Belly-up Nkandla company linked to bizarre SANParks deal
Nearly 14 years ago, Bohlabela Wheels wrote a cheque for R34 200 to start planning the upgrade and extension of then Deputy President Jacob Zuma's Nkandla homestead.
In the years since, the company has shared in the proceeds of a R500-million contract with the South Africa National Parks (SANParks), the details of which are fiercely guarded.
But now, Bohlabela is in the final stages of liquidation in a process that will cost another state organ, the Industrial Development Corporation (IDC), R2.9-million in bad debt, despite the fact that the SANParks contract was hastily renewed for three years, giving Bohlabela a theoretical 40% share of another R300-million in revenue at the same time.
Other peculiarities around the company, its liquidation, and the SANParks contract include:
- The listed Barloworld group and its subsidiary, vehicle hire company Avis, this week initially contradicted themselves when asked about the impact the Bothlabela liquidation would have on the group's partnership with that company;
- Bohlabela appears to have at one time chosen disgraced former liquidator Enver Motala to wind up its affairs; and
- The contract with SANParks in which Bohlabela has a stake was suddenly extended from five to eight years, apparently recently.
The financial ties between Bohlabela and the Zuma family were at one time demonstrably close. Those ties seem to have infected the story of Avis, Bohlabela and SANParks with the same confusion often seen in cases involving the finances of the family, its benefactors and associated government contracts.
Cast of characters
The story features a dizzying cast of characters and a long documented history, yet there is a surprising dearth of clear information.
It starts, however, quite simply, with an insignificant branch office of a medium-sized company noticing something strange about its numbers.
"The George branch of my client first noticed a loss in turnover in business done with SANParks locally at the beginning of 2010," says TJ Mouton, a lawyer acting for the holding company of Kempston Truck Hire. "It is more or less at this time that my client approached me to look into the matter."
Financial data from the branch shows just how dependent it was on renting vehicles to parks.
Year on year, its revenues had dropped by nearly 95% in March 2010.
Local SANParks officials could not entirely explain what had happened, and Mouton ended up submitting a formal request for information in terms of the Promotion of Access to Information Act on behalf of Kempston in mid-2010. Only then, says Kempston, did it learn that SANParks had signed a deal to centralise the management of its extensive fleet of vehicles that had been in effect since April 2008, locking out the piecemeal business Kempston had had a part of.
But everything did not add up. Kempston, a small but long-established player, had not been aware of the tender (although it subsequently turned out to have been advertised in two national newspapers). It had never come across Vuswa Fleet Services, which had won the business (although Vuswa subsequently turned out to be a joint venture involving the well-known Avis), and rumour had it that the centralised contract was actually more expensive for individual parks than their previous arrangements. Mouton was asked by his clients to dig deeper.
Then he hit a brick wall. "The officials of SANParks were extremely secretive," the lawyer told the Mail & Guardian drily.
Uncommonly, court papers paint a more visceral picture of an occasionally very nasty fight for information, later honed to just a list of the vehicles supplied and their prices.
In the years since 2010, Kempston has been in the North Gauteng high court twice to demand that SANParks hand over information on the contract, and the matter is likely to be heard for a third time late this year or in early 2014, long after the Vuswa contract would have expired in terms of its original specifications.
The various affidavits filed by employees of the various companies in those cases have included accusations that:
- SANParks, rather than making its own decisions on whether it should release details of the contract, parroted Vuswa, in order to protect the supplier: "The levels at which Vuswa priced the original tender are no longer of any commercial or competitive value," says a Kempston employee on behalf of the company. "I cannot conceive of any reason for opposing their disclosure, unless there is something improper that the respondents [SANParks and Vuswa] wish to avoid being discovered";
- Kempston is in effect using the courts to gain confidential data held by Avis in order to compete with it in future. "[Kempston's] application is precipitated by vengeance and a desire at all costs to win a new contract," says SANParks chief executive David Mabunda in an answering statement in which he also lashes Kempston for "its lack of operational capacity to successfully tender on a national basis"; and
- SANParks has adopted an "evasive and obstructive" approach, while the body, in turn, accuses Kempston of "scurrilous, vexatious and defamatory" accusations of wrongdoing.
