South African Miner Sibanye Sued for Fraud Over Safety Promises
(Bloomberg) -- Statements by executives at South African miner Sibanye Gold Ltd.’s committing the company to worker safety were a fraud that caused stock market losses, according to a shareholder lawsuit.
The complaint filed as the class action in Brooklyn, New York, federal court says the company violated U.S. securities laws by making "materially false and misleading" safety commitments in Securities and Exchange Commission disclosure forms. At least 21 miners have died working for Sibanye this year and the company is under investigation by the chief inspector of mines in South Africa.
Sibanye Chief Executive Officer Neal Froneman and Chief Financial Officer Charl Keyter both signed the discloser forms and are listed as defendants. Sibanye "intends to vigorously defend itself," according to a company statement.
The worker deaths have affected the company’s share prices since the South African government ordered it to shut down parts of its mining operation in Khomanani. After a worker was killed there earlier this week, Sibanye shares are down 16 percent this week. They are down 47 percent this year.
Analysts at Citigroup Inc. cut their recommendation to neutral from buy on Wednesday based on the company’s track record and rising death toll.
Shareholders accuse Sibanye of disseminating false information to investors and artificially inflating the market price of company shares. If those in the class action had known the full breadth of safety issues and the market had reflected those concerns, "they would not have purchased Sibanye securities at the artificially inflated prices that they did, or at all," according to the complaint.
The case is Brandel v. Sibanye Gold Limited et al, U.S. District Court, Eastern District of New York (Brooklyn).
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