The scandal spreads

This week, the Mail & Guardian brings you — in full — the story we had to black out a fortnight ago after being gagged, write Stefaans Brümmer and Sam Sole.

The article is in its original form below, word for word. Some of the more important information has already reached the public after a leak in Parliament. But the conflict-of-interest issues raised remain to be satisfactorily explained.

In addition, the explanation given on behalf of Minister of Minerals and Energy Phumzile Mlambo-Ngcuka, whose brother’s company received R50 000, and Imvume Management, which made the payment, is shaky.

Independently sourced information does not confirm the involvement of Imvume, or of its boss, Sandi Majali, in the tourism venture for which it was claimed Imvume made the R50 000 payment. Imvume and Majali’s lawyer now says it was an “informal” arrangement.

As revealed in the gagged story, Majali wrote an Imvume cheque for R50 000 to Uluntu Investments on December 19 2003, the same day a R15-million advance from PetroSA, the state oil company, reached Imvume. PetroSA answers to Mlambo-Ngcuka. Uluntu Investments is fully owned by her brother, Bonga Mlambo.

Before the story was pulled, the minister’s brother would not comment, other than to deny he had a business relationship with Majali.

A spokesman for Mlambo-Ngcuka’s department said the payment had been in terms of a joint hotel development bid by Majali and Mlambo at St Lucia. They lost the bid, but had to pay a consultant.The R50 000 to Uluntu was Majali’s payment towards the consultant’s fees.

Lawyer Barry Aaron, on behalf of Imvume and Majali, gave a similar explanation at the time. An updated version from Aaron this week was: “Imvume was involved with Uluntu Investments … in a bid for a property development project in Greater St Lucia Wetland Park. Professional consultants in Cape Town were engaged to prepare the development proposal. The tender was ultimately unsuccessful.

“The project costs exceeded the sum of R250 000. Imvume, in terms of its commitment to the joint project, paid R50 000 to the consultants in September 2003 and R50 000 to its co-bidder, Uluntu Investments, on account of those costs in December 2003.”

Mlambo-Ngcuka and Imvume’s argument is that Imvume’s payments to Mlambo were not improper, as they related to an economic activity — tourism — unrelated to the minister’s portfolio.

The M&G has been able to confirm that Uluntu was involved in the hotel development bid at St Lucia. But was Imvume indeed involved alongside Uluntu?

The Greater St Lucia Wetlands Park Authority, which adjudicated the bids, last week told the M&G that the only other shareholder in Awesintu, the bid consortium that included Uluntu, was Old Mutual Properties. The local community would have been introduced as a partner by the park authority.

During the St Lucia bid, Awesintu made use of the local office of a Dutch consulting firm, Horwath Tourism and Leisure Consulting — the company that allegedly received the Imvume payments.

The head of Horwath’s Cape Town operation, Joseph Aminzadeh, this week declined to provide details of his company’s dealings with Uluntu or Mlambo: “Everything we do for clients is proprietary information.”

He refused to confirm or deny that Horwath had been paid R50 000 directly by Imvume in September 2003 towards Horwath’s fees, as stated by Imvume attorney Aaron.

Asked whether he was aware of any involvement by Imvume in the project, Aminzadeh would only say: “I don’t believe the petrol company was involved in the bid at all.”

And Robin Bugler, the repre­sentative of Old Mutual Properties on the St Lucia bid, told the M&G that his company had been pulled in at the last moment when an earlier financial backer had pulled out. He said he had met Mlambo, but was hazy on the identity of any other stakeholders.

Aaron, speaking for Imvume and Majali, this week conceded there was no documentary proof of Imvume’s involvement in the St Lucia project. “There was an informal arrangement that Imvume was involved. There was no documentation to that effect … [Majali] was informally involved with Uluntu, he agreed to carry some of the costs, and he did.”

The story that was gagged
When Sandi Majali wrote cheques after getting a multimillion-rand advance from the state oil company, two of the first recipients were relatives of Cabinet ministers.

The ministers — Phumzile Mlambo-Ngcuka of Minerals and Energy and Zola Skweyiya of Social Development — regulate fields in which Majali’s companies operated.

The Mail & Guardian revealed last week how, in December 2003, Majali’s Imvume Management — a company best known for its Iraqi oil dealings and closeness to the African National Congress — got a R15-million advance from oil parastatal PetroSA. The advance was for oil condensate Imvume was supplying to PetroSA.

From that money, Imvume paid R11-million to the ANC. When Imvume defaulted on paying its own foreign supplier, PetroSA duplicated the advance, meaning the parastatal effectively subsidised the ruling party.

The M&G has seen forensic evidence that even before issuing the ANC cheques, Majali wrote cheques to Mlambo-Ngcuka’s brother, and to a builder who was renovating Skweyiya’s private residence.

Mlambo-Ngcuka was abroad this week and did not answer the M&G‘s questions, but a departmental spokesperson said the payment to the minister’s brother was in terms of an unrelated tourism venture.

Skweyiya professed ignorance of the payment towards his renovations and of the fact that Majali’s companies had been active in the field he regulates. His wife, former ambassador to France Thuthukile Mazibuko-Skweyiya, confirmed the payment, which she said was a loan.

