Exxaro in battle with ex-employee who raised procurement red flags

A dispute relating to claims of gross price manipulation and procurement irregularities has pitted mining giant Exxaro against a former employee.

At the centre of the saga is Ouma Sekgobela, who was employed by the coal and iron-ore giant as a buyer. She was dismissed in March 2024 following a procurement dispute over an emergency order for 300 cubic metres of aggregate at Exxaro’s Belfast operation after a breakdown.

Sekgobela successfully won a reinstatement order at the Commission for Conciliation, Mediation and Arbitration (CCMA), with the commission also ordering the company to compensate her R692 506.08 in back payments. Exxaro is appealing the ruling at the Labour Court.

The miner attributed her dismissal to dishonesty, saying she ordered six additional truckloads of 19mm aggregate without authorisation.

But she told CCMA commissioners she was fired for questioning procurement irregularities that the mining company had approved, which involved an aggregate and transport services overpayments.

Aggregate refers to bulk, granular materials that consist of sand, gravel, and crushed stone.

Sekgobela said she flagged a contract awarded to Colcon, a supplier at Exxaro’s Belfast coal mine in Mpumalanga, saying she had picked up inflated pricing, conflict of interest, irregular delivery records and breaches of Exxaro’s procurement policies.

She told the CCMA that while Colcon had procured aggregate for about R162.61 per cubic metre, the supplier invoiced Exxaro R1 775 per cubic metre.

She further alleged that transport costs increased from R7 000 to R24 375 per truckload, and that additional charges for labour, logistics and security were added despite not forming part of the original procurement request.

She further alleged in submissions to the CCMA that Colcon had charged R749 500 for concrete, R511 875 for transport involving 21 trucks, R64 000 for labour, R12 500 for logistics, and R40 125 for security to escort the trucks. The order ultimately resulted in an invoice of around R1.6-million including VAT.

“Colcon added charges for labour, logistics, and security transport, which were not part of the original procurement. The request was only for material that has a market-related price history on Exxaro system,” said Sekgobela.

Sekgobela said she also flagged a conflict of interest since Colcon was owned by the husband of a former Exxaro warehouse manager, possibly in contravention of company policy.

In a letter to the CCMA, a subcontractor hired by Colcon, Izicwe Mining Maintenance and Trading, confirmed that it was contracted to transport 20 cubic metres of 19mm concrete slag from Ferrobank Afrigrit to Exxaro’s Belfast mine under an emergency cash-on-delivery arrangement.

Izicwe Group director Joseph Saul said the company initially quoted R8 000 per load for six truckloads but later delivered 11 loads at R7 000 each after the order was extended.

Saul said only 11 truckloads were delivered. He said the trucks were weighed before leaving the loading site, but there was no weighing of the loads when they were offloaded at the mine.

“A total of R88 550 was circulated as proof of payment, along with an invoice showing R7 000 per load excluding VAT.

“Our quote was solely for the loading and offloading services, with no additional costs for truck security, logistics, or labour, as our trucks are fully equipped with tracking and cameras and we have access to a tracking bureau for emergency assistance.

“We believe that we have encountered unforeseen production losses due to the actions of Colcon, who exploited our services. However, we remain committed to seeking opportunities within Exxaro and aim to continue doing business based on trust and integrity,” said Saul.

Responding on behalf Colcon, Keletso Ramavhulela of Monareng-Ramavhulela Attorneys said: “We place on record that Colcon does not wish to involve itself in any Exxaro employee relations, including any employee disciplinary action and/or legal disputes and we kindly request that any questions in that regard be directed to Exxaro.”

Although the CCMA was not required to determine whether procurement fraud had occurred, the commissioner who presided on Sekgobela’s case made several observations about the transaction in his award.

He noted that purchasing aggregate from a new supplier at what appeared to be an inflated price “raises more concerns than it provides answers” and found that Exxaro could not verify the exact quantity of aggregate received because some deliveries had not been weighed, despite operational weighbridges being available.

The commissioner added that Exxaro remained entitled to pursue any further investigation into the transaction.

After hearing evidence over several days, the commissioner found that the company had failed to prove Sekgobela’s dishonesty and ordered that she be reinstated and compensated for wages lost.

According to the award in her favour, Sekgobela had initially been instructed to order 300 cubic metres of aggregate, but she later withdrew an email requesting additional loads after learning that the required quantity had already been delivered. The CCMA found there was no evidence she intended to deceive or defraud her employer.

She has, however, not been reinstated yet pending the outcome of the Labour Court appeal.

Nomonde Ndwalaza, corporate affairs manager at Exxaro, said the company had conducted an investigation in line with its zero-tolerance approach to unethical behaviour and had taken disciplinary action against the employee concerned.

“Exxaro resources is aware of alleged procurement irregularities involving an employee at our Belfast Business Unit that occurred in 2024. In line with our zero-tolerance policy on unethical behaviour, an investigation was conducted, and disciplinary action was taken against the employee involved.

“A review process is currently underway at the Labour Court and Exxaro will continue to defend its position, in line with its commitment to ethical partnerships across our value chain,” Ndwalaza said.

Boitumelo Kgobotlo