Motsepe wants SA court's intervention in Tanzania suit

Billionaire Patrice Motsepe’s investment firm African Rainbow Capital (ARC) has turned to the South Africa's Gauteng High Court (Johannesburg) to lay down the law in a R3.4bn lawsuit initiated in Tanzania by a US-based company, Pula Group, against the businessperson and three companies affiliated to him. BusinessLIVE reports that Pula Group, headed by former US Ambassador to Tanzania Charles Stith’s daughter Mary, initiated the legal showdown against Motsepe, ARC, African Rainbow Minerals (ARM) and ARCH Sustainable Resources in 2023, accusing Motsepe and the companies of breaching a 2019 confidential agreement in a mining project investment proposal in Tanzania for Pula Graphite. The litigation was initiated after ARCH invested in Australia’s Evolution Energy Minerals Ltd in 2021, which was involved in a graphite mine project, Chilalo, in the same area as Pula Graphite. Pula Group, which is a 50% shareholder of Pula Graphite, defines Chilalo as its opposition in the Ruangwa District. Motsepe, ARM and ARCH have had an unlucky run in the $195m legal battle in Tanzania. They did not defend the case, arguing they were not served correctly. Pula Group applied for a default judgment against the three. ARC was the only entity that opposed the application in Tanzania. The undefended parties tried to lodge applications to have the default judgment application scrapped but failed in 2024 and have taken the matter on appeal. ARC lodged an application with the Johannesburg court in June. ARC’s representative, Advocate Kristie Magagula, last week argued for edictal citation (serving court papers to parties outside the country) and the High Court granted the request. The foreign companies have about a month to oppose the application.

ARC wants the court to make declaratory orders, according to SA laws, that the company was not affected by the confidential agreement between ARM and Pula Group and cannot be held liable for damages. It also wants the court to declare that Pula Group’s mining company, Pula Graphite, in Tanzania was not part of the agreement therefore cannot claim to suffer contractual damages flowing from the alleged breach of the agreement. In court papers, ARC director Johan van der Merwe argued ARC was stuck in a legal conundrum as ARM, Motsepe and ARCH were not defended in the main lawsuit in Tanzania and could not produce evidence in the case. ARC requires the protection of SA courts to ensure that it is fairly treated in a foreign jurisdiction based on the correct application of the SA law, Van der Merwe argued according to the BusinessLIVE report.