Cosatu Head Office
The #Guptaleaks have shone light on the role former acting Eskom chief executive Collin Matjila played in facilitating the Guptas’ access to the state-owned electricity company.
Now amaBhungane can reveal how Matjila was already entangled with Gupta lieutenant Salim Essa in an earlier scandal in 2011 that appears to have ripped off Cosatu and helped force out its general secretary, Zwelinzima Vavi.
Matjila, at that time in charge of Cosatu investment arm Kopano ke Matla, was tasked with securing a new Johannesburg headquarters for the trade union and selling the old Cosatu House.
Evidence suggests that Matjila, together with Essa, engineered twin transactions that fleeced the union by:
- choosing a building secured by a middleman well-known to Essa, which was then sold to Cosatu at an inflated price, earning the middleman an instant R17-million profit thanks to a back-to-back transfer, and
- arranging for the cost to Cosatu to be offset by the sale of the old Cosatu House, which was then sold to the same middleman at a fire sale price, netting him millions more in value.
In response to detailed questions, Matjila would only say: “I did not receive any personal material benefit from the property transaction. I would suggest you refer your queries to Kopano ke Matla.”
Essa did not respond to detailed questions.
Lawyers for the middleman, Ebrahim Joosub, denied all impropriety, saying whether he benefited was “immaterial”.
Forensic investigation
The story goes back to a decision by Cosatu to move to a new building in 2008 or 2009. At the time, Matjila was chief executive of Kopano ke Matla and a director of its subsidiary KKM Property Developments.
Years later, in February 2014, a report Cosatu commissioned to get to the bottom of allegations of wrongdoing pointed a finger squarely at Matjila for underselling Cosatu’s old property and for the inflated R50-million price of the new property.
The report, compiled by the forensic division of audit firm Sizwe Ntsaluba Gobodo, told how a Cosatu task team originally identified a property named Kopano House – priced at R35-million – but were told it would cost too much to renovate. A source familiar with the building at the time disputes this, telling amaBhungane the building was in good condition.
Gobodo recorded Matjila as telling them that it was Salim Essa who brought a new option to the table, a building at 110 Jorissen Street, owned by Joosub, a property developer.
In his testimony Matjila mentioned being part of the task team, chaired by Vavi, that was set up to assist with the acquisition of the new building. Matjila claimed to have worked with the task team members and kept them informed before purchasing the new building.
But interviews Gobodo conducted with other members of the team suggest that Matjila acted unilaterally and that they were only informed of the decision in favour of Joosub’s Jorissen Street building after the fact.
The report also cited Matjila as saying that the task team was “informally assisted” by Essa. It added that Essa and Kopano had a relationship, having worked together on an energy project via a company they jointly owned, Inca Energy.
Joosub’s lawyers claim that Essa only “introduced the parties and was not an adviser”.
Related parties?
In recent years, Essa has emerged as a key figure in the Gupta business empire. His name has cropped up in numerous reports on the Guptas’ attempts to capture state entities, and he makes a regular appearance in the #GuptaLeaks.
The Gobodo report recorded: “According to Mr Matjila, ‘Salim Essa’ later advised the task team that there was a certain building that was owned by Mr Joosub situated in Braamfontein that could meet Cosatu requirements.
“Mr Matjila stated that Mr Joosub initially requested an amount of R60-million for the building and that after some negotiation on this, they eventually agreed on a purchase price of R50-million. According to him, the said negotiations undertaken with Mr Joosub on the purchase price were not extensive.
“Mr Matjila also could not provide us with any evidence of the said negotiation process undertaken. Our attempts to secure an appointment with Mr Joosub to establish his role in the sale of the old Cosatu House and new building occupied by Cosatu were unsuccessful.”
The report also found that no due diligence or independent valuation of the Jorissen Street building was done to establish whether the asking price was fair. On the contrary, the report notes that Joosub’s company bought the same building for R33-million.
What the report failed to note was the link between the Joosub family and Essa.
Essa has co-owned a close corporation called Sam Ax Trading with Mohamed ‘Max’ Joosub since 2003, company records show. Joosub’s lawyers say the company has never traded.
Mohamed is Ebrahim Joosub’s brother – Mohamed’s Facebook profile confirms this – and the two have given the same Houghton address and used the same telephone numbers.
The Joosub brothers now work out of the old Cosatu building that now houses their property company, J-One.
Sources who know Essa and the Joosub brothers say they are very close. According to one source they are related, and Essa’s mother’s maiden name appears to be Joosub, though the brothers’ lawyers deny any family relationship between them and Essa.
Harder to deny, however, is that Matjila, the insider, Essa, the dealmaker, and Ebrahim Joosub, the middleman, were too close for comfort.
Back-to-back sale
On 26 May 2011, Matjila, for Kopano subsidiary KKM, signed an agreement with Ebrahim Joosub’s company JBI (Johannesburg Investments) to buy the Jorissen Street property for R50-million.
Deeds records show that at this stage, despite the agreement to sell to Cosatu, Joosub’s company had not yet taken transfer of the building from its previous owners, Combined Asset Management.
Only on 10 June – two weeks after Matjila committed Cosatu to buy – did Combined and Joosub sit down to sign powers of attorney to transfer the building from it to him, and from him to Cosatu.
The deeds office gave effect to this back-to-back arrangement on 3 August 2011, when ownership was transferred from Combined to Joosub’s company, and instantly from it to KKM, for Cosatu.
Lawyers for the Joosub brothers argue that the transfer date is irrelevant, pointing out that Joosub had signed to purchase the property from CAM in February 2011 already, before Matjila signed to purchase the building for Cosatu in May.
The lawyers did not answer a further question as to whether Joosub’s purchase offer had been contingent on, for example, him obtaining the necessary finance. If so, he could have used that as a stratagem to get out of the purchase were he unable to sell to Cosatu at the inflated price.
