This week’s arrests by the Hawks of those people linked to money laundering at Bosasa are likely to be just the first in a far bigger case.
The charges stem directly from a 2009 special investigating unit (SIU) report into Bosasa and the department of correctional services. Although the National Prosecuting Authority received the report a decade ago, the matter was not dealt with.
But the charges reveal only a snippet of an allegedly much larger scheme by the firm to generate “clean” cash needed to pay off state officials.
All those arrested by the Hawks on Wednesday — former Bosasa chief operating officer Angelo Agrizzi, the company’s former chief financial officer, Andries van Tonder, former department of correctional services chief financial officer Patrick Gillingham, former Bosasa senior manager Frans Vorster and Bosasa chief accountant Carlos Bonifacio — face money-laundering charges.
These relate to the favours allegedly paid by Bosasa to Gillingham and the complex scheme to conceal their true source.
Gillingham’s confidant, former prisons commissioner Linda Mti, who handed himself over to the authorities on Thursday, has not been charged with money laundering, despite allegedly receiving almost R1-million in favours.
Gillingham and Mti have been accused of aiding Bosasa’s monopoly of department tenders. As the accounting officer, Mti is accused of acting to approve the tender awards. Gillingham was allegedly the operational person who oversaw the bidding, adjudication and evaluation to ensure Bosasa emerged on top every time.
Bosasa has held multimillion-rand tenders with the department since 2004, from which it has amassed billions of rands. Four of these tenders were the subject of the SIU’s investigation.
The arrests and their timing have given rise to speculation that the Hawks might be putting pressure on the six to deliver evidence (in return for lighter charges or full immunity) that could catch bigger fish, including Bosasa chief executive Gavin Watson, politicians and senior civil servants, such as the National Prosecuting Authority’s Nomgcobo Jiba and Lawrence Mrwebi.
Both Agrizzi and Van Tonder gave evidence before the Zondo commission of inquiry into state capture, incriminating themselves in allegations of rampant corruption and money laundering at the company.
The pair detailed what they said was an elaborate strategy by Bosasa for generating cash, most of which they allege was kept in the company’s coffers and used to bribe officials in government departments and state entities.
The draft charge sheet against Bosasa reveals that the value of favours received by Gillingham is likely to be more than R3.5-million, including a house worth R1.8-million that Bosasa bought him.
Speaking at the Zondo commission, Agrizzi alleged that, in 2004, Watson tasked Vorster with purchasing a new Mercedes-Benz E-class for Gillingham.
This came soon after Bosasa was awarded the 2004 catering tender by the department of correctional services.
Vorster corroborated this. During his testimony he claimed that four more cars were bought by Bosasa for Gillingham and members of his family. Van Tonder detailed a complex trail of money transfers meant to conceal the true identity of the entity that had bought the cars.
But the two men’s testimonies reveal that Bosasa’s money-laundering scheme goes far beyond Gillingham. They claimed that Bosasa would conceal cash transactions by generating fake invoices in the name of companies that were on the brink of liquidation.
Bosasa would also allegedly place large orders for liquor and food with the company’s catering suppliers but, instead of delivering the invoiced items, agents of these companies would deliver cash back to Bosasa and take a cut.
Agrizzi alleged that Watson played a role in hatching these money-laundering schemes and that he personally instructed him to make monthly cash payments to the accountants who co-ordinated them.
Watson, who is not directly implicated in the SIU report, has not been arrested in relation to the money- laundering charges. He previously described Agrizzi’s testimony as “nonsense”.
Gillingham and Mti, the only government employees charged so far, are accused of opening up the correctional services department for capture by Bosasa by bulldozing over public finance regulations, department policy and tender evaluation and adjudication rules.
In some of the matters, such as the department’s 2004 tender to outsource catering in seven prisons, project manager Gillingham was found to have sidelined the department’s divisions that are responsible for feeding prisoners and created his own specifications for the three-year, R239-million a year contract.
Gillingham, who was a regional commissioner before his appointment as project manager, allegedly surprised senior department officials with his own specifications, which overlooked critical aspects such as provisioning and the preparation of food, and ration scales, and instead focused on training and equipment.
Gillingham, who at the time possessed a matric certificate and had no expert knowledge of nutrition, included unusual specifications, including the installation of security cameras and a fully functional integrated maintenance department. The specifications were found to have been sent to Gillingham from Agrizzi’s computer.
Mti and Gillingham’s legal representative did not respond to the Mail & Guardian’s questions concerning the arrests.