/ 20 November 2009

Prisons graft: Bosasa’s empire of influence

The company at the centre of South Africa’s prison corruption scandal is closely connected to powerful individuals on the political landscape, including the country’s new spy boss, Gibson Njenje.

A number of them were also close to Thabo Mbeki’s presidency.

Bosasa Operations, exposed this week in Parliament for allegedly bribing top prison officials to secure contracts worth more than R1,7-billion, makes a killing from government business. This includes work for the departments of correctional services, justice, home affairs, transport and the provincial governments of Gauteng and the Eastern Cape.

Bosasa’s chief executive, Gavin Watson, has close links with the governing ANC through his family’s anti-apartheid struggle credentials and his brothers’ post-1994 business interests.

Njenje is a founding member of Bosasa Operations and was a director of the company before being appointed head of the National Intelligence Agency (NIA) in ­October.

A number of people benefiting from Bosasa contracts or linked to Watson and his family had links to Mbeki’s office, including the ex-president’s political adviser, Titus Mafolo, and Mbeki’s head of office, Lorato Phalatse, who is married to former Strategic Fuel Fund chairperson Seth Phalatse.

Watson’s brother, Valence, is the chief executive of Vulisango Holdings, the empowerment partner of controversial mining firm Simmer & Jack. Valence Watson’s business partners include Nozuko Pikoli, the wife of axed prosecutions boss Vusi Pikoli, and Siviwe Mapisa, the brother of Correctional Services Minister Nosiviwe Mapisa-Nqakula.

Mapisa-Nqakula told the M&G this week that she knows Gavin Watson. ‘Mr Watson is a former CEO of Dyambu Holdings, a company the minister was formerly affiliated to. Mr Watson resigned from Dyambu and went on to form Bosasa. The minister has had no contact with him since then.”

According to the minister, she has ‘no relationship with Bosasa nor has she benefited from the operations of Bosasa”. She is ‘not aware of any relationships members of her family may have” with Bosasa.

The M&G can reveal that Bosasa is seeking to interdict the Special Investigating Unit (SIU) and President Jacob Zuma from continuing its investigation into tender rigging.

In its frantic efforts to halt the SIU’s graft probe — which could lead to both civil and criminal charges — Bosasa claims that the SIU leaked sensitive information to the Mail & Guardian that resulted in a ‘trial by press”. Bosasa is referring to a series of M&G exposés of collusion between Bosasa and senior correctional services officials, including former prisons’ boss Linda Mti and the department’s former chief financial officer, Patrick Gilllingham.

Zuma’s involvement in the case stems from Mbeki’s authorisation, as president, of the SIU probe into Bosasa. The SIU and Zuma are defending the matter.

The Bosasa group has benefited from prison tenders worth more than R3-billion since 2004.

SIU head Willie Hofmeyr shocked Parliament with sordid tales of corruption inside South Africa’s prisons, disclosing details about how Bosasa put the likes of Gillingham and Mti firmly in its pocket.

Hofmeyr’s briefing also raised uncomfortable questions about why Mapisa-Nqakula has been sitting on the SIU report from at least mid-September. It is the duty of the minister — Mapisa-Nqakula — or of the acting prisons commissioner, Jenny Schreiner, to launch a civil claim against Bosasa.

Hofmeyr said on Tuesday: ‘It is a matter that justifies the institution of legal proceedings by the department to recover damages from the company.”

Mapisa-Nqakula, who was appointed by Zuma in May to head the prisons department, originally said she had to present the SIU report to Cabinet before releasing it. Her spokesperson, Sonwabo Mbananga, later told the M&G that this release was on hold because of Bosasa’s pending legal action against the SIU.

The M&G now has access to the court papers filed by Bosasa against the SIU. Nowhere does it seek to interdict the SIU or Zuma from releasing the final report. Instead the applications focus on the alleged tainting of the probe due to media leaks.

Approached again after Hofmeyr’s explosive briefing to Parliament, Mbananga remained adamant: the minister would still not release the report because the SIU has referred it to the National Prosecuting Authority ‘and therefore the contents … are sub judice”.

Bosasa’s spokesperson, Papa Leshabane, denied the corruption claims, labelling Hofmeyr’s briefing as ‘speculative, arrived at without hearing Bosasa, are disputed and will be dealt with in the appropriate forum”.

Bosasa also disputes the way in which Hofmeyr dealt with the ­matter at Parliament. According to Leshabane, their attorneys have advised them that Hofmeyr went beyond the powers of the SIU, acted unlawfully and breached Bosasa’s constitutional rights.

Although Hofmeyr evidently referred to Bosasa, Mti and Gillingham in his briefing, he didn’t name them, citing pending legal action against his unit.

Hofmeyr’s presentation this week vindicated the M&G‘s revelations in February that Bosasa had access to tender documents before they were publicly advertised. Bosasa is demanding R500 000 from the M&G for referring to a ‘corrupt relationship” between the group and the department of correctional services.

Bosasa’s strategy to avoid penalties is two-pronged. First, it is pursuing an application for an interdict preventing the SIU from continuing its investigation until the court has made a final decision.

The application is brought by Bosasa Operations, the company’s operations coordinator Angelo Agrizzi, financial coordinator Andries van Tonder, buyer Frans Vorster and Watson. The four men were given notices by the SIU to ­provide certain documentation during interrogation by the unit.