Either way, the back-to-back transfer meant that Joosub only had to pay Combined the full purchase price on the day that he received the proceeds of the onward sale – meaning he netted an instant R17-million without adding value.
The price Cosatu paid soon raised eyebrows.
For its report, Gobodo commissioned a property valuation to ascertain the market value of the property at the time of its sale to KMM for Cosatu. This put the value of the building at R43.7-million.
“This suggests that KKM Property Developments overpaid in respect of this building by R6,300,000”, the report noted, adding, “This appears to be irregular.”
A separate valuation for the property for 2007, only a few years prior to the sale, put its value at a little over R36-million.
The report mentions that Matjila claimed to have relied on a desktop evaluation conducted by Tamela Consultants, who “advised that the offer of R50-million was reasonable and fair”. But it states that Matjila was unable to provide any documentary evidence of that evaluation.
Approached by amaBhungane for comment, a spokesperson for Tamela Consultants denied Matjila’s version, saying: “Tamela did not provide any advisory services to Kopano or Cosatu or Mr. Matjila.”
The windfall did not end there.
Double tap
Not only would Joosub sell the new building at an inflated price, he would also buy the old Cosatu House for much less than it was valued.
On 12 April 2011, Vavi wrote to Matjila about a resolution taken “to sell Cosatu House which in 2007 was evaluated at R20-million rands with immediate effect”.
The letter added: “We confirm that a minimum of R10-million from the sale or the entire amount if necessary is pledged to contribute to the purchasing of the new building.”
Again, Matjila was tasked with the transaction. He arranged the sale of the old building for only R10-million to a company called Street Talk Trading, which was “represented” by Ebrahim Joosub.
Joosub registered the company in his name the month he purchased the building and he remains its sole director.
The sale was finalised on 17 August 2011 and signed off by Joosub and Vavi, with the latter claiming that he inked the deal under “duress” because Matjila had already made the legal commitment.
Vavi came under severe criticism over the botched sale and it was used to mobilise against him in the run-up to his expulsion in March 2015.
He told amaBhungane that he only became aware that the buyer and the seller were the same person long after the deal was done.
The bargain basement price tag of R10-million caused such alarm among Cosatu officials that when the Central Executive Committee announced the sale in November 2011, Cosatu affiliate Popcru quickly offered to buy the property for R15-million.
But by then it was too late. After Popcru officials wrote to Vavi with the offer, he wrote back saying: “Please don’t rub the salt! We have been screwed literally by these fellows.”
According to the Gobodo report, Matjila again claimed to have acted on advice from Tamela Consultants, though he was unable to provide any evidence to that effect.
Matjila defended his actions by saying that Vavi’s letter had advised him to sell the property for R10-million. But as the report noted, “the letter does not seem to suggest that the building should be disposed of for R10-million”.
Rather, a “minimum of R10-million” from the selling price was to have been used towards buying the new building.
Valuations of the property before and after the sale make it clear that it was worth much more. The audited financial statements of Cubah Properties, the Cosatu subsidiary that sold the old Cosatu House, reflected a valuation of R12.6-million for the Leyds Street building as at 25 March 2010, well over a year before it was sold.
Amid concern among Cosatu office-bearers that the old property had been sold for a steal, CPF Valuers conducted a second valuation in November 2011. Their assessment put the value of the building at R19.5-million, almost double what it was sold for to Joosub.
But by then the sale had already gone through.
Moving on
Matjila quickly moved on after the scandal. A little over a month after the Gobodo report was delivered, Matjila resigned from Kopano to take up the position of acting chief executive at Eskom.
The #GuptaLeaks show that shortly before Matjila’s appointment to this position, his CV was sent by Essa to one of the Gupta brothers, Rajesh “Tony” Gupta.
amaBhungane and Scorpio previously reported how, during Matjila’s stint at Eskom, it channelled lucrative deals to the Guptas’ nascent media empire. These included the bulk buying of The New Age newspapers and multimillion-rand sponsorships of that newspaper’s business breakfast events.
And Essa appears to have kept up his links to the Joosubs.
When Trillian, the advisory firm controlled by Essa that controversially scored large payments from state-owned companies, was set up, Max Joosub was pencilled in as a possible director, according to inside information amaBhungane obtained. And his family trust would have held 60% of the firm – the same stake that Essa now holds.
The report recommended that Cosatu seek legal advice on the appropriate corrective action to take against Matjila for his role in the property scandal.
Kopano ke Matla said it was currently doing so on behalf of Cosatu.
“As per the undertaking that the [Kopano ke Matla] trust made to its beneficiary, Cosatu, the trust has taken steps to ensure that the recommendations of the forensic report are implemented. The trust has instructed one of the top law firms in South Africa to recover all the monies as per the recommendations… Investigations are ongoing. At this stage no further details can be released.”
Lawyers for the Joosubs said: “Our clients’ involvement in regard to the said transactions was at all times at arm’s length.
“The fact of the matter is that our client did not engage Mr Essa in the transaction. Mr Essa introduced the parties and was not an advisor…
“To conclude that our clients were involved in what you describe as an irregular process because they know one of the persons involved, is not only speculation, but reckless…
“If the transaction was marked by irregularities, this is something our clients have no knowledge of nor were they involved in any such irregularities. If there were issues within Cosatu in relation to the transaction, this has nothing to do with our clients, who purchased and sold the property at arm’s length…
“Whether or not the deal was to the benefit of our clients is immaterial and to draw an inference that our clients acted irregularly is a conclusion which is not supported by any of the facts.”
The amaBhungane Centre for Investigative Journalism produced this story. Like it? Be an amaB supporter and help us do more. Know more? Send us a tip-off.