National

From Oilgate to Bosasa: 10 reports that shook SA

Staff Reporter

The Mail & Guardian is synonymous with the exposé -- it's part of our brand, our professional lifeblood.

The Mail & Guardian is synonymous with the exposé—it’s part of our brand, our professional lifeblood. Here are 10 big ones we sweated over. Dare we say we caused a few beads of perspiration in some other quarters too.

Arms deal—the never­ending story
No investigation has had more impact on our politics in the past decade than the infamous arms deal. Think Schabir Shaik and Jacob Zuma, think whistle-blower Bheki Jacobs and spin-doll Ranjeni Munusamy, think Bulelani Ngcuka, Moe Shaik and the Hefer Commission, think Thabo Mbeki and the tale of two judges: Willem Heath and Chris Nicholson.

The M&G was one of the first to start sniffing around the story with reports in 2000 regarding defence department linchpin Chippy Shaik’s conflict of interest in relation to ADS, the company in which his brother Schabir had an interest.

But the story really took off with the M&G exclusive in November 2002 revealing that the Scorpions were investigating then-deputy president Zuma.

The intense focus on Zuma and Shaik sometimes distracted us from the main arms deal allegations—involving the bulk of the contracts. But the M&G kept chipping away. Along the way we revealed:

  • How various middlemen and fixers were paid more than R1-billion in ‘commissions” by fighter jet supplier BAE Systems — with the lion’s share going to Fana Hlongwane, the man who had been Defence Minister Joe Modise’s special adviser;
  • How ex-NIA agent Mhleli Madaka was the source of the sensational (and strenuously denied) claim that then-president Thabo Mbeki had accepted R30-million from a German arms bidder;
  • How former sanctions buster Tony Georgiadis received $22-million for lobbying from ship-builder Thyssen — and paid more than three amounts of R500000 to the ANC and two charities linked to Nelson Mandela and his wife Graça;
  • How Thyssen also paid more than $3-million to an offshore company, allegedly at the request of Chippy Shaik (also denied).
  • How justice department director general Menzi Simelane resisted helping the German and British investigations of the South African deal.
Is it all over? Most of the skeletons are still hidden, but history suggests at least some of those dark cupboards will come creaking open.

Zuma and Shaik—the generally corrupt relationship
On Wednesday November 27 2002 M&G reporter Sam Sole ordered an obscure file from the registrar of the Durban High Court: Schabir Shaik v the National Director of Public Prosecutions.

The case had never got to court but Sole had been tipped off about its existence.

It was a draft application by Shaik to challenge the lawfulness of the raids on his premises carried out the previous October. Sole hoped that attached to Shaik’s challenge would be a copy of the secret search warrant that set out exactly what aspects of his involvement in the arms deal the Scorpions were investigating.

Until then all efforts to get insight into the Scorpions’ probe had proved futile, with access to the original warrant being denied.

That evening Sole attended the launch party of Durban’s new Suncoast casino, so it was with both a thumping head and heart that Sole returned to the registrar the next morning to see if the file would be handed over—or if someone in authority had realised the significance of the information it was said to contain.

But the file was duly handed over and the next day the M&G broke the story that was to launch a thousand headlines: ‘Scorpions probe Jacob Zuma”.

It would emerge as the criminal investigation that formed the battleground of the fight for the soul of the ANC—which would see Zuma first brought down—and then triumph over the Scorpions, over his political enemies and over Thabo Mbeki.

South Africa-Nigeria oil scam
The M&G revealed that a lucrative Nigerian crude oil allocation to ‘the Republic of South Africa” was diverted to an offshore company with no benefit to the South African state or public.

The crude—a whopping 55 000 barrels a day for the first year and then doubled—was first allocated in 1999 after then-president Mbeki had lobbied his counterpart, Olusegun Obasanjo.

As a ‘government-to-government” allocation, Nigeria’s state oil company provided the crude at a discount, meaning the recipient could make millions of dollars in clean profit annually. But while similar allocations went to the recipient countries’ state oil companies, South Africa’s allocation went to a private company misleadingly called the South African Oil Company (SAOC). Behind SAOC was Kase Lawal, a Houston-based Nigerian oilman.

In South Africa Lawal had chosen a who’s who of connectivity as his partners in SAOC: the wives and relatives of two premiers and a minister, and seemingly the ANC treasury itself. But there was a duplicate SAOC in the Cayman Islands. The Nigerian allocation was switched to this company, meaning that not even tax accrued to South Africa.

Who benefited? Lawal’s United States-based Camac Group said it owned 75% of the Caymans SAOC, but refused to identify the minority shareholder. Rumours persisted that the ANC or individual politicians were Lawal’s secret co-beneficiaries—but it or they were shielded by the Caymans’ notorious secrecy laws.

