The CEO of Armscor, Sipho Thomo, has been implicated in a massive fraud case being investigated by the Scorpions and the National Prosecuting Authority (NPA) against Ernest Khosa, the former CEO of the Mpumalanga Economic Empowerment Corporation (MEEC).
According to papers filed in the regional court in Pretoria, Khosa spent millions of rands of government money and took huge bribes over a period of six years while he was CEO of the MEEC.
Khosa held the position from the beginning of 1999 until late 2005 when the entire board of the MEEC and Khosa himself resigned after an investigation was instituted by the province into mismanagement at the corporation.
Investigators are trying to account for approximately R400-million that went missing, was mismanaged or was simply stolen from the MEEC, which receives most of its money from the government.
According to the charge sheet against Khosa, Thomo received R100 000 in cash from Peter Maake, manager of Legal Services at the MEEC about December 23 2002 on instruction from Khosa. Asked by the Mail & Guardian for a response to the allegations, Thomo said through his secretary this week that he was too busy in meetings to comment.
Khosa’s fraudulent dealings were uncovered by Philip Dexter, the Communist Party treasurer who was sent in by the premier of Mpumalanga to try and clear up the mess.
Dexter was the CEO of the MEEC from April 2005 until earlier this year. He uncovered the massive fraud at the MEEC and brought in the Scorpions and the NPA to investigate.
Dexter has received numerous threats, including death threats. His office manager (at the MEEC) and now the company secretary at the Mpumalanga Economic Growth Agency (Mega), Petunia Morgan, received a two-page faxed death threat three weeks ago. ”It will be easy for us to kill you, already we traced you. We are finished with you…” reads the faxed letter, which was copied to Dexter.
Dexter himself received a threatening SMS: ”U know what we r watching u and u r right in our hands… Lastly u better know ur colour stop claiming cos this is not Cape flats/Mitchelsplein.” Criminal charges have been laid with the police, who are investigating the threats.
Dexter also had to defend himself against accusations made by investigative magazine noseweek that he was corrupt, misappropriated funds and spied on his staff. An independent audit by the board of Mega cleared him of the allegations.
The MEEC was set up to finance established businesses and provide bridging finance in the form of loans in order to alleviate unemployment and poverty in the province.
According to the charge sheet, Khosa seems to have taken cash bribes from a wide variety of individuals and organisations who came to the MEEC for loans or bridging finance. He also instructed his staff to pay monies into specific accounts unrelated to companies doing business with the MEEC. He would then access these funds for his private use.
Khosa also instructed his employees at the MEEC to write off loans and to submit false claims for funds used primarily to pay for his lavish lifestyle. He and his family spend hundreds of thousands of rands travelling all over the Middle East and Europe.
In another interesting twist, Vusi Mona, former editor of the City Press newspaper, is also named in charge sheets against Khosa as one of the beneficiaries of Khosa’s alleged fraud. Mona gave evidence at the Hefer commission of inquiry set up by President Thabo Mbeki to investigate whether former Scorpions boss Bulelani Ncguka was an apartheid spy. Mona was the editor who published the false article claiming that Ncguka was a spy.
In 2001 Mona joined a communications company called Zanmoss Technologies which traded as Rainbow Communications. This company was owned by Kedibone Mashamaite and his wife, ST Ngwenya. Mona had a 50% share in this company.
In March 2002 Mashamaite presented a communications strategy for the MEEC. Khosa promised him the account, but said ”he wants something out of the deal”. Mashamaite subsequently signed a contract with the MEEC for about R400 000; shortly after the contract was signed, he paid Khosa R50 000 in cash.
Numerous other fraudulent deals between Khosa and Mashamaite are mentioned in the charge sheet. Khosa is being investigated on at least 45 counts of fraud and mismanagement of funds amounting to an estimated R40-million. He will appear in court in February next year.