Swapping such allegations has come at a cost. Kempston's Mouton this week said his client had racked up nearly R630 000 in legal bills to date. It has, meanwhile, recovered just less than R186 000 in legal fees from SANParks.
Dragged to court
The business cost has been higher still. Vuswa, the SANParks contract-holder, is 60% owned by Avis, which is in turn a subsidiary of listed giant Barloworld. And Avis/Barloworld, it turns out, does not take at all kindly to being dragged to court.
In mid-2011, Kempston says, Avis informed it that it "would cease all further business" with its rival if it did not drop the quest for information on the SANParks contract. It made good on the threat, costing Kempston what it describes as "very substantial amounts of money".
In responses to written questions this week, Barloworld did not comment on the implication of commercial blackmail, but said it did "not do business with parties that have instituted legal action against us".
But the liquidation of the now strangely impoverished Bohlabela could result in Avis and Vuswa facing more pointed questions, and not just from Kempston.
Vuswa, the operating company that handles everything from tourists' cars breaking down in the Kruger National Park to supplying the tractors that service other parks, took up those services in terms of a contract with an effective date of April 1 2008. Intended to run for five years, it would have expired in the middle of this year, 2013, bar the invocation of a six-month extension.
But responding in writing to questions this week, SANParks said the Vuswa contract "has been extended until August 31 2016 as provided for in contract based on good performance", after having expired in August this year.
The decision to extend the contract seems to have come in something of a hurry. On July 16, Mabunda provided yet another sworn affidavit to oppose Kempston's demand for information. In it, he twice referred to a new tender due at the end of 2013, first saying it could be awarded by the end of this year, then indicating such a new contract "would be advertised at the end of the year ".
That was a month and a half before the absolute latest date the further three-year renewal could have been signed, according to SANPark's own timeline of events.
For five years, there was every indication that SANParks would invite new bids to handle its vehicle fleet at the end of 2013. In less than 47 days of that affidavit, however, "business needs dictated otherwise".
More peculiar, however, is that SANParks at first appeared to have renewed the contract, which it values at slightly more than R95-million a year, with a company that will soon no longer have a black economic empowerment component. Under scrutiny, that all changed, although without the knowledge of SANParks.
Papers filed with the master of the high court in Pretoria in August show that Bohlabela Wheels (Pty) Ltd is in the final stages of voluntary liquidation. On finalisation of that process, Bohlabela will cease to exist, leaving Vuswa without its 40% empowerment shareholder, and imperiling the deal with SANParks, now secured until at least 2016, while also leaving the IDC out of pocket.
SANParks this week said it was not aware of Bohlabela's liquidation, even though Vuswa would have been obliged to inform it of the loss of its empowerment partner, and warned that it would invoke "appropriate remedies" if that were to be the case.
The documents show that Bohlabela owes the IDC R3.2-million. Of that amount R184 124 was secured and will be repaid to the state funder. As to the remainder, however, the IDC will take a considerable knock.
Bohlabela, the company's liquidators say in a sworn statement of account, having for five years held a large chunk of the SANParks contract, had less than R7 000 in the bank at the end of May. With precious little by the way of other assets, creditors will receive about 3c on the rand in the liquidation. The resulting calculation shows that the IDC will have to write off R2.9-million.
The IDC on Thursday said it had written off the balance of a R4.6-million loan granted to Bohlabela after a court judgment failed for lack of assets to seize.
"Although we have written the debt off for financial reporting purposes, we are still pursuing it," the lender said. "If it transpires that there is new value through new contracts, we welcome this development since it improves our prospects of recovery."
The liquidators, who as of August 8 this year included Enver Motala, do not list Bohlabela's 40% shareholding in Vuswa as an asset.
