Wednesday's dramatic raids in which the Hawks seized evidence from mining company Imperial Crown Trading (ICT), the department of mineral resources and the state attorney's office may affect people close to both President Jacob Zuma and his deputy, Kgalema Motlanthe.
Both Jagdish Parekh, a top lieutenant of Zuma benefactors the Gupta family, and Gugu Mtshali, Motlanthe's partner, are among people of interest to the investigation, according to the search warrants used in the raids. Parekh and Mtshali are shareholders in ICT.
Also named is Jacinto Rocha, who formerly was second in charge at the mineral resources department. He signed off on iron-ore prospecting rights controversially awarded to ICT.
The company, through its lawyer, has denied all wrongdoing and questioned the timing of the raids, which came less than three weeks before the North Gauteng High Court hears a civil dispute between the Sishen Iron Ore Company (Sioc), ICT and the department. Sioc claims that ICT, in collusion with officials from the department, cheated it out of rights to part of its own iron-ore mine.
Rocha said he was unaware that his name was on the warrants and could not comment because he had not seen them.
The rights awarded to ICT are potentially worth billions. Steel company ArcelorMittal announced last August that it would buy ICT for R800-million and do a parallel BEE transaction in which ICT's shareholders and related parties — not least of them the Gupta family and the president's son, Duduzane Zuma — would obtain ArcelorMittal shares with a face value of more than R7-billion.
Should the transaction be consummated, both the younger Zuma, whose investment company would get shares worth R933-million, and Mtshali, who would get shares of R300-million plus R67-million in cash, will be extremely wealthy.
But ArcelorMittal has repeatedly postponed signing off on the deal, citing delays in the completion of its due diligence, which may be materially affected by evidence that ICT acquired the Sishen rights illegally.
Wednesday's raids will pose another obstacle — possibly insurmountable, depending on what was found — to the consummation of the deal.
That cages were rattled appears from the reaction of at least two state departments. Mineral resources spokesperson Bheki Khumalo went on radio to say raiding the department was "unconstitutional" and "against the very grain of good governance". The Hawks should simply have requested the information, he said.
And department of justice spokesperson Tlali Tlali was quoted as saying the raid on the state attorney's office was "unprecedented", also claiming that the information could have been obtained without a warrant.
Hawks spokesperson McIntosh Polela replied: "The departments of mineral resources and justice have expressed their unhappiness about our raid in the media. We are not going to respond to that. [Hawks head Anwa] Dramat will engage with both ministers on the issue individually."
Inside the investigation
The search warrant used to raid ICT spells out the charges being investigated: fraud, forgery, uttering and corruption. Apart from Parekh, Mtshali and Rocha, others named as being of interest to the investigation include ICT's Phemelo Sehunelo, his assistant Sharifa Ferris, Sehunelo's companion, Duduzile Kunene, and her former business partner, Thozama Basi. Both Kunene and Basi are department of mineral resources officials (see "Who are in the Hawks' sights").
The warrant, read with allegations made by Sioc in papers filed for the civil matter in the Pretoria North High Court, make it clear that the events of May 1 to 3 2009 are core to the alleged crimes. That May Day long weekend, it is alleged, ICT was given access to Sioc's mining rights application, which had been handed to the department immediately before the weekend. ICT hastily prepared its own competing application, allegedly copying title deeds from Sioc's application and crudely forging them to appear as if they had been obtained from the deeds office.
In the week that followed, ICT's prospecting right application was lodged at the department's Kimberley office — allegedly belately or in dribs and drabs — but passed off, with the help of officials, as if the entire application had been lodged on Monday May 4.
The date is significant because May 4 was the first day on which applications were accepted for lapsed, unconverted old-order mineral rights. ICT and Sioc's applications were both judged by the department to have been received on that day, but ICT's was given preference because of its greater empowerment credentials.
ICT hits back
ICT legal representative Ronnie Mendelow questioned what he called "the exquisite timing" of the raids, coming as they did less than three weeks before Sioc's court application to have the prospecting right awarded to ICT set aside, but 11 months since Sioc had first indicated that it had laid criminal charges against ICT.
He said: "To view the timing of the raid as sheer coincidence is an affront to common sense — It's a malicious attempt to embarrass us and cloud the mind of the judge."
He dismissed the allegations against his clients as having "no substance whatsoever".
"We dealt with the allegations in our court papers in February in very intricate detail, head-on and with documentary evidence to refute Kumba's [Sioc's] allegations," he said.
Who are in the Hawks sights?
People of interest named in the Hawks' search and seizure warrant against ICT include (in bold):
- ICT co-founder Phemelo Sehunelo is romantically linked with Duduzile Kunene, a department of mineral resources official. Kunene is a one-time business partner with Thozama Basi, the department official in Kimberley who received Sioc's application immediately before the 2009 May Day long weekend.
ICT — and specifically Sehunelo and his assistant Sharifa Ferris — hurriedly prepared its own competing application over the weekend, allegedly having been slipped a copy of Sioc's application.
In court papers, Sioc claims the title deeds included in ICT's application are copies of those that were in its (Sioc's) application, but crudely forged to appear as if they were obtained from the deeds office.
This was allegedly done by Ferris by placing a card over Sioc's certification marks while photocopying, after which ICT had its own certification done.
In a counter-affidavit, Sehunelo claims he had obtained the deeds from the deeds office in Vryburg, two hours' drive away, on Monday May 4, before ICT submitted its application to the department that same morning. Sehunelo claims that the crude forgeries were later slipped into the file — a dirty trick to damage ICT.
- ICT co-founder and shareholder Prudence "Gugu" Mtshali is understood to be deputy president Kgalema Motlanthe's long-time romantic partner. At the time ICT applied for the right to prospect the Sishen mine, Motlanthe was in the final throes of his short term as president. No specific allegations against Mtshali appear from the warrant or Sioc's court papers, but the warrant portrays an interest in her communications at the time of the ICT application and authorised the seizure of her computer.
- Director and shareholder Jagdish Parekh took up a 50% stake in ICT in March 2010, well after the events in question. He is a key executive in businesses of the Gupta family, which is close to President Jacob Zuma. No specific allegations appear against him either.
- Jacinto Rocha was deputy director general in the department at the time and responsible for approving all prospecting right applications. No specific allegations appear against him. He said on Thursday: "I was not aware that my name was included in the search warrant. I have not seen the warrant and so I cannot give an informed comment on the allegations against me."
Rocha left the department in February 2010; he now consults and lectures on mining law.
All ICT members referred the M&G to the company lawyer, Ronnie Mendelow, for comment (see "ICT hits back"), with the exception of Mtshali, whose phone went unanswered all Thursday. Kunene deferred comment to the department, and Basi could not be reached.
The M&G Centre for Investigative Journalism, a non-profit initiative to develop investigative journalism in the public interest, produced this story. All views are ours. See www.amabhungane.co.za for all our stories, activities and sources of funding.