The head of Zim's Marange diamond firm, a trusted Mugabe lieutenant, has paid inflated prices for prime real estate in KwaZulu-Natal and Sandton.
A trusted lieutenant of Zimbabwe President Robert Mugabe has been on a R185-million property-buying spree in the past year, acquiring prime real estate on the Durban north coast and in one of the plushest areas of Sandton in Johannesburg.
Shadowy multimillionaire Robert Mhlanga is chairperson of Mbada Diamonds, one of the biggest mining companies operating in the controversial Marange diamond fields in southeastern Zimbabwe. Mbada recently said that it had turned over $600-million from diamonds in two years.
Mhlanga's property dealings have raised eyebrows, not least because he appears content to pay up to six times the going rate for the properties he buys. Speculation is rife in Zimbabwe that Mhlanga represents the Mugabe family's interests in Marange and has been buying properties on their behalf, although his role as a proxy for the Mugabes could not be proved by the Mail & Guardian.
Mugabe's spokesperson, George Charamba, said: "What is the link between Robert Mhlanga and Robert Mugabe except that they share the same [first] name? I find it strange that any Zimbabwean who makes money must be in association with Robert Mugabe. Is it being implied that Zimbabweans are not entrepreneurial enough?"
Mhlanga's personal assistant, who refused to give her name, asked the M&G to provide contact details, which was done on Monday this week and again on Wednesday. However, she did not respond to the newspaper.
Attempts to interview staff at the Sandton offices of Mhlanga's company, Liparm Corporation, also failed when the M&G was denied access. Security staff said it could take up to six months to secure an interview with the secretive businessman.
Ballito bolt hole
Questions were sent to Liparm, which did not respond. Lazelle Paola, a lawyer who has spoken on Mhlanga's behalf in the past, denied any business connection between Mhlanga and Mugabe, but said she was not authorised to answer other questions.
News broke in the South African media in May that Mhlanga had purchased a R200-million mansion on a hillside overlooking the prestigious Zimbali golf estate in Ballito, KwaZulu-Natal, last year.
One report claimed that the mansion had "two man-made lakes, bulletproof windows, a helipad and an underground bunker beneath a security building". However, an M&G investigation has confirmed that Mhlanga actually paid R100-million for the property in September 2011. He had bought an adjoining property for R1.2-million in 2002.
In addition to the Ballito bolt hole, the M&G used property deed searches to trace another four properties bought by Mhlanga in the past 18 months. On one day in January 2011 alone, Mhlanga bought three properties for a combined
R60-million, including a penthouse suite in Umhlanga Rocks and a pair of mansions almost opposite one another in Hyde Park, Sandton. He followed up these purchases in August 2011 by buying a sprawling property – again on the Umhlanga beachfront – for R25-million.
The paperwork for all five new properties has been finalised at deeds offices in their respective jurisdictions, the most recent of which – the Ballito estate – was completed in May this year.
Mhlanga's modus operandi is to buy a shelf company with an obscure name, such as Formate Proprietary, or an obscure name followed by a string of numbers, such as Redlex 549. He uses the shelf companies as vehicles through which to buy property. Mhlanga is traceable as the sole director of these companies and, through the company names, to records of property sales at deeds offices.
The deed searches and deed of transfer documents obtained by the M&G show that Mhlanga paid up to six times more for each property than when it changed hands between previous owners. Both owners of the properties whose prices increased sixfold explained that they had made improvements to the properties. But whereas one owner "demolished and rebuilt", the other said he had done an "upgrade".
Property analysts say the housing market has been "mediocre" and "flat" for years. According to the FNB House Price Index, house prices have risen cumulatively by 15% since February 2008 – the last time house prices peaked in real terms in South Africa.
The M&G managed to contact two of the five properties' previous owners to seek an explanation. The others could not be reached, despite numerous attempts.
Brian Nathan, a well-known Umhlanga businessman involved in the marketing and distribution of alcohol and tobacco in Africa and the Indian Ocean islands, said he had bought his Umhlanga beachfront property "some 12 years ago, for just under R4-million". The property was registered in the name of his wife, Brenda. "The house was demolished and rebuilt so obviously the market value has increased. The property market has also improved over the last 12 years," he said.
Mhlanga's shelf company paid R25-million for Nathan's property.
An Umhlanga Rocks-based estate agent corroborated Nathan's account, saying he had improved the property and put it on the market for "R30-million to R35-million".
But the agent expressed surprise at the R31-million Mhlanga paid for an apartment at the Oyster Schelles complex on the famous Oyster Box Hotel premises in the town. According to the agent, the most expensive flats were the penthouses in each apartment building, whose asking price was between R10-million and R15-million "absolutely tops". Even at R10-million, the penthouses were on the market for two or three years before they were sold.
