The Mail & Guardian is in possession of an extraordinary statement from a man on the witness protection programme who has implicated Inkatha Freedom Party officials in an elaborate scheme to milk millions from provincial coffers.
The businessman, Sateesh Isseri, has been on the programme since August 1997, after the auditor general was alerted to his claims. The police confirmed this week they have been investigating the information passed on by the auditor general, but charges have yet to be laid. Isseri’s statement details how senior civil servants in the KwaZulu-Natal government gave him unauthorised cheques worth more than R1-million and instructed him to dispense the money in cash to other officials.
According to the statement, Isseri struck a deal with the provincial government to supply medical equipment and soon afterwards started receiving the extra money, purportedly for his services.
Isseri, himself the subject of a criminal investigation, also recounts several conversations in which senior IFP members articulated their desire for the province to secede, and their need for “loyal businessmen”.
According to the document, a senior civil servant even drew a diagram to show how the party siphoned funds from the government via handpicked businesses. South Africa’s top commercial crime sleuth, Assistant Commissioner Louis Esterhuizen, said this week in reply to questions about Isseri that “certain information was referred to me by the auditor general during May 1997. These and other matters are being investigated by the commercial crime unit, Durban.”
Esterhuizen refused to comment further and would not answer questions about the statement. The M&G has confirmed the statement was signed in the presence of a senior member of the Durban commercial crime unit. That Isseri came into contact with allegedly fraudulent bureaucrats involved in high-level fraud has effectively been confirmed by the provincial government in papers filed with the Durban High Court last month. Isseri launched a civil law suit against the government in February this year for R740 000, which he claims he was owed in terms of his original deal with the province.
The M&G reported last month on the provincial government’s extraordinary defence in the case: that the officials – including a “PW Buthelezi”, identified as provincial expenditure chief — were involved in a fraudulent conspiracy with Isseri, which shielded the province from the civil claim. Although the government has filed its defence in court, Wesley Buthelezi, the provincial expenditure chief, and two alleged accomplices are still employed. Buthelezi declined to comment on the case this week.
Premier Ben Ngubane would not comment beyond saying he referred Isseri’s fraud claims to Judge Willem Heath’s corruption probe. Despite the intriguing details of Isseri’s civil case, politicians from the IFP and opposition parties, and senior civil servants expressed doubts about Isseri’s wider claims, warning he could have been involved in the scheme from the start. Senior officials not affiliated to the IFP have suggested Isseri found himself trapped in an investigation and spun a more elaborate story, with a political slant, to get on to the witness protection programme.
However, other sources close to the investigation said some of Isseri’s claims appeared true, and the police had made good progress. The Department of Justice , which runs the witness protection programme, cannot disclose information about anyone on the scheme.
The M&G has independently confirmed Isseri is on the programme. Isseri’s 22-page statement contains much incidental detail, but attaches few dates to the events described. A cover sheet, signed off by a senior Durban policeman on August 15 1997, says Isseri received several death threats. The statement opens in November 1996, when Isseri claims to have secured a deal to supply medical kits to the government after giving a presentation in Ulundi to senior provincial officials.
He claims Buthelezi instructed him to submit two invoices for an advance payment, each for just less than R400 000. Isseri says Buthelezi then took him to the Rib Inn, where he was introduced to Zenzele Mhlungu, a businessman. Mhlungu was minister of finance in the old KwaZulu homeland government and is currently the chair of Khulani Springbok Patrols, a security company previously linked to rogue elements in the former government’s security services. He denied this week ever meeting Isseri.
Isseri writes he was invited to join the IFP, and they discussed the benefits of secession. He then describes the intervention of a Captain Els, from a special police unit concentrating on government corruption and fraud, who pulled him aside when he went to his bank to ensure the cheques owed him had been cleared. Els informed him he was dealing with “petty criminals” and, according to the statement, had many encounters with him in an apparent attempt to trap the culprits.
Isseri describes how, shortly after his initial meeting with Els, Buthelezi informed him there was a “small gift” waiting for him in his post box. “Later that afternoon I went to my post boxes and found three more cheques [which were made out to different companies].” Isseri claims he told Els, who seized the cheques – worth about R1,2-million.
