Council tender haunts Gauteng mayor’s wife

Johannesburg mayor Parks Tau faces tough questions over his wife's R10-million shareholding in an empowerment consortium put together by a politically connected company that won a lucrative contract from the metropolitan council.

Last week the Mail & Guardian reported that Pilisiwe Twala-Tau is one of the beneficiaries of Coral Lagoon, the consortium that acquired shares in Capitec Bank in 2006 now worth about R1-billion, with the help of a R285-million loan from the state's Industrial Development Corporation.

It has now emerged that the company that helped to assemble the Coral Lagoon consortium in 2006, Regiments Capital, won a highly lucrative contract to manage the Johannesburg council's R2-billion liability redemption fund, or "sinking fund", in the same year as Tau's wife was made part of the consortium. Her 1% stake equates to shares worth about R10-million now.

At the time, her husband was the head of the mayoral committee in charge of financial strategy and economic development and was therefore politically responsible for the contract awarded to Regiments. Twala-Tau was director of community development for the metro.

According to a notice for the renewal of the tender, published on the Johannesburg city council website last year, the sinking fund is designed to enable the municipality to "redeem liabilities when they fall due".

The city created the fund for the redemption of R2-billion raised from investors through a bond issue in 2004. One source has claimed that Regiments has earned more than R100-million from the contract, but this could not be corroborated. Regiments, without quantifying the amount, said it earned "a management fee of 35 basis points per annum of assets under management. Correspondingly, Regiments … consistently delivered returns that were above the mandate expectations."

Responding to M&G questions about what could be perceived as a conflict of interest, Tau's spokesperson, Fred Mokoko, said that in terms of the Municipal Finance Management Act councillors were prohibited from participating in any tender process.

"In the city of Johannesburg, councillors, including the executive mayor, councillor Parks Tau, do not participate in any committees evaluating or approving tenders," Mokoko said.

"There is no conflict of interest, nor could it arise, because councillors do not and cannot participate in procurement and supply-chain management processes."

Mokoko added that Tau "is prepared for the matter of alleged conflict of interest to be opened up for scrutiny by the public protector".

Mokoko did not answer M&G questions relating to when the tender was advertised or what tender processes were followed.

By the time the M&G went to print, Twala-Tau, who is chief executive of the Gauteng Enterprise Propeller, a provincial government entity, had not responded to questions.

Regiments denied that any conflict of interest had arisen as a result of it benefiting from the Johannesburg council contract while Tau's wife was cut into Coral Lagoon.

Without giving details, it said: "The two transactions were initiated and concluded over different time frames by different divisions within Regiments Capital in the normal course of business. They are completely independent of each other."

It also said it had won the council contract fairly. "Regiments Capital has structured numerous value-added funding and risk management solutions for a full spectrum of public sector clients. We have recently been recognised by our peers … as the best emerging financial services company for 2012. In mid-2005, Regiments Fund Managers was appointed through an open tender process by the city of Johannesburg to implement and manage its sinking fund."

Although it is not clear what criteria were used to select the members of the Coral Lagoon consortium, most were well-known businesspeople connected to the ruling party.

The mastermind behind Coral Lagoon is controversial ANC fund-raiser Zwelibanzi Miles Nzama, who attracted attention in 2003 when a Johannesburg printing company alleged in court that it had lost a Transnet tender because it had rebuffed his attempts to extort shares for the ANC.

Nzama roped in Regiments chief executive Litha Nyhonyha to help with corporate financing for the Capitec deal. Capitec issued 10million shares to the consortium in February 2007 at R30 a share, which means the total value of the shares was R300-million. The purchase was financed through a R285-million loan from the Industrial Development Corporation and a R15-million loan from Capitec itself.

Coral Lagoon this year sold off sufficient shares to the Public Investment Corporation to pay off all debt incurred by the original purchase. The corporation said it would warehouse the shares for a future black economic empowerment sale. At the current JSE price, the remaining shares are worth about R1-billion.

Other beneficiaries of Coral Lagoon include Batho Batho, a funding trust set up by ANC leaders, and individual beneficiaries, including the life partner of Deputy President Kgalema Motlanthe, Gugu Mtshali, and Lotto boss Bongani Khumalo.

Three of our articles dealing with the fund management tender won by a division of Regiments Capital from the City of Johannesburg (<a href="" target="_blank">Council tender haunts mayor's wife</a>,<a href="" target="_blank">Jo'burg mayor proclaims innocence over tender</a>, and <a href="" target="_blank">Regiments deal costs taxpayers many millions</a>) stated that the tender was awarded in 2006 or "in the same year" that the Johannesburg mayor's wife, Pilisiwe Twala-Tau, was included in the Coral Lagoon consortium also involving Regiments.

In fact, as some of our articles reflected, the Johannesburg tender was awarded in 2005, roughly a year before Twala-Tau was included in Coral Lagoon, and commenced in early 2006.

The first two articles also stated that Regiments had "put together" or "helped to assemble" Coral Lagoon, from which readers could have understood that Regiments was responsible for Twala-Tau's inclusion. Regiments has clarified that while it participated as an investor in Coral Lagoon, did its financial structuring and raised capital for it from state institutions, it did not select its members.

* Got a tip-off for us about this story? Email [email protected]

The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See for our stories, activities and funding sources.

Subscribe to the M&G for R2 a month

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

And for this weekend only, you can become a subscriber by paying just R2 a month for your first three months.

Tabelo Timse &
Guest Author

Related stories

Moving towards undoing Joburg’s spatial apartheid

The Nodal Review might transform South Africa’s biggest city. Implementing the new policy, which has the potential to open wealthy suburbs to impoverished residents, is the challenge

Tau, Mashaba ‘defamatory’ comments drama halted by court

Mayor Herman Mashaba approached the court to seek relief against former Joburg mayor Parks Tau who described him as sexist and anti-black in 2016

EFF manifesto: No more tenders says ‘government in waiting’

Addressing the EFF manifesto launch, Malema described the EFF as a government in waiting, saying people are no longer willing to wait for land

Makhura’s problem: His provincial committee

Makhura reportedly supported a group that backed former Johannesburg mayor Parks Tau as his deputy

No Cabinet shake-ups because of leadership contest — Makhura

'There shall be no MEC who is changed because they have a different view from me'

Lobbying ends now — Makhura tells Gauteng ANC

Newly elected ANC Gauteng chairperson David Makhura has called for an end to lobby groups and ill-discipline in the province

Subscribers only

ANC: ‘We’re operating under conditions of anarchy’

In its latest policy documents, the ANC is self-critical and wants ‘consequence management’, yet it’s letting its members off the hook again

Q&A Sessions: ‘I think I was born way before my...

The chief executive of the Estate Agency Affairs Board and the deputy chair of the SABC board, shares her take on retrenchments at the public broadcaster and reveals why she hates horror movies

More top stories

Exclusive: Top-secret testimonies implicate Rwanda’s president in war crimes

Explosive witness testimony from the International Criminal Tribunal for Rwanda implicates Paul Kagame and the RPF in mass killings before, during and after the 1994 genocide.

Shadow of eviction looms over farm dwellers

In part two of a series on the lives of farm dwellers, Tshepiso Mabula ka Ndongeni finds a community haunted by the scourge of eviction

Editorial: Crocodile tears from the coalface

Pumping limited resources into a project that is predominantly meant to extend dirty coal energy in South Africa is not what local communities and the climate needs.

Klipgat residents left high and dry

Flushing toilets were installed in backyards in the North West, but they can’t be used because the sewage has nowhere to go

press releases

Loading latest Press Releases…