Barely two months after taking office, Free State Premier Ace Magashule is fighting claims that he abused his office to solicit a R3-million bribe.
Barely two months after taking office, Free State Premier Ace Magashule is fighting claims that he abused his office to solicit a R3-million bribe, allegedly negotiated by President Jacob Zuma’s ally and benefactor Vivian Reddy.
These startling allegations, which have been dismissed by Magashule and Reddy as false, are made by Johannesburg businessman Bongani Biyela in an affidavit before the Free State High Court.
Biyela and his business partners brought an urgent application before Judge Shamin Ebrahim on Wednesday after a decision by the Free State Gambling and Racing Board to approve or decline the sale of Biyela’s and his partners’ share in Gold Reef Resorts to Tsogo Sun was blocked as a result of direct intervention by Magashule.
Ebrahim didn’t pronounce on the corruption allegations apart from saying Biyela’s affidavit is not proof that Magashule ‘was on the other side of the bribe”.
The Biyela group’s interest in Gold Reef Resorts—the assets of which include Gold Reef City in Johannesburg, Silverstar Casino in Krugersdorp and Goldfields Casino in Welkom—amounts to 15% equity or ‘approximately R1-billion”. In his affidavit Biyela admits asking Reddy to intervene because of his ‘closeness” to Magashule and confirms he negotiated with an intermediary who allegedly acted on Magashule’s behalf.
The sale of the Biyela group’s stake in Gold Reef Resorts to competitor Tsogo Sun, which owns Montecasino in Johannesburg and Durban’s Suncoast Casino, is subject to approval by five provincial gambling boards in provinces where Gold Reef Resorts and Tsogo Sun own casinos.
The gambling boards of Gauteng, KwaZulu-Natal and the Eastern and Western Cape approved the deal. The Free State gambling board was supposed to approve or decline the transaction last week Wednesday.
But on May 22 Magashule wrote to the board’s chief executive, Jennifer Bokwa, informing her that, according to him, the board was not properly constituted owing to the absence of a lawyer and chartered accountant and that all matters should be ‘kept in abeyance” until a new board was appointed in August.
Despite a legal opinion in their favour, Bokwa and provincial economic development and tourism minister Mxolisi Dukwana unsuccessfully tried to persuade Magashule otherwise and the board informed Biyela’s group that it could not approve the deal at its June 17 meeting.
Because the current board’s term ends on Thursday at midnight, this meant the deal would have stayed on ice until a new board was appointed by Magashule’s administration.
After establishing that the deal wouldn’t go through, Biyela approached ‘a friend”, Reddy, ‘whom I knew to be in close contact with the premier ... Reddy made inquiries and then contacted me to inform me that there was indeed a problem with the application, and that I should meet him in Durban”.
Biyela says he met Reddy at the Beverley Hills Hotel in Umhlanga Rocks on June 13 where he was told ‘these guys” [the politicians] believed there was in fact no gambling board. ‘He [Reddy] told me that he had been told that I had to meet with a Mr [Kenosi] Moroka, an attorney, who would be able to facilitate the process for me. I knew Moroka to be very influential in the Free State and closely connected to the premier’s office.”
Biyela was ‘horrified” but agreed to meet Moroka—who is Magashule’s business partner through their directorships in Afropulse 197 and Afrique Networking Solutions—at the Kroonstad Shell Ultra City the next day with his business partner, Richard Moloko. Moroka allegedly told them that he was representing Magashule and could facilitate the process for them ‘although he couldn’t give any guarantees”. Moroka allegedly confirmed the ‘facilitation fee” would be R2-million.
Moroka said he was representing four other individuals as well and unsuccessfully attempted to call Magashule in their presence. He ended up speaking to the premier’s wife. Biyela says his subsequent attempts to get hold of Moroka failed and he again asked Reddy to intervene. On June 18 Reddy allegedly told him Moroka had set up a meeting with Magashule the next day and they agreed that Reddy would charter a plane from Durban to Bloemfontein.
On June 19 Biyela arrived in Bloemfontein. Biyela and Reddy drove with Moroka in his car to Magashule’s office and waited outside in the foyer. Biyela says Moroka was ‘uncomfortable” with his presence.
‘Moroka started mentioning money. [He] talked in a way that was difficult to understand, somewhat incoherent, but started mentioning money. He mentioned a figure of R10-million. The conversation made me very uncomfortable. This was proof to me that bribes were being crudely solicited to exploit apparent regulatory hurdles placed in the path of applications such as ours.”
Biyela claims he left the building and saw Moroka and Reddy entering Magashule’s office as he was leaving.
‘After quite some time Moroka and Reddy returned to the vehicle. In the presence of Moroka Reddy informed me that the ‘price’ was initially R10-million, but that he had managed to persuade ‘these guys’ to accept R3-million. Reddy informed me that ‘these guys’ wanted me to sign an agreement.”
They drove to Moroka’s office where ‘a man was typing on a laptop computer”. Moroka allegedly asked the man to type an agreement for him and dictated the document.
‘The draft agreement purports to be a ‘cost agreement’ between Moroka’s firm and [Biyela’s company]. It purports to regulate payment to Moroka’s firm of an amount of
R3-million for services rendered. No services of any sort were rendered by Moroka’s firm to [the company] beyond the attempts to solicit a bribe detailed above.”
Biyela says he and Moloko refused to pay the bribe and turned to the court to have their transaction approved.
On Wednesday Ebrahim ruled that Magashule was wrong to instruct the board that it wasn’t properly constituted and ordered the gambling board to finalise its decision on the transaction before its term expired at midnight on Thursday.
The gambling board was still deliberating the matter when the Mail & Guardian went to print.
Magashule on Thursday rejected the corruption allegations as ‘wrong and malicious”.
‘Both Judge Ebrahim and advocate Frans Odendaal for the applicant said there was no wrongdoing on the part of the premier. As a result the premier rejects the allegations ... it undermines his person and office.”
Reddy said the allegations about his involvement are an ‘absolute pack of lies designed to benefit one party in a serious clash between two business colleagues and friends ... I am an innocent party in this whole episode.”
Moroka rejects Biyela’s allegations, saying he was contacted by Biyela and Moloko to discuss business opportunities. At the Kroonstad meeting, they allegedly complained to him about Magashule’s problems with the gambling board and told him the board would decide in their favour.
They asked him to speak to Magashule about finalising the casino deal and ‘they will see how they take care of me”. Moroka denies asking for a R3-million facilitation fee. ‘In fact, that is what they offered me should I succeed with their request to have their application finalised.”
Moroka denies setting up the meeting with Magashule and says it was Reddy who had an appointment with the premier to make a ‘business presentation”.
Biyela, according to Moroka, stayed in his car and couldn’t have seen them entering Magashule’s office. Moroka says he did not enter Magashule’s office with Reddy.
Moroka further denies that Reddy mentioned a bribe in the car and says the meeting at his office was held in the context of his appointment as legal adviser in the province to Biyela’s group. Biyela wanted to ‘empower me financially”.
Moroka says it was Biyela who dictated the ‘cost agreement”, not him. ‘It is my view that Biyela planned all this in a desperate effort to ensure that his application with the [gambling] board is decided in his favour.”