The statement claims Buthelezi instructed him to bank the three cheques, and that “if I ever needed to use any of these monies for my personal use, I must always end the figures with the digits R39,95 cents”. Els arranged a meeting between him, the provincial paymaster general and a representative from the office of the attorney general.
The M&G has confirmed the meeting took place. The policeman subsequently installed surveillance equipment in his office. The statement describes how Buthelezi at one stage drove Isseri to the airport, where he was introduced to Professor Otty Nxumalo, the provincial director general. “He [Nxumalo] asked me whether I had considered Mr Buthelezi and Mr Mhlungu’s request of joining their political party. He said I would get all the state tenders relating to medical products and ambulance services.”
Isseri claims Nxumalo said he should contact him immediately if anyone asked him about the cheques. Nxumalo had a different version this week when contacted by the M&G. He confirmed meeting Isseri at Durban airport, but said Isseri had told him he (Isseri) was being probed by police on phoney cheque allegations, and had asked Nxumalo to intervene on his behalf. Nxumalo said Isseri had also asked him why he [Nxumalo] was not being investigated, as signatory to the cheques.
The statement then says Buthelezi arrived at Isseri’s home the next day and instructed him to withdraw R500 000 and place R1 000 in each of 500 medical kits Isseri destined for Ulundi. “He also informed me that if it was not delivered on time, then I will not hear from him in future but my family will.” The statement says Els arrived shortly after Buthelezi’s departure, said he had captured the conversation on tape and excitedly started making phone calls.
Els allegedly instructed Isseri to carry out Buthelezi’s instructions. But on the day of the drop-off Els said all the cheques had been stopped, “the deal was off and had just become a sensitive issue between the government and a political party. He informed me to be careful.” Els has since left the police. Isseri then describes a meeting with several people, including Nxumalo and Buthelezi, at the Royal Hotel in Durban.
One of the officials — whom the M&G was unable to contact – said if the cheques were not honoured, he would pay in cash. “He then opened the brief case and I saw it was full of R200 notes.” The statement says Nxumalo walked in, sat down and drew a diagram showing money flowing from government to “businessmen” — and companies such as Khulani Holdings — and finally to the IFP.
Isseri was told arrangements were being made for him to become part of this cycle. Over the next few days, the statement says, Isseri was alternately feted and intimidated. He was offered a “pile of money” at one meeting and told to keep silent. Isseri’s statement claims he and a coloured businessman, Len Anderson, were flown to a paramilitary camp on the pretext of a hunting trip at the Umfolozi game reserve. There he saw many army and police vehicles, as well as several Springbok patrol vans.
“Mr Mhlungu informed me that this was their training camp and that the hunting there was good.” Isseri met several armed men, one of whom was a sharpshooter called “Themba”. Anderson told the M&G this week he had never heard of Isseri, had never been hunting and had never given funds to the IFP. He said Isseri’s description of him as “coloured” meant nothing as it was so vague. He asked whether the statement gives a date of the meeting, which it does not.
On another occasion, Isseri claims he was taken to a “special meeting at the King’s [Goodwill Zwelethini’s] palace in Nongoma”. Isseri gives a list of names of people he recognised at the party, politicians and businessmen, including Vivian Reddy. At the party the king allegedly spoke to Isseri, saying: “If I [Isseri] had business sense like Mr Mhlungu, I would go a long way.”
Reddy told the M&G this week he had never met Isseri and had never been to such a gathering. Isseri’s attorney, Louis Hitchcock, declined to comment this week, beyond confirming details of the civil case. The province’s MEC for Finance, Peter Miller, said he had not seen Isseri’s statement but had heard it exists. “I have also heard second-hand of the name mentioned. It has come to my ears accompanied by an allegation that there is an involvement here that is too sensitive for me to know about.”
He said his department had nothing to do with drafting the province’s defence in Isseri’s civil case. The chair of the province’s public accounts committee, Valentin Volker, said he has heard of Isseri’s claims about fraud in the provincial government. “There have been allegations made that there is money laundering going on,” Volker said, “but no substantial evidence has been produced.
If one person submits details, it is not enough. We need corroborative information. That has not happened in this case.” The former deputy national auditor general, Bertie Loots, has confirmed the provincial auditor general brought the matter to him last year, that he was “very concerned” and had passed the case to the police.