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A Tanzanian court has struck Pula Group's $195 million damages claim against companies associated with Patrice Motsepe from its roll, without deciding the question at the center of the case.
The High Court of Tanzania found that Pula had failed to join two companies central to its own case, Australian-listed Evolution Energy Minerals and its Tanzanian subsidiary Ngwena Tanzania, which operates the Chilalo graphite project in Ruangwa district, not far from Pula's own site. Both must be joined for the matter to continue.
Pula cited Motsepe and three of his companies as respondents, African Rainbow Minerals, African Rainbow Capital and ARCH Sustainable Resource. The dispute traces to 2019, when ARM signed a 24-month confidentiality agreement with the US-based group while weighing an investment in Pula's Ruangwa graphite project. Pula says it handed over geological, commercial and strategic material, and that ARM undertook not to use it for competitive purposes or to Pula's detriment.
Pula later found that ARCH Sustainable Resources Fund had invested in Evolution, the company developing Chilalo. Its filings argue ARCH was close enough to Motsepe and ARM to have received the confidential material and acted on it. ARC denies receiving or using Pula's information and says it was never a party to the agreement.
The ruling was not a clean win. The court held that Tanzania has jurisdiction, rejecting the argument built on a South African judgment that cleared African Rainbow Capital of liability in the same claim. That judgment found the confidentiality agreement was concluded between ARM and Pula rather than ARC, and that Pula's subsidiary held no contractual rights under it and could suffer no damages from the alleged breach. The Tanzanian court called it "inconclusive and immaterial" to its own proceeding.
Pula chairman Charles Stith said the court had affirmed central elements of the case, having rejected the jurisdictional challenge, rejected the attempt to use the South African proceedings to end the matter, and made findings on Motsepe's controlling interest and capacity to influence ARC. That is Pula's reading of a ruling that went against it procedurally.
The litigation has already moved markets. ARM's market capitalization fell R3.5 billion when the Tanzanian challenge surfaced, and Motsepe's side has both appealed to South African courts over the claim and sought protection there from the Tanzanian proceedings. Pula had earlier gone to court ahead of ARC's planned delisting.
Pula says it is weighing an appeal, a review, or fresh proceedings naming Evolution and Ngwena. Whether the confidentiality agreement was breached remains undecided.
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