Tokyo Sexwale’s billiard-ball-like smoothness might develop a scratch or two as the presidential hopeful faces the first real public probe of one aspect of his leadership record.
Two of Sexwale’s former comrades, members of the Ex-Political Prisoners’ Committee (EPPC), have gone to court to challenge the way in which he has presided over the Makana Trust, which he chairs.
The trust was registered in 1996 as a fundraising vehicle to support the EPPC and specifically to assist former political prisoners and their families.
The trust set up an investment company, Makana Investment Corporation (MIC), which it was to control via a 51% shareholding. MIC was to seek investment opportunities with other shareholders who might bring expertise or capital into the enterprise.
Now two former political prisoners, Jaki Seroke, leader of the Gauteng region of the EPPC, and Paul Ramakatsa, who heads the Free State branch, are asking the Pretoria High Court to remove Sexwale and the other trustees and interdict the trust from carrying out a proposal to sell 26% of MIC, a move that would reduce the trust to a minority shareholder.
Their application is due to be argued on August 23. Notably, it is not supported by EPPC chairperson David Moisi.
Seroke and Ramakatsa accuse the Makana Trust and MIC of a raft of lapses in corporate governance and allege that former political prisoners have received minimal benefits from the business ventures pursued and obtained in their name.
In particular, they point fingers at prominent businessmen Peter-Paul Ngwenya and Sotho Ndukwana, who were appointed by the EPPC as the founding trustees of the Makana Trust and who have become millionaires as a result of their shareholding in MIC.
Meanwhile, Sexwale, who was appointed chairperson of the trust in 2001, is accused of mismanagement for the following reasons:
l A Makana trust bank account was opened only on March 11 2004, despite the trust having been registered in 1996; and
l Trustees failed to meet at least four times a year as required and failed to provide the EPPC with any minutes or other form of accountingÂ, despite numerous requests for such documentation.
In court papers Seroke alleges that 49% of the shareholding in MIC was transferred without any formal meeting or knowledge of the founder, EPPC. He states that Ngwenya owns 22%, while Ndukwana acquired 14% and later sold this back to MIC and was paid R8-million.
Seroke argues that the trustees tolerated Ngwenya and Ndukwana’s conflicts of interest; Ngwenya holds positions in the trust and MIC, is treasurer of the EPPC and a shareholder in MIC, while Ndukwana is a trustee and was previously a director and shareholder in MIC.
‘All documents related to transactions between the trust and MIC and third parties were signed by Ngwenya and Ndukwana. The self-serving nature of their relationship towards the trust and MIC is self- evident,†he argues.
In a detailed response set out by Sexwale, Ngwenya, Ndukwana and Sexwale deny acting in conflict with their duties as trustees.
In the event the case may not get very far. Seroke and Ramakatsa apparently chose attorneys perceived as sympathetic to their cause, but Sexwale’s firm at one point noted tartly, ‘the papers served on us were, in plain language, a messâ€. It appears that large gaps were left for technical objections that could see the case thrown out even before the allegations are canvassed.
Nevertheless, Sexwale’s responses are illuminating.
First, Sexwale makes various disclosures relating to the income and expenditure of the trust in relation to the intended beneficiaries and to the EPPC itself, apparently the first time such information has been disclosed formally to anyone outside the trust and MIC.
The figures portray an organisation that appears to exist mainly to maintain its own bureaucracy. Of about R6,1-million in overall expenses incurred by the EPPC head office between 1998 and 2007, only about R1,5-million was paid out to bene-ficiaries, mainly in funeral costs for former political prisoners.
The figures show that until 2003 the EPPC received no money from the trust or MIC at all and survived on earlier donations and a large overdraft.
They also show that from 2003, when the EPPC was heavily in the red — it was totally dependent for survival on loans from MIC and later on loans from the trust — it had no control over either entity.
All the disbursements from the trust to the EPPC and its provincial structures are still reflected as loans, because of the failure of the EPPC to account properly for its expenditure.
Second, what is notable is Sexwale’s keenness to avoid any responsibility to or for the EPPC, though until 2003 he was a member of the organisation’s national executive committee.
He points out that the trust is an independent entity, not answerable or accountable to the EPPC, adding: ‘Nowhere in the trust deed are the trustees obliged to make any distributions of income … to any of the trust’s beneficiaries.â€
He contends that nevertheless the trustees, through MIC and EPPC, have disbursed significant funds to trust beneficiaries.
Nowhere, however, does Sexwale explain the trust’s continued reliance on the costly EPPC structures as a means of reaching beneficiaries — despite the fact that 12 years after its formation, the EPPC has still not adopted a constitution.
The papers also show how, in order to bid for broadcast licences during the opening up of the country’s airwaves, the initial intention of the EPPC to retain control over the trust was abandoned to meet with the requirement that bidders not be linked to any political organisation.
On the face of it, that has allowed the trustees and MIC to build a business empire using the stature of the former political prisoners as a selling point, without being accountable to them.
Sexwale insists this has been to the benefit of the former prisoners. The free shares Ngwenya and Ndukwana were granted are justified by their ‘sweat equityâ€, he argues.
For now Sexwale appears to occupy the legal high ground. Whether his approach accords with the spirit of the founding of the trust is another matter.