Bottles of Le Vie de Luc mineral water sport the Nelson Mandela Children’s Fund logo without permission
Stefaans Brummer
The Nelson Mandela Children’s Fund has found itself in bed with a business linked to Mafia don Vito Palazzolo but the fund protests that it is an unwilling partner and says it has asked for an audit of moneys collected in its name.
Sicilian-born Palazzolo was arrested in November 1999 on fraud charges relating to his entry to South Africa after evading a Swiss jail sentence and also relating to the way he later gained South Arican citizenship. He is out on bail of R500 000 pending conclusion of his trial, set to resume in the Cape Regional Court on August 20.
Ironically, Palazzolo’s arrest, by the elite Scorpions unit, followed a call the previous year by Mandela, then still president, for the Palazzolo matter to be reinvestigated. Mandela’s call was in response to a renewed media focus on Palazzolo and his links with the Sicilian Mafia.
Achmat Dangor, chief executive of the fund, this week said he was expecting no money from Franschhoek-based La Vie de Luc mineral water, which has been sporting labels with the words, “Benefiting the Nelson Mandela Children’s Fund”.
But Wayne Robertson, financial manager of La Vie de Luc, said: “As far as we’re concerned we have a three-year agreement to use the children’s fund [logo].” He said the first payment to the fund was due on July 31.
La Vie de Luc is bottled at La Terra de Luc, the wine farm where Palazzolo maintains a residence. A majority stake in the R30-million farm, which earlier belonged to Palazzolo, was reportedly sold around the time of Palazzolo’s arrest to his equally colourful neighbour, the Italian racing driver-entrepreneur Count Riccardo Agusta.
La Vie de Luc, though its attorney Igor Vukic, on Thursday asked the Mail & Guardian to publish no reference to Palazzolo’s “ownership” of La Vie de Luc. He said Palazzolo was not the owner and that any such suggestion could affect the company’s “image in the marketplace”. Robertson said the mineral water company, like the farm, was owned by Agusta. “The ultimate shareholder is the count and it is a 100% shareholding by the count.
Whether or not Palazzolo who also calls himself Roberto von Palace Kolbatschenko has an ownership stake, his links remain clear. His sons Christian and Peter von Palace Kolbatschenko were listed as recently as February as directors of the company La Vie de Luc Mineral Water, and Christian remains the general manager at the bottling plant.
Palazzolo also remains a consultant or manager at least to the farm itself. At the time of the sale, it was reported that Palazzolo had been asked to stay on “indefinitely” in the manor home as a consultant. When the state tried to withdraw Palazzolo’s bail last year, Palazzolo opposed it on grounds which included that he was still a consultant at the farm. His representative also told the court that Palazzolo received a monthly salary for managerial duties.
The link-up between the children’s fund and La Vie de Luc was formalised in May last year, but at that stage possibly without the fund’s knowledge. The deal was done in the fund’s name by Edusaf Projects, a charity which had entered a fundraising joint venture with the children’s fund some months earlier.
Edusaf and the fund are now at loggerheads, and the fund’s Dangor told the M&G that he had demanded audited statements of transactions Edusaf had conducted in the fund’s name. If Edusaf failed to produce these, the fund would consider legal action. Dangor said that partnership between Edusaf and the fund was a failed “experiment in outsourcing” that would not be repeated.
Edusaf boasts patrons including Miriam Makeba, Leah Tutu and Minister of Public Service and Administration Geraldine Fraser-Moleketi.
Edusaf legal adviser Jon Gephardt this week said the link to Palazzolo was news to him. He said La Vie de Luc had been introduced as a donor by Swiss citizen Peter Mark, who was an associate of Cape-based music promoter Udo Klotz, who was involved with Edusaf in arranging a “Nelson Mandela Children’s Fund” exhibition at Expo 2000 in Hanover, Germany.
Events at the exhibition led to a breakdown in relations between Edusaf and the children’s fund. Correspondence between La Vie de Luc, Edusaf and Peter Mark shows that La Vie de Luc agreed to sponsor Edusaf R5 000 in cash and R5 000 in mineral water, as well as provide at wholesale prices 15 000 bottles of mineral water, sold at the Hanover fair to the benefit of Edusaf and the children’s fund.
But Expo 2000, said Gephardt, turned out to be a “terrible failure”. The pavilion had cost about R500 000 to set up. The water sales made “a bit of money”, but in total there was a “huge loss”. Gephardt said Edusaf still owed much money on that venture a fact confirmed by Robertson, who said La Vie de Luc had, in addition to the sponsorship, also provided the start-up loan. That loan had been repaid but much was outstanding on the water supplied by La Vie de Luc.
But the children’s fund had a different reason for being angry with Edusaf over the Expo 2000, which ran between June and October last year. Dangor said that South Africa’s embassy in Germany informed the fund that the Edusaf pavilion was giving the children’s fund bad publicity. Among problems were claims by South African workers, brought to Germany to work at the pavilion, that Edusaf had breached their contracts and left them in the lurch.
In October, Dangor wrote to Gephardt saying that the children’s fund was “impressed by your commitment and dedication”, but that it had no choice but to terminate the partnership with Edusaf as the children’s fund “does not wish to jeopardise its goodwill and reputation in the marketplace”.
In spite of Dangor’s letter, it seems the break was not that clean or complete. This week the Edusaf website still sported the “Nelson Mandela Children’s Fund” logo.
More importantly, La Vie de Luc mineral water also sports the logo. The logo was attached in terms of a contract signed between Edusaf and La Vie de Luc on May 31 last year. The contract states that between 1c and 5c of each bottle sold will be donated, via Edusaf, to the children’s fund.
These bottles, ironically, went on sale only after Dangor’s termination letter to Edusaf. Robertson said the labels were late to be supplied, and were only attached from May this year. In terms of the contract the proceeds were to be paid at the end of every quarter, meaning the first payment was due at the end of July. Robertson said he regarded the three-year contract with Edusaf as valid. Gebhardt agreed, saying the deal had been transferred to the children’s fund and that the fund had been informed of the contract.
But Dangor’s take was different. He told the M&G that “someone is using our logo without our formal approval”; that “if someone wants an association they must apply [directly] to us and we will consider”; that the children’s fund has “a very strict selection procedure”; and that funding agreements would not be entered with any party “if it had links in any way with people with dubious backgrounds”.
Palazzolo’s background, indeed, is dubious. The fraud charge sheet against him details how he entered South Africa on a fellow Swiss jail inmate’s passport in 1986.
At the time, Palazzolo was supposed to be serving time for his role in laundering drug money generated by the “Pizza Connection”, the most notorious Sicilian Mafia drug ring uncovered in the United States.
The South African charge sheet also details how, when Palazzolo finally applied for and got South African citizenship in 1994, he withheld information required by law, including the fact that Italian and United States authorities had indicted him for Mafia or drugs- related charges, among others. Palazzolo was convicted in absentia in Italy in 1992.
Palazzolo has often been alleged to be involved in the Cape underworld but has denied these allegations.
South African Airways renewed a two-year contract with La Vie de Luc in May this year for the in-flight supply of mineral water. SAA representative Madelain Roscher said La Vie de Luc had been one of 17 tenderers for the contract.
Only four tenderers, among them La Vie de Luc, made the grade technically. La Vie de Luc tendered the lowest price.
Roscher said SAA was unaware of links to Palazzolo since the sale of the business to Agusta, but that SAA “has immediately called for an investigation into the matter”.
ENDS