Behind Balindlela's knives
A dodgy R15-million black economic empowerment deal involving a provincial minister in the Eastern Cape and an affluent farmer was being investigated by the head of the provincial treasury, Monde Tom, at the time of his suspension two weeks ago.
Four days later Premier Nosimo Balindlela also sacked his political head, the provinceâ€™s finance minister, Enoch Godongwana.
The Mail & Guardian has learnt that Tom was probing the agriculture minister, Max Mamase, for his involvement in a controversial land deal with the provinceâ€™s citrus farming king, Norman Benjamin, of Oranjezicht Citrus Estates.
Mamase rode roughshod over a series of provincial finance regulations to bankroll an empowerment deal to sell — at double the market value — a portion of Benjaminâ€™s farms to an empowerment trust that had not yet been established.
The joint anti-corruption task team, a partnership between the South African Police Service and the Scorpions in the province, has taken over the investigation.
Balindlela and Mamase are close friends and travelled abroad as part of a delegation to Edinburgh and Germany from August 19 to 29. Three days after her return, the premier suspended Tom, officially to allow for an “unhindered” investigation of the provincial treasury with regards to “management, administration and accounting practices”.
While the premier quickly axed the two men, she has not yet constituted the urgent investigation into the treasury, while details emerging since then suggest that she may have fired the wrong man.
During Tomâ€™s provincial treasury budget review for 2004/05, his team discovered that R7,84-million had been transferred on January 15 this year by the agriculture department to Uvimba Bank. Uvimba, formally known as the Eastern Cape Rural Finance Corporation, is a former homeland lending institution that now provides micro-financing to emerging farmers. Uvimba has its own budget allocated by the treasury and statutorily should not receive transfers from any other government departments without approval.
The provincial treasury discovered that Mamase had circumvented the Public Finance Management Act by failing to communicate “in writing ... to the national Treasury, the provincial treasury and the auditor general” the reason for his decision to transfer the money to Uvimba. The provincial treasury issued an immediate directive to Mamase that the transfer be reversed.
In August this year Tom and his team discovered that the reversal had not taken place and that a second tranche of R7,84-million had instead been paid into the account of a company, also owned by Benjamin, called Oudewesthof Township Development.
The M&G has seen a letter written by Mamase to his departmentâ€™s accounting officer, Lumkile Ngada, instructing him to make this second payment despite Ngadaâ€™s objections that procurement procedures had been flouted.
In the letter, dated August 1 2004, Mamase wrote: “You are hereby instructed to transfer the remaining R7,84-million to Oudewesthof Township Development for the purpose of settling the balance towards the purchase of 49% equity in the Kangela Project on behalf of the empowerment group. This transfer must be done despite the following concerns that you raised to me in writing in your letter dated 9 July 2004: issues raised by the provincial treasury, meeting with Oranjezicht, the valuation report, due diligence. I therefore, as the executive authority of this department, take responsibility for any financial and legal implications that may result from the aforementioned transfers.”
The Kangela project is the nascent empowerment plan to sell equity in Benjaminâ€™s farms to 35 workers. The Kangela trust has not yet been established and provincial officials doubt the workers have even been informed, though the money has already illegally been paid.
An agreement between the agriculture department and Benjamin says the workers will “develop a commercially viable farming operation [that would operate] as a black economic empowerment entity”.
Documents in the possession of the M&G show that Kangela entered into an agreement with Uvimba to advance it a loan of R15,6-million — the same amount paid out by the agriculture department. According to the anti-corruption task team, one of the discrepancies in this deal is that the first tranche of money was paid over five months before the trust was formed (it still doesnâ€™t exist) and before there was any agreement or business plan signed by the two parties.
The second major discrepancy is that the land had never been evaluated by the agriculture department despite the fact that the department has specific contractors to value assets and advise on the business sense of land purchases.
Mamase told the M&G that the reason an evaluation wasnâ€™t initially made was that “a Saudi Arabian [entity] was interested in buying the land for R32-million,” and the agriculture department wanted to secure it “first”.
A retrospective valuation of the land was conducted in February this year by a Port Elizabeth-based contractor, AndrÃ