Nkandla: How IDC splashed R10m on bailout

Just who is Thandeka Nene – and what is her hold over state institutions?

Nene was the sole member of Bonelena Construction CC, one of two building firms nominated by the public works department to do the major work on the security upgrade at President Jacob Zuma's Nkandla homestead.

Documents regarding the controversial development obtained by amaBhungane show:

  • When Bonelena was liquidated, the state-owned Industrial Development Corporation (IDC) intervened to keep the firm going, providing extra funding when the prospect of recovering its loans appeared doubtful;
  • When Bonelena's failure to meet deadlines led public works to cancel the contract, exposure in court of Project A – the department's code name for Nkandla – was a large concern for the department. Public Works Minister Thulas Nxesi also intervened, leading the department to backtrack and reach a compromise with Nene; and
  • She had such high-level access that when part of the work was awarded – supposedly erroneously – to the other main contractor (See "Nkandla's money mine", Page 4), the public works' deputy minister intervened and the architects were obliged to write her a grovelling apology for their error.

IDC to the rescue

Documents obtained by amaBhungane relating to the June 2012 liquidation of Bonelena suggest the IDC went to extraordinary lengths to rescue Nene, who at that stage owed the corporation nearly R20-million.

She had concluded a loan agreement with the IDC in February 2011.


In April 2012, the public works project manager cancelled the Nkandla contract with Bonelena, citing repeated failures to reach agreed construction milestones.

Nene and her lawyers refused to accept the cancellation, arguing it was unlawful and unfair, as she had completed 95% of the work.

In May 2012, a Durban car-hire firm, Reebib Rentals, applied to liquidate Bonelena over R190000 it was allegedly owed. A final winding-up order was granted in the High Court in Pietermaritzburg on July 18.

Lobbying

Meanwhile, Nene was lobbying vigorously to overturn the contract cancellation. Her lawyers wrote to the department threatening legal action and she refused to hand over the keys to the Nkandla site so that another contractor could take over.

She also wrote to the new minister, Thulas Nxesi, on June 15 2012, noting: "I have great respect of the president … and take cognizance of the security measures of the project."

She wrote to him again on July 20, noting: "We have received phone calls and text messages from creditors threatening to approach the media. We have also received phone calls from the media inquiring as to the nature of the project and the payment delays. We have not commented and will not be held liable for any resultant reports that may surface as a result of the media."

Earlier, the Durban public works regional office had written to the Pretoria head office warning about the possible fallout for Zuma – referred to as "the Principal".

"The severe implications of cancelling the contract is expected to end in court cases between the contractor and the department. This will result in all the project information being subjected to public scrutiny," the regional office said.

"This is an unacceptable risk to this office and could result in political fallout that could possibly influence the Principal's political position very negatively."

Nxesi pays up

The letters had the desired effect. On July 31 2012, a teleconference was held with Nene and her lawyer at one end and the minister and his senior department advisers at the other. An urgent agreement was reached to pay Bonelena about R7-million.

Neither Nene nor her lawyer disclosed that the company had already been placed in final liquidation.

Bad faith?

In September 2012, after the money had already been paid out, one senior official, Gerard Damsta, expressed outrage at discovering this.

In an email to the department's chief legal adviser, he wrote: "I have learnt today with great shock and disappointment … that Bonelena was provisionally liquidated on 4 June 2012 … This means that Bonelena negotiated with the employer [the minister and others from the department of public works] … when it was already not in a competent position to have done so …

"The conduct of Ms Nene in all of this is what I need your legal expertise for …

"Can it be labelled as fraudulent? Bad faith?? … What recourse does [the department] have under these circumstances?"

But, instead of fraud charges, Nene got a rescue package from the IDC to take her company out of liquidation.

Good money after bad?

According to a report by liquidator Eugene Nel, the IDC proposed and funded the rescue scheme.

On top of its R20-million, the corporation agreed to put up a further R10-million to pay the liquidators, fund the payout of preferred creditors (such as banks and the South African Revenue Service) and offer concurrent creditors – such as Reebib Rentals – 50c of every rand owed.

