Tokyo Sexwale is one of three South African mining moguls who appear to be caught up in an international bribery scandal that landed a United States firm with a R5.6-billion penalty last week.
Next week, a self-confessed fixer, a Gabonese, will appear in a New York court where he is expected to start giving evidence about his role in the bribery scandal involving several African countries.
The Mail & Guardian understands the US department of justice has contacted Cape Town multimillionaire Walter Hennig, who is accused of being a central figure in paying bribes.
Hennig, former Cabinet minister Sexwale and their business partner, Mark Willcox, are identified in a US Securities Exchange Commission (SEC) order as South Africans who “enriched themselves” on the back of millions of dollars of US investor funds through various schemes over several years.
The men did not respond to questions about their alleged role in the scheme, or whether they intend challenging the US findings.
Details of their apparent involvement emerged in the order handed down last week.
The Wall Street hedge fund manager, Och-Ziff Capital Management, and an affiliate were fined for contravening US anti-bribery laws and turning a blind eye to years of corruption, which Och-Ziff claims was carried out by two former senior employees and the firm’s South African partners.
The order, dated September 29, exposes how Och-Ziff, through a subsidiary, African Global Capital (AGC), repeatedly doled out cash to help their South African partners pay off politicians in countries such as Chad, Niger, Guinea and the Democratic Republic of Congo in exchange for mining rights.
“Millions of dollars in Och-Ziff investor funds also went to personally enrich South African Business Partner [Hennig], the [chief executive officer] of AML [Willcox] and the South African businessman [Sexwale] who Och-Ziff touted as an AGC partner,” states the order, which does not name the individuals.
Sexwale’s Mvelaphanda is further described as the “South African conglomerate” involved in the funding of “corrupt business efforts in Guinea” between 2010 and 2011.
‘Samy from Miami’
Their fate now rests in the hands of self-confessed “fixer” Samuel Mebiame, who has already made startling claims about how Hennig allegedly funded his lifestyle and provided the cash for him to pay bribes for deals in various countries.
In addition to the 46-page order by the SEC, at least one other court document reveals further evidence of the involvement of some South Africans.
A statement by an Inland Revenue Service criminal division special agent, Yves Hunziker, handed in for bail purposes, describes how Mebiame claimed to have helped Och-Ziff’s South African partners to buy political influence in exchange for lucrative mining deals.
In September 2009, Mebiame, believing that he was being short-changed, fired off an angry email to his South African employer. “You sistematicaly used corruption in Africa to get the assets you have. I have proofs of what i am stating and several witnesses that also feel cheated by your company are ready to testify. But more than that, i have proofs from several Bank transfers linking you directly to corruption … If I am not given the money that i have worked for several years … i will let the world know what kind of international crooks you are.”
He further stated: “According to RSA [Republic of South Africa] laws and also English and American laws, you are not supposed to invite, commission or bribe any members of an administration were you competing for tenders etc …”
They later resolved the issue and Mebiame continued working for the group. He told investigators that he reported directly to Hennig.
Previously, in an email to update Hennig on a Niger deal, Mebiame suggested they invite two high-ranking officials to South Africa. “This must happen before they take a decision on the mining and oil request we recently sent them.”
A few years later, he again wrote to Hennig about deals in Niger, even inquiring about how to reward helpful officials in an email signed off as “Samy from Miami!”
Mebiame was arrested on August 16, a day before he was scheduled to leave the US. He is in custody and is expected to appear in court next week for plea proceedings.
This case is likely to be used by the US authorities to seek criminal prosecutions of others implicated in the misuse of investor funds.
Although the co-conspirators, intermediaries and agents are not named in the SEC order, the document contains enough details about Och-Ziff’s South African partners and affiliates to suggest they include Sexwale, Willcox and Hennig.
Their association with the US firm dates back to 2008 when the Och-Ziff Capital Management Group announced a joint venture between its subsidiary, OZ Management, Mvelaphanda Holdings and Hennig’s Palladino Holdings. Through their new joint venture, Africa Management, the trio would seek investments in Africa, with a bias towards natural resources.
“Och-Ziff chose a prominent figure in SA as a potential partner for AGC. This individual was a former government official as well as a successful businessman through his SA-based conglomerate,” the SEC order states.
South African Reserve Bank restrictions prevented Mvelaphanda from proceeding with the partnership but Willcox, a cofounder of the empowerment conglomerate, became chief executive of the joint venture until his resignation in 2012.
AGC, a subsidiary of the joint venture, was set up to invest in private and public markets around Africa.
Although two Och-Ziff executives admitted to violations of the Foreign Corrupt Practices Act, agreed to the fine and to institute rigid control to prevent further abuses, it is clearly not the end of the case.
US investigators have cast their net wider in pursuit of criminal prosecutions of others involved in the scandal that saw millions of dollars in investor funds used for dodgy loans and bribes to high-ranking state officials in the different countries.
The M&G has been told that the noose is tightening around the two former Och-Ziff employees, Michael Cohen and Vanya Baros, both of whom are directly implicated in the case and dealt directly with Och-Ziff’s South African partners.
The SEC order sketches a shocking narrative of Western corporates using political clout in African countries in pursuit of mineral riches. In some cases, bribes were “falsely classified” as “consultant payments, law firm payments, house rentals and charitable contributions” by Och-Ziff.
“Bribe accounts were created” and money went as “bribes to ministers and governors, including house repairs and medical assistance for these officials”, the order states.
The US department of justice cited the Och-Ziff case as the first in which a hedge fund has been held accountable for violating the foreign bribery Act in its pursuit of profits.
The company essentially admitted to flouting parts of the US law by, among other things, failing to keep accurate records or to conduct sufficient due diligence on assets bought by their various partners in Africa.
When due diligence on agents and business partners did reveal significant red flags, the company proceeded with the relationship nonetheless. In some cases, the executives were aware of the corruption risk but still approved the use of investor funds for those deals.
Attempts to obtain comment from the US department of justice were unsuccessful.