MILLIONS of rands are at risk after municipal treasurers got embroiled in illegal investments involving former apartheid agent Joe Verster
At least three municipalities in KwaZulu-Natal could lose as much as R35-million after their officials used council money to invest in get- rich-quick schemes. The investments were illegal in terms of the Local Government Transition Act, which specifies that municipalities may only invest in approved financial instruments, such as banks and government bonds.
At least two investments ? by the Umzinyathi and Uthungulu regional councils ? with a total value of R32,5-million, involved Pieter Johan (Joe) Verster, the former head of the Civil Cooperation Bureau, an apartheid-era hit squad.
On Friday last week Thokozani Madlala, director of finance for the Umzinyathi District municipality, was found guilty of misconduct for investing two amounts of R10-million and R6-million in a company called Transglobe Industrial Holdings Limited, represented by Verster.
The investments, which were made in 2000, are nominally worth R21-million, but to date no money has been repaid to the council.
However the attorney representing Transglobe, Flip Prinsloo, told the Mail & Guardian he was expecting confirmation of payment to the councils from ”attorneys in New York” representing foreign investors in the company. At the time of going to press this could not be confirmed.
Contacted by the M&G, Verster said he had merely put investors together acting on behalf of Transglobe and had no further interest in the company.
In terms of the agreement with Verster, Transglobe would after six months repay the money plus interest calculated at the normal bank daily rate, plus R3-million in the case of the R10-million investment and 5% in the case of the R6-million investment. The original maturity date for the R6-million investment was June 30 2000, a mere 11 days after the deal was signed.
The council was not aware of Madlala’s actions and believed the money was invested in Saambou. It is understood that the Saambou curator- ship prompted an investigation that exposed the unauthorised investment – and later another one of R10-million by the Uthungulu district council.
Both deals were set up by a company called SA Corporate Brokers, which was also involved in another illegal investment by the Estcourt municipal treasurer worth about R2-million. Treasurer NJ van Heerden was suspended on April 15, pending a disciplinary hearing.
Local government authorities in KwaZulu-Natal have launched an investigation into the schemes and have brought in two auditing firms and an investigating attorney to try to trace and recover the money.
Sources close to the investigation said it was feared that similar unauthorised investments would be uncovered as SA Corporate Brokers dealt with many municipalities throughout the country. Attempts to reach the brokers were unsuccesful by the time of going to press.
Prinsloo claimed that the councils had been advised at all times by their own attorneys. However investigating attorney Anton de Swart told the M&G that lawyers who got involved after repayments fell due had represented SA Corporate Brokers, not the councils.
Prinsloo was adamant that the outstanding amount, totalling R33-million, would be repaid. He said the debt was now carried by a company called Quick Holdings, but that if for any reason Quick, which has been suspended from the Johannesburg Securities Exchange, was unable to meet its obligations, the money would be repaid by other companies ”within the group”.
He claimed companies in the group owned construction material patents worth hundreds of millions of rands.
The same claim about patents was made previously by a company called Choice Holdings, currently in liquidation. The chairperson of Choice was controversial Pretoria businessman Tom van der Merwe, who appears to have been a key figure in the background of the deal with the municipalities.
Van der Merwe is a director of Transglobe Industrial and its associated company Transglobe International and is also linked to Quick Holdings.
He is apparently still suing Finansies & Techniek over a story in 1999 by investigator Deon Basson that exposed questionable dealings involving Choice.
Prinsloo said Choice had not been involved in the patent project for two to three years and the rights were held by a South African company called Tower Technologies.
De Swart has indicated he is ”very doubtful” about whether the money will be repaid as he claims Prinsloo has made more than one previous promise of payment that was not fulfilled.