But the court left the door open for Pula Group to bring a fresh claim to recover $195m from Patrice Motsepe companies it says it is owed for misuse of confidential information.
African Rainbow Minerals founder Patrice Motsepe. Picture: Visionhaus/Getty Images
A Tanzanian court has struck Pula Group’s $195 million damages claim against companies associated with Patrice Motsepe from the court roll – but stopped short of deciding whether confidential information was misused to support a competing graphite project, as Pula alleges.
The High Court of Tanzania found that Pula failed to join to the proceedings two companies central to its case: Australian-listed Evolution Energy Minerals and its Tanzanian subsidiary Ngwena Tanzania, which operates the Chilalo graphite project in the Ruangwa district, not far from Pula’s own graphite project.
Pula cited Patrice Motsepe and three of his companies as respondents: African Rainbow Minerals (ARM), African Rainbow Capital (ARC), and ARCH Sustainable Resource.
The dispute dates back to 2019 when ARM signed a 24-month confidentiality agreement with US-based Pula Group while considering an investment in Pula’s Ruangwa graphite project in southern Tanzania.
Pula says it provided ARM with confidential geological, commercial and strategic information. ARM undertook not to use that information for a competitive purpose or in any way detrimental to Pula.
Pula later discovered that an associated company, ARCH Sustainable Resources Fund, had invested in Evolution Energy Minerals, the Australian company developing the nearby Chilalo graphite project through Ngwena Tanzania.
ARCH was sufficiently close to Motsepe and ARM to have received confidential information in breach of the agreement and then act on it, according to Pula’s court filings.
ARC denies receiving or using Pula’s information and says it was not a party to the confidentiality agreement. The two companies not present in the court – Evolution and Ngwena – will have to be joined to the proceedings for the case to continue.
Ruling not entirely in Motsepe’s favour
The Tanzanian court ruling didn’t go entirely in Motsepe’s favour, with the finding that Tanzania had jurisdiction in the matter – despite an earlier South African court ruling that the confidentiality agreement was concluded between ARM (not ARC) and Pula Group, and that its subsidiary company Pula Graphite has no contractual rights in terms of this agreement, nor can it suffer damages as a result of the alleged breach.
The Tanzania court took a different view, ruling that the SA judgment was “inconclusive and immaterial” for purposes of the Tanzanian proceeding, but did not make a decision as to whether the confidentiality agreement had been breached.
Ambassador Charles Stith, chairman of Pula Group, said: “This is an important judgment because the court has affirmed central elements of the case Pula has advanced from the outset.
“It rejected the challenge to Tanzania’s jurisdiction, rejected the attempt to use the subsequent South African proceedings to terminate our case, and made important findings concerning Mr Motsepe’s controlling interest and capacity to influence ARC.”
Pula says three key elements of its claim were established by the Tanzania court: the relationship and common control between ARM, ARC and ARCH; the investment links through the Evolution and Ngwena entities; and the operation of the competing Chilalo graphite project during the relevant period.
The ruling delays its search for justice, says Pula, but does not derail it. Among its options are to appeal the ruling, apply for a review, or start fresh proceedings citing Evolution and Ngwena as respondents. The company says it is taking advice on the best way forward.
This article was republished from Moneyweb. Read the original here.