Motala was blacklisted by the master of the high court in September 2011 after an investigation into his role in the hugely controversial liquidation of the Pamodzi Gold group during the Aurora Empowerment Systems debacle. That investigation uncovered that Motala had had a previous fraud conviction that he not only had failed to disclose, but had consistently denied.
Among those involved in Aurora was Jacob Zuma's nephew, Khulubuse Zuma. Motala subsequently approached Zuma in search of a presidential pardon for his past crimes, which could have been a step towards rehabilitating himself as a court-appointed liquidator.
Bohlabela Wheels Nelspruit
Vuswa did not respond to any of the M&G's attempts to contact it for clarification of the impact the liquidation will have on its business with SANParks, and Bohlabela no longer strictly exists. But in a startling turn of events, Barloworld said late this week the deal was in no danger whatsoever, because Bohlabela was not, in fact, a partner of Vuswa.
"Avis' partner in Vuswa is Bohlabela Wheels Nelspruit (Pty) Ltd, being a different legal entity," the company said, when asked whether it was aware of the Bohlabela liquidation.
But that seems unlikely.
Bohlabela Wheels Nelspruit is indeed a separate legal entity to Bohlabela Wheels (Pty) Ltd, although the companies share directors. However, Bohlabela Wheels Nelspruit came into existence only in 2003, while Avis says it formed a partnership with "Bohlabela" in 2002, in part because it owned and operated motor dealerships in Limpopo. At the time, the only Bohlabela in existence was the company currently in liquidation.
The claim that its partner is Bohlabela Nelspruit and not the company in liquidation is also contradicted, under oath, by an Avis employee. "Avis Fleet Services owns 60% of the shares in [Vuswa] and Bohlabela Wheels (Pty) Limited owns the balance of 40%," said Francois Viljoen in an affidavit on July 22 this year. In the papers, Viljoen identifies himself as an executive director of Vuswa and an employee of Avis.
That is the exact wording Vuswa was using on its website at the time of going to print, as it had for years.
Confronted with the discrepancies, Barloworld then said that Bohlabela Wheels was "identified and selected as a partner in 2002" but that a "subsequent" corporate restructure had occurred "without a change in beneficial ownership, resulting in the change from Bohlabela Wheels to Bohlabela Wheels Nelspruit".
Despite repeated requests, Barloworld did not make any company executives available for interviews by the time of publication, and did not respond to further requests for clarification, including when the restructure had taken place, when it had been disclosed, and whether it amounted to hiding assets from liquidation.
Shortly before publication, SANParks said it was not aware of any changes in the shareholding of Vuswa, although contracts of such scope usually include a requirement for notification. But the body implied that in the absence of a change in beneficial ownership and capacity, it might not care which Bohlabela Wheels it was doing business with.
"It should be further stated that SANParks' interest in this would be that the shareholding, as determined by legislation, has not changed. Our interest is not in the individuals involved as this would embroil us in internal affairs of third parties," the organisation said. "Further we would also be interested to know whether the competence of the entity to deliver on the terms of the contract has not been diluted."
Wheeling its way into Zuma's heart
Bohlabela Wheels, the company that stands to cost the Industrial Development Corporation R2.9-million in the near future, has had financial ties with two of President Jacob Zuma's close relatives and has channelled funds into his Nkandla homestead.
Evidence presented to a parliamentary investigation into allegations that Zuma, then deputy president, failed to declare his interests in 2003, showed that Bohlabela signed the cheques for architect's fees in what was then the early stages of expansion at Nkandla. Deposits apparently from the company into the accounts of suppliers to the expansion project totalled R134 200.
At the time of the payments, Bohlabela employed Zuma's nephew, Kusa Raymond Zuma, who is listed as having been a director of the company until
July 2004. According to credit records, Jacob Zuma's brother, Michael Zuma, was also at one point employed by Bohlabela.