Majali and Imvume, through their lawyer, gave explanations similar to the department and the minister’s wife.

Majali wrote both cheques on December 19 2003, the day PetroSA’s R15-million reached Imvume’s account. They were:

  • A cheque for R50 000 to Uluntu Investments. This company’s share register shows it is fully owned by Bonga Mlambo, the minerals and energy minister’s Durban-based brother.
  • A cheque for R65 000 to Hartkon, a construction company renovating the Waterkloof Ridge, Pretoria, residence of Skweyiya and his wife, Mazibuko-Skweyiya.

Both payments raise serious conflict-of-interest questions.

Mlambo-Ngcuka’s ministry is responsible for PetroSA, which awarded Imvume the condensate contract in October 2002 and made the controversial advance payment on that contract in December 2003.

Mlambo this week confirmed knowing Majali, but denied any business relationship with him — contradicting the subsequent explanation of a joint tourism venture. Mlambo refused to entertain further questions, saying: “I will not participate in your soap opera.”

Mlambo is also a partner of the minister’s husband, former prosecutions director Bulelani Ngcuka, in a logistics company and in the recent Old Mutual empowerment deal.

A spokesperson for Mlambo–Ngcuka’s department, citing her director general Sandile Nogxina, said on Thursday that Majali’s payment to Mlambo was in terms of a joint bid by Majali and Mlambo relating to a hotel development in St Lucia. They lost the bid, but a consultant had to be paid.

Majali and Imvume, through their lawyer, gave the same explanation.

PetroSA last week denied there had been any intervention by Mlambo-Ngcuka’s ministry regarding the condensate contract or the advance payment.

Skweyiya this week contacted the M&G from France to answer questions about Imvume’s R65 000 payment towards renovating his Waterkloof Ridge home.

He denied knowing of the payment and referred the M&G to his wife, Mazibuko-Skweyiya.

Mazibuko-Skweyiya confirmed the payment by Majali, but said the money was a loan that was repaid last year. She said she and her husband had taken out a R800 000 bond to pay for the renovations. Majali had been in France at the time and had offered to help after overhearing her say she had problems paying the builder.

Skweyiya said he was aware that Majali “was trying to recruit my wife” to work for Imvume once her ambassadorial term ended. But he denied that his wife’s employment by Imvume would have constituted a knowing conflict of interest, as he was unaware at the time that Majali’s companies were involved in social grants distribution.

Mazibuko-Skweyiya confirmed that Majali offered her a job, but said: “When I told Zola, he said you can’t work with Sandi. That’s why I turned it down.”

She was unclear why her husband disapproved of her working with Majali. Asked whether it was because Skweyiya knew Majali was active in the field he regulated, she said she could not remember, or had not asked her husband for a reason.

Skweyiya also argued that there was no conflict of interest because social grants distribution was a provincial competency at the time, and contracts were not issued by his national department.

Skweyiya said it would be “unfair reasoning” to suggest that Majali was trying to buy influence “for the future”.

Serge Belamant, the chief executive of Net1 UEPS Technologies, the holding company of Cash Paymaster Services (CPS), confirmed this week that Majali’s companies, principally the Permit group, had partnered his firm.

CPS is the country’s premier grants distribution group, with contracts from five provincial governments.

Belamant said that in several provinces, Majali’s companies were contracted to “distribute our message on the ground” to stakeholders from pensioners’ committees to church groups and local politicians. That contract, worth up to R700 000 a month, was terminated last year.

The M&G has seen documentary evidence that in late 2003 Majali was not only an agent for CPS, but was working on grandiose plans to build a financial services group under the Permit banner. Imvume, Net1 UEPS and government bodies would have been among the stakeholders. One of Permit’s main functions would have been grants distribution.

Even though grants distribution was a provincial function, Majali would still have had much to gain from securing influence with Skweyiya as national minister. At the time, Skweyiya was drawing up policies that led to the creation of the Social Security Agency, which is taking over the function from the provinces.

Belamant remarked: “We don’t get a R1,7-billion contract without being pretty close to the minister nationally as well as to the [provincial ministers].”

But he denied that Majali was part of his strategy to get close to the minister. The company had strict corporate governance rules for its partners. However, he could not force them to submit to audits to ensure compliance.

Majali and Imvume gave similar explanations to the one given by Mazibuko-Skweyiya. Without asserting, as she did, that the money had been repaid, they said: “The loan is the subject of a written acknowledgement concluded between the parties at the time, and there is absolutely nothing untoward in the payment made to [the building company].”

They added: “The loan was made immediately after Mrs Mazibuko-Skweyiya’s return to South Africa from her assignment in Paris.” This is contradicted by the facts. The payment was made in December, when she was still ambassador to France. She returned to South Africa in January.

Majali and Imvume’s lawyers also said: “Whilst [you] correctly point out that Imvume was involved, either directly or indirectly, in projects with the Ministers concerned, these were already ongoing, established, contractually secure projects, valued to the extent of billions of rand.” Any innuendo of bribery was defamatory, they said.

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