South Africa plans to reform how local communities manage and spend mining royalties after a corruption probe found that a $44 million fund bankrolled by Lonmin Plc had been exhausted.
Almost all the money received by the Bapo Ba Mogale community during the past 20 years has been spent, with the biggest amount used to build a palace for a tribal leader, Public Protector Thuli Madonsela said on July 5. The palace cost at least 80 million rand ($5.8 million) despite an initial budget of 20 million rand.
“We need to develop a policy mechanism that can prevent it from reccurring anywhere else whilst also dealing with the remedies of what has happened with the Bapo,” Obed Bapela, a deputy minister at the Ministry of Cooperative Governance and Traditional Affairs, said in an interview.
Mining companies such as Lonmin, the world’s third-largest platinum producer, are required by law to help improve the living conditions of communities and racial groups who were discriminated against under whites-only rule that ended in 1994.
Some companies sell or finance equity stakes to black investors and can also pay royalties to community groups.
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