Anti-corruption investigators in the Eastern Cape are probing evidence that the mansion of provincial agriculture minister Max Mamase is being financed by the citrus farmer who landed a controversial R16-million empowerment deal from his department.
Mamase and his wife, provincial social development minister Neo Moerane Mamase, co-own the home through a company called Quickvest 54. This company’s account has received substantial payments deposited by the citrus farmer’s accountant. The R2,7-million home is in the plush East London suburb of Bonnie Doon.
Six weeks ago the Mail & Guardian reported on evidence that Mamase had ridden roughshod over provincial finance regulations and ordered his department to fund the acquisition of a portion of citrus king Norman Benjamin’s farms by an empowerment trust. Benjamin was allegedly paid double the market value.
At the time claims were made to the M&G that the Mamases’ new home had been financed by Benjamin.
The joint anti-corruption task team, an elite squad of investigators from the police and the National Prosecuting Authority deployed to the province, has been probing the payments by Mamase’s department to Benjamin. Now, the M&G understands, the team is interested in payments allegedly made by Benjamin’s accountant, Emiliya Peneva, towards the Mamases’ home.
Company records show that on February 1 this year Max and Neo Mamase became directors of Quickvest 54, a company bought ”off the shelf”. On February 13 Neo Mamase signed an offer to purchase the Bonnie Doon home. This was a day after Max Mamase’s department had released the first of two multimillion-rand payments towards the empowerment deal from which Benjamin was to benefit.
Neo Mamase’s offer was accepted, and on June 24 the house was registered to Quickvest at a purchase price of R2,7-million. The Mamases, through Quickvest, obtained a R2,7-million bond to finance the purchase.
The M&G is aware of evidence that on August 10 and on September 2 Peneva made deposits of R15 000 each into the Quickvest account from Cape Town, where Peneva and Benjamin live.
While Peneva last week confirmed to the M&G that she made two such payments into the Quickvest account, she fervently denied that this money was to service the Mamases’ bond.
Peneva claims that the payments were to rent a different building in East London: a property company called Parch Properties 17 was renting it from Quickvest, she said. Company records show that Benjamin and Peneva are directors of Parch Properties.
Peneva claims that Parch Properties, together with the Buffalo City Development Agency, is involved in a ”large development in East London”, which she said had not started yet.
”We want to do that development and we needed premises in East London to use as an office so we are renting a building [from Quickvest] — so far this lease agreement is for six months and we have only used the property twice or three times for meetings. I don’t know East London very well so I am not very familiar with the address [of the rented property],” said Peneva.
But there are problems with Peneva’s explanation:
The Buffalo City Development Agency’s acting CEO, Peter King, this week denied all knowledge of the partnership agreement, saying: ”There is no partnership between the Buffalo City Development Agency and a company called Parch Properties 17. I have never heard of this company. I have not heard of, or from, these people [Emiliya Peneva and Norman Benjamin].”
A deed search into Quickvest shows that the only property that is registered under its name is the Mamases’ home. It is highly unlikely that Benjamin and Peneva ”rented” a different property from the Mamases’ company.
The monthly bond repayment on the Mamases’ home would be about R25 000. Max and Neo Mamase’s monthly salaries are less than R30 000 each after tax. Questions of affordability arise.
But even if Peneva’s explanation holds, it is ethically problematic. Any private rental deal between Benjamin and Max Mamase, while Mamase’s department was benefiting Benjamin’s company, arguably constitutes a serious conflict of interests.
Further tending to corroborate that Benjamin has been financing the Mamases’ home is an allegation, made to the M&G by a well-placed insider, that Benjamin had accompanied Max Mamase when he and his wife bought the Bonnie Doon home.
Peneva said that, if true, the reason for this would be that ”Mr Benjamin is a property developer and he knows properties very well, so he might have advised Mr Mamase from arm’s length … on what is a good property to buy and what is not a good property to buy.”
Quickvest, as a shelf company, was created by the same auditing firm in Cape Town, Wilson Rich & Associates, as Kangela Citrus Farms, Benjamin’s company at the centre of the contested empowerment deal.
In terms of the empowerment deal, Max Mamase and Benjamin had negotiated the purchase of 49% shares from Kangela in a citrus farming venture in the Eastern Cape’s Addo district. These shares would be given to 44 of Benjamin’s employees with a view to developing them as future citrus farmers and a trust representing them was formed in July. Mamase’s agriculture department ultimately transferred R15,68-million to make this possible.
On February 12 this year — the day before Neo Mamase had made the offer on the house — the first tranche of R7,84-million was transferred from the agriculture department to Uvimba Bank, which in turn transferred it on February 25 to the trust account of the lawyers of Kangela Citrus Farms. Uvimba is a parastatal that provides micro-financing to emerging farmers.
The provincial treasury became suspicious when it discovered that the payment had not been budgeted for and that Mamase had sought no special permission for the transfer. It regarded this as unauthorised expenditure. The treasury issued an immediate directive to Mamase that the transfer be reversed. It was not.
On March 18 a meeting was held in Port Elizabeth between representatives of Kangela and the department of agriculture where it was decided that the Kangela deal should be construed as a ”loan” rather than a ”procurement”, as it was originally treated. On June 3 a loan agreement was signed between Kangela and Uvimba to be repaid after 20 years, if both parties agreed to the terms of repayment.
On August 31 the agriculture department transferred a second tranche through Uvimba to a company, also owned by Benjamin, called Oudewesthof Township Development.
The M&G has seen a letter written by Mamase to his department’s accounting officer, Lumkile Ngada, instructing him to make this second payment despite Ngada’s objections that procurement procedures had been flouted. This payment was two days before Benjamin’s accountant, Peneva, made the second R15 000 payment to Mamase’s Quickvest.
Another major concern of the treasury was that the shares were bought before the property had been valued by the agriculture department.
A retrospective valuation under the treasury’s order pegged the land at R16-million, which, if accurate, means that the agriculture department irregularly funnelled funds to Uvimba to buy a 49% share in a R16-million property for R15,6-million. This would mean it paid nearly double what the shares were worth.
According to Peneva, ”This can be explained because when that valuation was done [the evaluator] missed two of the main farms.”
When the M&G approached Max Mamase to explain the two R15 000 payments into the account of his company Quickvest, he said: ”What you are asking me is confidential, I signed a declaration form to that effect. Ask the people who gave you the information to follow through with it.”
At the time of going to press Neo Mamase was not available for comment.
Benjamin told the M&G: ”I know nothing about this.” He then put the phone down.