Prominent members of the African National Congress Youth League (ANCYL) have been implicated in a R268-million fraud being investigated as part of a forensic audit on companies run by the late Brett Kebble.
The full financial horror of Kebble’s pillage of companies he controlled — notably Randgold & Exploration (R&E) and Johannesburg Consolidated Investments (JCI– is still emerging, but recent court action by R&E’s new directors has placed one spotlight on Kebble’s youth league partners.
The Mail & Guardian has previously highlighted the web of deals linking Kebble and the Youth League, and last week the M&G reported how Kebble was suspected of personally benefiting by hundreds of millions of rands from secretly selling off company assets.
Now, via in-camera applications at the Johannesburg High Court last week, R&E has applied for the provisional liquidation of two companies, Equitant Trading and Itsuseng Strategic Investments, that are controlled by Youth League executive members Songezo Mjongile and Andile Nkuhlu, as well as prominent Youth League member Lunga Ncwana.
The court papers allege that Itsuseng, chaired by Nkuhlu, received millions in shares and cash as part of a fraud perpetrated using Equitant, of which Mjongile and Ncwana were directors.
The youth league has been among the most consistent supporters of former deputy president Jacob Zuma and is likely to be hit hard by these claims against its most prominent business members. Mjongile is the chief executive of Lembede Investments, the organisation’s formal investment arm. Lembede has, mainly with the help of JCI, made investments in mining, property development, agriculture and fishing. It is Youth League money that has been used to bus in supporters to Zuma’s rape trial.
Nkuhlu refused to take calls this week, twice telling the M&G he was in a meeting before putting down the phone. His lawyer, Thabo Kwinana, who also represents Equitant and Itsuseng, said his clients were not yet ready to respond: ”Our clients are considering their options regarding submissions on the provisional liquidations. There will be a time when we are going to respond.”
In his affidavit in support of the liquidations, R&E company secretary Roger Pearcey alleges that Equitant was ”registered and incorporated to serve as a vehicle or conduit in a substantial fraud”.
According to the affidavit, the fraud essentially involved an empowerment transaction that Kebble embarked on in July 2003, with a consortium called Phikoloso Mining, which supposedly owned Equitant.
As part of that transaction, R&E agreed to purchase from Equitant a shelf company called Viking Pony Properties 359. The price paid consisted of 8,8-million R&E shares, worth, at the time, about R268-million.
Pearcey alleges: ”There is prima facie evidence that Viking Pony had no assets at the date of acquisition.” In other words, Kebble allegedly handed out R268-million worth of R&E shares for nothing.
Viking Pony purported to own shares in three listed companies that had a value of R127-million as well as shares in an entity called Kabusha Mining, which, in turn, held shares worth R92-million, making a total of R219-million.
In return for this supposed parcel of assets R&E issued the 8,8-million of its own shares to Equitant.
According to R&E’s affidavit, the forensic investigation has determined that R&E ”received no value from Viking Pony” as the company did not ever own the shares.
The affidavit then sets out to show what happened to those 8,8-million shares.
Contrary to what was set out in the sale agreement, Equitant did not get the full benefit. Instead, in August 2003, Equitant, purportedly represented by George Poole, an R&E manager, opened an account at T-Sec brokers into which the 8,8-million shares were placed. Poole then instructed T-Sec to transfer shares to different accounts.
About three million shares were transferred to an account in the name of Paradigm Shift, a company that appears to have been operated to Kebble’s benefit.
Another three million shares were transferred to an account operated by CMMS, a company in the Kebble group that acted as a ”banker” to the group, but in practice served as a huge ”slush fund” for off balance sheet transactions.
Poole further instructed brokers T-Sec to sell 2,27-million of the shares, realising a total of R73,8-million.
About R46-million of this was used to purchase JCI shares on behalf of Equitant, thereby propping up the JCI share price. R7-million was transferred to an account at SocietÃ