Denel and the R100-million
Although it emerged later, this was really the precursor to the great arms-deal scandal: a prequel in which many of the characters and issues in that saga made their first appearances. Joe Modise, defence minister and corruption suspect; Yusuf Surtee, middleman and influence peddler; kickbacks dressed up as ‘commission”; and seeming foot-dragging by law-enforcement.

The story began in the mid-1990s when state-owned defence company Denel was trying to sell Saudi Arabia our G5 and G6 artillery systems.

From later court papers it emerged that in 1996 the Denel board agreed to pay out about R100-million in ‘advance commission” to the Saudi agents in the hope of closing the deal. When the deal failed to materialise, the auditor general raised the alarm, but investigations were put on the back-burner in the hope that the Saudis would eventually buy.

In February 2001, when Saudi-controlled CellC was finally awarded South Africa’s third cellphone licence, there were vain hopes this would clinch the weapons deal.

In 2002 the Scorpions finally started to follow the money.

They had evidence that some of the R100-million paid into a Swiss account might have flowed back into South Africa as kickbacks to officials at Denel and others, including Modise and the ANC.

The Swiss released the bank data. Before it could be accessed, the Saudi agent launched a court challenge in South Africa, attempting to interdict the handing over of the information. While the Scorpions initially resisted, in 2005 the matter was removed from the court roll without explanation.

The ANC’s Oilgate
The M&G revealed how Sandi Majali and his company Imvume Management diverted millions of rands of public money to the ANC before the 2004 elections—democratic South Africa’s biggest funding scandal yet.

PetroSA paid R15-million to Imvume in December 2003 as an ‘advance” on a shipment of oil condensate for which payment was not yet due and without checking whether Imvume had the ability to repay. Within days Imvume transferred R11-million to the ANC and smaller amounts to, among others, a brother of then-minerals and energy minister Phumzile Mlambo-Ngcuka and a builder renovating the private home of then-social development minister Zola Skweyiya.

When Imvume failed to pay its foreign supplier in turn PetroSA obliged by paying the same amount again. PetroSA’s efforts to reclaim the money — using a lawyer who happened to be Majali’s business partner—were ineffectual.

Further revelations included how Imvume had won large oil allocations from Saddam Hussein’s Iraq after travelling to Baghdad with then-top Luthuli House officials Smuts Ngonyama, Mendi Msimang and Kgalema Motlanthe; how the proceeds were intended to be shared with the ANC; and how a R1-billion tender issued by the state’s Strategic Fuel Fund for strategic crude oil stocks was ‘fixed” so Imvume could supply it with the Iraqi crude.

Selebi and Agliotti—friends, finish and klaar
Sometimes big scandals are so obvious you simply have to hear what common sense is trying to tell you. Brett Kebble was a funder of the ANC Youth League, a recently deposed master of a pyramid scheme dressed up as a mining company, a vocal foe of the Scorpions.

When he wound up dead with a hail of bullets drilled into him at close range and the cops claimed it was a ‘botched hijacking”, you had to know there was a huge story behind it. The challenge was to find out what it was.

We had a slight head start. Before his death someone told us Kebble had been paying off then-police commissioner Jackie Selebi using some guy called Glenn Agliotti as his bagman. We had never heard of Agliotti, but we started to look at him and his connections—especially with Selebi.

When Kebble died the M&G threw serious time and resources at the story. And no, we never had a briefing from the Scorpions, but we did seek out scores of sources, some of whom were obviously also—witnesses in the official investigations. A few we spoke to long before they were ever questioned by investigators.

Of course we sought out Selebi’s opponents—Paul O’Sullivan, the former head of airport security, prominent and proactive among them.

Selebi helped us in two ways. He lied to us about never having been to Kebble’s house before the murder—and he was arrogant enough to try, initially, to bluster his way out, giving us the line that haunts him still: Agliotti was his friend, finish and klaar.

But the focus now on prosecuting Selebi leaves unresolved the wider organised crime networks we glimpsed, for whom Selebi may or may not have been a useful idiot.

Post Office scandal
After fending off an interdict attempt by Maanda Manyatshe, the former Post Office chief executive, the M&G revealed that his successor has asked the police to probe him for pushing through a R100-million deal to refurbish post office branches.

Although criminal charges never followed, Manyatshe lost his job as head of MTN South Africa in the wake of the scandal.

The project to refurbish Post Office branches was put out to tender in 2003 under Manyatshe’s leadership and 19 bids were received. But the tender was cancelled and Vision Design House, which did not submit a bid, was appointed in a series of deviations from tender procedure; first on an ad hoc basis and later to handle the entire project.

Manyatshe’s successor, Khutso Mampeule, instituted a forensic investigation and cancelled the contract in 2005, by which time the retail space at 68 branches had been upgraded at a cost of R100-million. Had the contract been rolled out to all 1500 branches as planned, it could have cost the Post Office more than R2-billion.