According to Nel, the offer was generous as the company's financial position was so dire that, if it was simply wound up, preferred creditors would have got a reduced payout and there would have been nothing at all for others.

The IDC insists that the decision to assist Bonelena to exit liquidation was "not influenced by politics whatsoever".

IDC public relations manager Mandla Mpangase told amaBhungane it viewed the liquidation as "erroneous" and that Bonelena had existing contracts "based on which the IDC will recover its money".

"Bonelena continues to honour its repayment arrangement with the IDC."

He declined to give details but the liquidation report suggests Bonelena will have to score some sweet new deals to be able to repay the loan.

Security?

At the date of the provisional liquidation, Bonelena owed about R32-million to creditors, of whom the IDC was the largest, with R20-million owed to it.

The liquidators judged two contracts – a prison upgrade and a school building project – were worth keeping the company solvent for.

However, the IDC's security was calculated at only R11.5-million – not a major comfort when its R20-million loan was pushed up to R30-million to secure Bonelena's release from liquidation.

In return for the cash injection, the IDC demanded that a quantity surveyor and an accountant appointed by the IDC should be given full access to help to manage the company.

AmaBhungane's attempts to communicate with Nene for clarity on the current state of the company were fruitless.

Other friends in high places

The public works documents obtained by amaBhungane provide other evidence of Nene's clout, despite officials and contractors complaining about the company's performance.

When Moneymine was allocated work that had been earmarked for Bonelena, Public Works Deputy Minister Hendrietta Bogopane-Zulu got involved and ordered that the decision be reversed.

The architects were obliged to write to the department and the deputy minister apologising for the error, saying: "We meant no disrespect."

* 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 www.amabhungane.co.za for our stories, activities and funding sources.

Subscribe to the M&G

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.

Amabhungane
Amabhungane
Developing investigative journalism in the public interest. Digging dung. Fertilising democracy.

Related stories

ConCourt settles the law on the public protector and interim interdicts

The Constitutional Court said it welcomed robust debate but criticised the populist rhetoric in the battle between Busisiwe Mkhwebane and Minister Pravin Gordhan

The crisis can ‘galvanise all of us to eradicate inequality’

To lessen the damage being wrought by the lockdown, the coronavirus budget mixed increased grants with more money for infrastructure and to keep businesses

South Africa’s economic plan for Covid-19

Relief for small businesses, tax breaks, employment incentives — Ramaphosa’s drastic measures to fight the effects of Covid-19

Zuma breaks silence on his tax records

But his last minute affidavit does not resolve the bigger legal dispute between the South African Revenue Service and the public protector

Riddle of Zuma’s sick note

SANDF officials considered launching a probe into the ‘doctored’ certificate

Court tests protector’s powers

In the Ramaphosa vs Mkhwebane case, the court has been asked to rein in the public protector
Advertising

Subscribers only

The shame of 40 000 missing education certificates

Graduates are being left in the lurch by a higher education department that is simply unable to deliver the crucial certificates proving their qualifications - in some cases dating back to 1992

The living nightmare of environmental activists who protest mine expansion

Last week Fikile Ntshangase was gunned down as activists fight mining company Tendele’s expansions. Community members tell the M&G about the ‘kill lists’ and the dread they live with every day

More top stories

‘Battle-tested’ vs ‘kind and fair’ — DA candidates’ last push...

John Steenhuisen and Mbali Ntuli both acknowledged the problems faced by the party over the past year, with each of them offering their own leadership vision.

A Landie icon is born

Replacing one of the most-loved cars in history, the new Defender pulls off the near impossible task of doing almost everything better

NSFW: The tricky business of OnlyFans

In an increasingly digital world, OnlyFans has given online creators a new way to make money on their own terms

Q&A Sessions: ‘Keeping quiet is not an option’ — Charlotte...

More than a decade after a brief stint on the opposition benches, Charlotte Lobe is helping to fly the South African flag as a senior public servant in the department of international relations and co-operation
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday