Fourteen months after it was first announced, the sale of the government’s multibillion-rand stake in cellphone giant MTN to a black economic empowerment consortium has still not been sealed. The deal involving prominent businessman Sandile Zungu is still mired in controversy, including allegations of conflict of interest by a former leading executive.
Transnet, the state-owned transport conglomerate, confirmed recently that no agreement had yet been reached with Zungu’s Umthunzi Consortium regarding the sale of a 5% stake in MTN. Umthunzi was selected as the preferred bidder to acquire the stake, worth about R3-billion, in April last year. At the time, former public enterprise minister Jeff Radebe said the government expected the deal to be “closed within two weeks”.
Transnet spokesperson John Dludlu attributed the delays to commercial elements of the transaction, but did not elaborate.
The Mail & Guardian has learned, however, that the deal has also been hampered in part by allegations of a conflict of interest levelled against Transnet’s former chief financial officer Sindi Mabaso.
As head of Transnet’s finance division, Mabaso was responsible for certain aspects of the transaction. Conflict of interest issues have arisen because of Mabaso’s close business ties with Zungu, who heads the consortium.
The MTN transaction was partly responsible for Mabaso’s departure from Transnet last November. Mabaso’s handling of the risk management issues was another factor that led to the departure of this former Transnet poster-woman.
Transnet’s R6,3-billion loss for 2003/04 was largely owing to risk- management lapses. Transnet’s previous board resigned en masse over the losses, and of the 16 directors, only Mabaso and Transnet’s chief executive Maria Ramos were recalled to the board. Mabaso did not stay long.
It is understood that a month before her departure she was repeatedly quizzed about her role in the MTN transaction and about the nature of her business association with Umthunzi and Zungu.
An M&G investigation has found that Mabaso and Zungu feature together as directors in at least three different companies. Their business relationship began when they worked at SARHWU Investment Holdings, the investment arm of the South African Transport and Allied Workers Union.
Mabaso also holds shares in Zungu’s African Vanguard Capital, a family holding company. Two trusts within African Vanguard feature prominently as members of the Umthunzi consortium, but African Vanguard Capital does not.
Approached for comment this week, Mabaso said only: “I won’t comment unless you disclose your source.”
Her defence to Transnet rested largely on a claim that she has no direct or indirect financial interest in any of components of the Umthunzi Consortium. She wrote a sworn affidavit confirming this — apparently at Ramos’s behest — and the affidavit was presented to the Transnet board, but it is not clear what steps they took.
Zungu confirmed that Mabaso had been ordered to make a sworn affidavit and said his consortium is “entirely satisfied that it was rightly awarded the bid”.
Mabaso, he added, “does not have a beneficiary interest, direct or indirect, in any of the shareholders of Umthunzi. She is not and never was a director or trustee or consultant or adviser to any of the shareholders of Umthunzi.” Mabaso is, however, a shareholder of African Vanguard Capital which would, as holding company, eventually benefit from the sale of the MTN stake.
On the issue of his business relationship with Mabaso, Zungu said: “Sindi is the most appropriate person to explain the nature thereof and how she dealt with it, that is, if or not she made disclosures and/or recused herself from the adjudication process.”
He believed she had “made relevant disclosures and recused herself from the adjudication process,” he said.
Last week the M&G asked Transnet to explain the role Mabaso played on the adjudication panel. The para-statal responded on Thursday with a one-paragraph statement: “There is a new team at Transnet which is negotiating with Umthunzi. We have no agreement yet. The delays have largely been the result of the complex nature of issues involved, especially the commercial elements of the mooted transaction. We are keen to realise maximum value for Transnet pensioners in this deal.”