In affidavits Mampeule accused Vision Design of inflating subcontractor’s invoices to make ‘secret profits” of millions of rands. The parastatal’s property division said it had done similar work for a fraction of the price.

In a follow-up the M&G showed that Vision Design had done design work for Manyatshe at his private homes—and caught him lying about the extent of it.

Manyatshe maintained he had done no wrong in the award of the contract to Vision Design.

Chancellor House
The M&G, after an investigation jointly with the Institute for Security Studies’ corruption and governance programme, revealed that the ANC set up a funding front, the Chancellor House Group, which had notched up ‘BEE” stakes in a wide range of businesses often dependent on state oppor­tunities.

The initial exposé made hardly a ripple, but Chancellor House has since become part of the political lexicon, with no less than new ANC treasurer Mathews Phosa and Deputy President Kgalema Motlanthe acknowledging there is a problem when the ruling party is both player and referee.

The problem was illustrated most forcefully when the M&G revealed a year later that Chancellor House had a 25% stake in Hitachi Power Africa, which with its European parent company had won contracts worth a whopping R38,5-billion to supply boilers for Eskom’s two new coal-fired power stations, Medupi and Khusile. The Khusile contract was awarded without a further tender.

At the time the contracts were awarded, Eskom was chaired by Valli Moosa, an ANC national executive committee (NEC) member who also served on the NEC’s fund­raising committee. Despite the glaring conflict, Moosa did not recuse­himself.

At the ANC’s Polokwane conference, delegates mandated the ANC executive to ‘urgently develop guidelines and policy on public and private funding [of parties], including how to regulate investment vehicles”. The delegates’ instruction has yet to be honoured, as has a promise by Phosa that Chancellor House would withdraw from Eskom contracts.

Carl Niehaus
On a windy February morning the M&G‘s Pearlie­Joubert met struggle dominee Carl Niehaus at a coffee shop in Cape Town’s Waterfront.

Niehaus had recently been appointed the ANC’s spin doctor for the 2009 general elections and was on his way to making a stunning comeback in Jacob Zuma’s party after vanishing into obscurity.

But a few minutes into the interview, Niehaus’s world came crashing down. Again. He burst into tears as Joubert confronted him with a litany of allegations of fraud and corruption levelled against him by almost all of his former employers.

Niehaus admitted to forging signatures while he was chief executive of the Gauteng Economic Development Agency (Geda), borrowing money from high-profile ANC politicians and businessmen whom he couldn’t repay and owing the Rhema Church—he had done a stint as their spokesperson—thousands of rands.

It seldom happens that the subjects of our investigations admit wrongdoing, especially on a first date.

On Friday February 13 the M&G appeared with the front-page headline: ‘Tearful Niehaus admits fraud”. On the same day the ANC said Niehaus would resign from his position and five days later he did.

Joubert’s interview also led to criminal charges being laid against Niehaus and former Gauteng premier Paul Mashatile.

The M&G‘s exposé led to more Niehaus skeletons tumbling from the closet. Now everyone was sceptical of anything the man ever said or did.

Niehaus’s demise was quick. He is understood to have gone into rehabilitation and was recently seen queuing in front of Julius Malema’s office.

Bosasa
At the beginning of 2006, members of Parliament’s portfolio committee on correctional services started questioning a curious trend of multimillion-rand tenders being awarded to one company.

In one instance the company was paid R160-million to install 6000 television sets at R26 500 each at prisons.

That company was Bosasa and four years later the country’s new corruption-buster, Willie Hofmeyr, has confirmed allegations the M&G and other publications have been exposing for four years: that Bosasa and the prisons department have had an inordinately corrupt relationship.

Beeld was the first news­paper to make a link between the Krugersdorp-based Bosasa group and former prisons boss Linda Mti, who was a leader of the ANC in the Eastern Cape during the struggle.

That’s where his path crossed with the Watson family, better known for refusing to play for a whites-only Springbok team.

Many years later Gavin Watson was Bosasa’s chief executive and Mti was in a position to outsource basic prison services such as security, catering and fencing to Watson’s growing empire.

At the beginning of 2009, the M&G revealed through a series of articles how Bosasa had exclusive access to tender documents before they were advertised publicly.

Patrick Gillingham, the department’s former finance chief and a close ally of Mti, was fingered as Bosasa’s chief point of contact at the department’s head office.

In November Hofmeyr presented to Parliament some of the findings of the Special Investigating Unit’s probe into Bosasa’s prison contracts. They vindicated our reports.

Bosasa is currently trying to stop the probe through the courts, Gillingham is on suspension and Mti heads security for the 2010 Fifa World Cup.

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