The applicants claim that the SIU’s probe is tainted because of alleged media leaks and the handling of a seizure operation at Bosasa’s premises.

In reply the SIU denies leaking information to the M&G and accuses Bosasa of activating a ‘data deletion utility” on Bosasa’s servers shortly before the SIU arrived.

In the second court action the plaintiffs ask the court for a permanent order against the SIU, ‘declaring the entire process of the first defendant’s (SIU) investigations into the plaintiffs to be fundamentally tainted”.

Hofmeyr’s presentation brought into sharp focus again Bosasa’s astonishing success in winning government tenders. Even after 2007, when it became publicly known that Bosasa was under investigation for tender rigging, the group continued to secure lucrative contracts from the justice department and the Eastern Cape.

The group’s most recent tender is a R3,9-billion contract awarded by the Eastern Cape to Phakisa Fleet Solution, a Bosasa company, to manage the provincial fleet of vehicles.

At the time when the Bosasa group was awarded its first major prisons contract for catering in 2004, the company was owned by Watson’s family trust (26%), Bosasa directors Carol Mkele (33,3%) and Joe Gumede (18,5%), and the Bosasa Employees Trust (22,2%).

Between 2004 and 2006 three companies in the group — Bosasa Operations, Sondolo IT and Phezulu Fencing — were awarded six tenders by the prisons department at the value of R1,8-billion.

The SIU’s probe focused on four tenders: a catering tender for R717-million over three years; an access control tender at R237-million; a fencing contract for R587-million, and a tender for TV systems in prisons at a cost of R224-million.

Hofmeyr’s probe found that in almost all cases Bosasa was involved in the drafting of tender specifications and that procurement policies were severely discounted.

More than free air tickets
Former correctional services chief Linda Mti is a Teflon man. Though he has been involved in numerous controversies and charges, he has never been censured, writes Adriaan Basson.

Despite being arrested for drunk driving on at least three occasions and being convicted twice, he still heads security for the 2010 World Cup local organising committee (LOC) with no hint of any action against him.

Hofmeyr’s briefing to Parliament this week adds weight to the suspicion that Mti received more than free air tickets and hotel accommodation from Bosasa, as reported by the M&G in February. Hofmeyr, though not naming Mti directly, told how Bosasa paid architects to design Mti’s house in the luxury Savannah Hills Estate in Midrand.

The only concrete penalty Mti has faced to date is the confiscation of his driver’s licence for six months and a R20 000 fine or two months’ imprisonment in his home town, Port Elizabeth, last month. Mti pleaded guilty to drunk driving and paid the fine.

In 1992 Mti was also convicted of drunk driving in Port Elizabeth. He was sentenced to two months in prison with the option of a R400 fine. Mti paid the fine.

Two years later he was appointed a member of Parliament for the ANC and shortly after that as the country’s national intelligence coordinator.

In 2006 Mti was again arrested on suspicion of driving drunk, this time in Johannesburg. He was acquitted in 2008. At the same time Beeld revealed that he had a business relationship with Bosasa’s company secretary, Tony Perry. Mti was not reprimanded, but he was redeployed from the prisons department to the 2010 LOC to head security. Last month’s conviction after his guilty plea to drunk driving related to a car crash in Port Elizabeth in 2005. He also received a six-month sentence suspended for five years. The LOC has since responded that they still trust him.

Mti declined to comment and said the M&G should refer inquiries to the Special Investigating Unit.

From warder to prisons finance chief
Suspended senior prisons official Patrick Gillingham’s opulent lifestyle, allegedly partly bankrolled by Bosasa, was laid bare this week in Parliament.

The former finance chief of the prisons department was presented as a main beneficiary in the irregular awarding of lucrative tenders. The Special Investigating Unit (SIU) claims that he was handsomely rewarded for his loyalty to the company.

The ‘at least” R2.1-million of kickbacks allegedly paid to Gillingham included cars for him and his children, rugby tickets at Loftus Versfeld, an overseas trip for his daughter and a house in an exclusive Midrand estate.

Court papers before the North Gauteng High Court also mention the cars for his children, but Gillingham’s lawyer Ian Small-Smith this week denied his client’s guilt. ‘It is factually incorrect to allege that Bosasa Operations and/or any company in the Bosasa group purchased the vehicles in question. Upon proper investigations it would be revealed that not Bosasa Operations, or any company in the Bosasa group, had anything to do with the purchase of the vehicles.”

Gillingham does not have a tertiary qualification.

Beeld reported in 2006 that he was managing the department’s budget of more than R9-million a year with only a matric certificate. After school Gillingham joined the prisons service as a warder.

His personal and professional lives soon converged when he married the daughter of a senior prisons official in the apartheid regime.

Gillingham’s career in correctional services bloomed. He quickly rose through the ranks to become functional services director and later KwaZulu-Natal’s commissioner, before being promoted to the chief financial officer position.

In 2007 it seems Gillingham was becoming a liaibility. He was moved to the position of regional commissioner for Limpopo, Mpumalanga and North West — a move perceived as a demotion and linked to his involvement in the Bosasa saga that was starting to hit the headlines. In September last year he was suspended by former prisons boss Vernie Petersen after he [Petersen] was presented by the SIU with a draft report of its findings.

Gillingham has been on paid leave ever since.

During his tenure as chief financial officer, Gillingham was a confidant of both prisons boss Linda Mti and his minister Ngconde Balfour.