two matters were unrelated. "Mr Khumalo has paid for his shares in Cluff," he said, adding that he considered Mr Khumalo "a man of great probity".

"With black empowerment, it is important to find local partners for transactions and it is difficult to find partners who both have finance available and are useful to us," he explained. "Mr Khumalo's political credentials are as good as they can be and he is a very straightforward and sensible man."

The black empowerment movement was created after apartheid and is designed to bring black people into positions of power in previously white- controlled businesses. Mr Khumalo figured in one of the movement's most controversial episodes when the value of JCI, one of South Africa's oldest mining groups, collapsed amid a power struggle involving Mr Khumalo and the UK mining group Lonmin.

Terence Wilkinson, who ran the South African operations of Lonmin at the time, is now the operations director of Cluff Mining. Mr Cluff said Mr Wilkinson and Mr Khumalo had known each other for over 10 years.

The Cluff deal will make Mr Khumalo the largest shareholder in the company, owning almost three times as many shares as Mr Cluff himself.