Asked whether any apartment in the complex was worth R31-million, the agent said: "Absolutely impossible ... never, ever."
The previous owner of Mhlanga's apartment, whose name is known to the M&G, was out of the country and could not be reached for comment.
Laurence Grigorov, who sold the two Hyde Park properties to Mhlanga for a combined R29-million, said he bought both properties for a combined R5-million in 2007 and "upgraded" them. "I believe he paid a fair price. The property had been on the market for more than a year when Mhlanga came with an offer. I heard he was a miner … who was I to refuse?" said Grigorov.
A real estate analyst said if Mhlanga was buying property at well above the going rate, he was not expecting to make a return on his investment.
"If you're buying property to let, there's a 7% to 8% return you would want to get back on your investment per year," the analyst said. "But if you're paying five to six times above market rates, then you're only going to get a 1% return on your investment. It doesn't make financial sense; you must be doing it for other reasons."
The analyst offered two possible scenarios: "There could be money laundering happening, where basically you're paying a lot more than it's worth but there is some other agreement with the guy who's selling it to you where a percentage of the transaction flows back to you later in some other transaction down the line.
"Or you may be trying to set up bolt holes or places of safety outside your country in places where governments are relatively friendly to you, like in South Africa, and you don't care about the price because you need them quickly."
Despite lawyers claiming this week that Mhlanga "has no business or other relationship" with Mugabe, he is a former air vice-marshal who is known to have piloted Mugabe's private helicopter. Mhlanga prefers to keep a low profile, however, and calls himself Dr Mhlanga.
The M&G traced all of his dozen South African shelf companies to a single address in Sandton's business district.
We were met by Mhlanga's security detail on the ground floor, who said the 17th floor was only accessible to people who had made an appointment, which might take six months. They said no one was allowed on the floor without an escort. The floor has been secured in its entirety for Mhlanga's commercial use.
A key player in the murky diamond trade
The Marange diamond trade is dominated by shadowy companies with links to senior Zimbabwe securocrats. The two main players are Anjin, a joint venture between companies linked to the Chinese and Zimbabwe military, and Mbada Diamonds.
Robert Mhlanga's involvement began in August 2009 when Grandwell Holdings, a Mauritius-registered company in which he is the sole director, signed a 50-50 joint venture agreement with Marange Resources to form Mbada Diamonds. Grandwell is a subsidiary of Reclamation Group, a South African scrap metal company, and Marange Resources is owned by the state-controlled Zimbabwe Mineral Development Company.
In May this year, Mhlanga told the Zimbabwean Parliament that Mbada Diamonds had a turnover of just less than $600-million over the past two years. It had paid half of this in dividends and taxes to Zimbabwe's treasury, 26% towards working capital and 24% (about R612-million) to private shareholders.
If Mhlanga's declaration to Parliament was an accurate reflection of Mbada's revenues, his R185-million property buying spree in South Africa over the same period would amount to 30% of the dividends accruing to Mbada's private shareholders.
It is not known what share Mhlanga holds in the opaque and complex group of companies associated with Mbada Diamonds.
According to a report on Marange's diamond industry, published in February by watchdog non-governmental organisation (NGO) Global Witness, an obscure Hong Kong-based company called Transfrontier acquired a 49.9% shareholding in Grandwell. As soon as Transfrontier came on board, the government increased Mbada's concession area in the diamond fields sevenfold.
Global Witness believes that Mhlanga is linked to Transfrontier, although its beneficiary owners are not known. Mhlanga is the sole director of Liparm Corporation, a company operating from Sandton (see "Mugabe's man shells out R185m for prime property").
Global Witness said that until recently, Liparm's website listed Transfrontier as one of its "sister companies alongside Skyview Minerals and Mbada Diamonds".
But the section on sister companies was removed a few days after Global Witness wrote to Mhlanga asking about the relationship between Liparm and Transfrontier.
Zimbabwe's finance minister in Zimbabwe's coalition government, MDC-T secretary general Tendai Biti, has expressed concern that most revenue generated from Marange's vast diamond wealth is not finding its way back to the country's fiscus. NGOs allege that it could be used to fund a parallel government, including top figures in the military.
Biti was forced to slash the country's budget by 15% this week. In Parliament he complained bitterly that revenue of just $46.1-million had been received from Marange in the first half of 2012 – in contrast with the $600-million revenue previously projected for the current financial year.
Diamonds sourced from Marange were cleared for trade by the Kimberley Protocol in 2010, despite concerns over a lack of transparency and accountability by the companies that dominate the trade. – Owen Gagare & Lionel Faull
The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.