IDC loan of R60m ‘gone in one year’

The Industrial Development Corporation (IDC) has laid criminal charges against businessperson Lorraine Masipa following allegations that she squandered a whopping R60-million loan in less than a year. Perhaps more troubling, however, are claims that the deputy minister of public enterprises and former energy minister, Ben Martins, was instrumental in the IDC awarding the loan to Masipa.

Masipa, the director of Semona Eco, is said to be linked to Martins, and the couple have a four-year-old child together. The Mail & Guardian has seen a copy of the child’s unabridged birth certificate, which lists Martins as the father.

Both Martins and Masipa have refused to comment on their relationship, with Martins saying he would not discuss his private life with the M&G. In an SMS, Masipa, like Martins, said her personal life “and children are a private matter and not up for public discussion”.

Defaulters on IDC loans have reached historic levels, prompting speculation that process is routinely flouted to secure funding for politically connected businesspeople.

Former associates have red-flagged Masipa’s relationship with Martins as being a possible factor in the awarding of the R60‑million loan. IDC spokesperson Mandla Mpangase insisted, however, that a rigorous process was followed before granting funding to Semona Eco, including conducting an initial screening, basic assessment and due diligence tests.


“Funding is approved by the relevant delegated approval committees … Clients enter into a formal legal agreement post the approval and before any money is disbursed,” he said.

The IDC said it was not aware of any relationship between Masipa and Martins, and is “therefore, not in a position to comment on it”, suggesting that such details were not disclosed to the funding entity.

According to the IDC’s 2014-2015 financial report, Semona Eco was funded to establish manufacturing facilities in Midrand. The project would manufacture “compressed biomass logs mainly for the braai and fireplace market”.

Mpangase confirmed that Masipa had failed to make repayments on the R58-million loan since December 2014. Documents seen by the M&G indicate the loan was to be repaid in 71 instalments of R320 000 a month. The IDC has since opened a criminal case against Masipa and launched liquidation and sequestration proceedings to recoup the funds. The hearing is set for later this month.

“The firm action taken by the IDC so far to recover its money does not support the narrative of a soft loan resulting from the existence of a ‘political relationship’,” Mpangase said.

The IDC has been praised for ensuring better transparency in state-owned enterprises by publishing a list of businesses it lends to, and highlighting those deemed to be politically exposed persons. This follows scrutiny of the IDC’s relations with the Gupta family’s Oakbay Resources and Energy.

Thanks to a debt-to-equity conversion deal struck in 2014, the IDC owns 3.57% of Oakbay. The IDC has lost 36% on that investment to date.

Masipa, however, blames her failure to honour the IDC loan on the downturn in the global economy.

“Unfortunately, it has been a difficult few years for the manufacturing industry globally and domestically,” she said, adding that Semona and the IDC were involved in a legal process.

Meanwhile, questions remain over whether Martins influenced the process of granting the IDC loan.

Mpangase rejected claims that Martins had influenced the process through his close ties with IDC chief executive Geoffrey Qhena, saying Qhena did not have a personal relationship with Martins and had only dealt with him in Martins’s former capacity as energy minister.

Semona Eco is a subsidiary of the Semona Group, which describes itself on its website as a “100% black- and female-owned conglomerate” that has “dynamic, innovative and effective solutions” in the global oil, gas, energy and information technology industries.

Several default judgments have been granted against Semona Eco after it failed to honour debt repayments. A draft order, dated February 27 2017, brought by Standard Bank, was for the return of a 2015 Range Rover worth R1.2‑million. A May 8 judgment was for unpaid rent of R2.6‑million on the company’s Sandton warehouse.

Masipa denies that the IDC loan was used to fund a lavish lifestyle.

“My Standard Bank matter is a private one. I bought a [car] via vehicle finance and the company got into trouble. It affected everything, including me personally, and therefore I sold the car and have paid up the outstanding debt,” she said in response to questions from the M&G.

But the rate at which the R60‑million loan appears to have been spent is staggering. Former Semona Eco employees, who spoke to the M&G on condition of anonymity, said the company began a process of dismissing and retrenching staff in mid-2015, just months after the IDC loan was granted.

The company was struggling to make contributions towards staff medical aids, salaries and pension funds. Momentum, the underwriter of Semona’s FundsAtWork Umbrella Provident Fund, liquidated the scheme in February this year. Giant Leap Workspace Specialists, an interior design company, filed its own application in the same month.

“During the financial difficulties, we did default on certain contributions and/or payments,” Masipa said.

But those close to Masipa allege that she had been “reckless in her spending” and squandered the loan on an elaborate lifestyle.

“It was ridiculous. She hired incompetent people, some of whom were her family members. She hired more people than she needed. Overseas vacations and trips became a norm,” a source close to Masipa said.

Another former employee said Masipa also splurged on a mansion in Bryanston in 2014. The house was sold for R10-million late last year. Before this, Masipa is believed to have rented an apartment at the exclusive The Regent MCC complex in Sandton in Johannesburg.

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.

Sihle Manda
Sihle Manda is a senior reporter at the GCIS. He previously covered local government and investigations at The Mercury, The Star and the Mail & Guardian.

Related stories

Advertising

Subscribers only

Ithala fails to act against board chairperson over PPE scandal

Morar asked to settle with the state and pay back the profit he made on an irregular tender

Vodacom swindled out of more than R24m worth of iPhones

A former employee allegedly ran an intricate scam to steal 8700 phones from the cellular giant

More top stories

Millers pay for duty-free wheat quota

The South African Revenue Services didn’t gazette the EU quota rates for about month, with no reasons given – and then suddenly published them

Austerity budget unpacked

The finance minister has said it’s not an austerity project. But the numbers and economists disagree

Will job creation schemes fix the unemployment crisis?

Experts say there is no evidence yet to show that government-funded employment schemes work long term

Will Cyril Ramaphosa have one or two terms?

The threat to the president’s rule comes not from the opposition, but from within the ANC
Advertising

press releases

Loading latest Press Releases…