/ 11 June 2020

Allegations of corruption at City Power

Graphic Citypower Twitter
(Graphic: John McCann/ M&G)

An executive at the City of Johannesburg’s power utility, City Power, is under investigation for allegedly using his teenage son’s company as a front to score kickbacks from companies contracted to the City.

In following the money, the Mail & Guardian has traced millions from City Power projects that were channelled into a network of companies and individuals, who allegedly have links to Percy Mphahlele, the utility’s general manager in charge of capital contracts related to the building of substations, service connections, bulk supply, electrification (including of informal settlements), street lights, cabling, metering connections and protection.

Some of the money ended up in the bank account of Hlelele Power Projects, whose sole director is Mphahlele’s 19-year-old son, Prince Mphahlele. Prince is also a business partner of 37-year-old Moloshi Seanego, who owns Anego Africa Power, a company allegedly sub-contracted by some of City Power’s contractors. 

The M&G has tracked at least R300 000 that was paid to Hlelele Power Projects in a space of a month between April and May. 

The payments have raised suspicions about conflict of interest and who the ultimate beneficiary is. The concept of ultimate beneficial ownership is used by law-enforcement agencies in money-laundering investigations and refers to a juristic individual who, despite not appearing on company documents, effectively controls and benefits from that company. 

The R300 000 payments are part of about some R6.8-million paid to Anego Africa Power by three City Power contractors, Nolewu Construction, Mohlawe Technology, and Machite Engineering. There is no evidence of wrongdoing on the part of these companies and the payments could have been for work done, which they claim to be the case.

According to company records, Anego was registered last July, about the same time that Hlelele was registered. Curiously, the records also show that Seanego and Prince are co-directors in Mokgalaka Power Technology, which shares the same business address as a former Anego Africa director, 21-year-old Phomelelo Maja.

Both Seanego and Prince also seem to have used the same Orange Grove address — barring what appears to be a typo — as their residential addresses in company records or when applying for finance. 

City Power, the City of Johannesburg’s power company, operates with at least a R2.9-billion budget a year and has been dogged by allegations of corruption for years. The City has also said its energy infrastructure is old, needs constant maintenance and has to be upgraded to ensuring people keep getting electricity. Last week the company’s board informed staff that chief executive Lerato Setshedi had agreed to take special leave after allegations of impropriety by a whistleblower.

The three companies that made payments to Anego Africa are part of a panel of companies that were awarded millions worth of contracts. 

According to a whistleblower’s report to the City’s anti-corruption unit connections, which is backed up by the money flows, these companies are a means to get money back to Mphahlele sitting as the general manager of City Power.

“These companies are given most of the subcontracting work on City Power projects and the person responsible for allocating is none other than Mphahlele. It is believed Anego made several deposits into Hlelele Power Projects [owned by Mphahlele’s son] as kickbacks for the work done, or as a vehicle to launder money,” said the whistleblower.

The M&G understands the whistleblower has handed over the information, including contacts, company records, and bank statements to the City of Johannesburg’s Group Forensic and Investigation Service (GFIS), as well the Hawks. 

Sifting through dozens of pages of Anego’s business account bank statements, the M&G found that money flow was erratic. There were also about 40 cash withdrawals made from the account, amounting to more than R234 000.

For a company that is meant to be a subcontractor on electrical contracting projects, the account is used for anything from purchases at grocery stores to petrol, home-building supplies and paying for Nando’s takeaways and meals at popular eateries in the Waterfall precinct.

The statements, which cover the period between March and May, show e-wallet transactions to dozens of cellphone numbers, amounting to more than R37 000.

The business account also shows that more than R140 000 has been used for shopping at Pick n Pay, Checkers, Builders Warehouse in Rivonia, Clicks and Doppio Zero, among others. 

Anego’s statements also show the company received a little under R1.8-million from Machite Engineering, R3.2-million from Mohlawe Technology, and about R1.6-million from Nolewu Construction during this period. 

These companies were each awarded in 2019 work worth R19.5-million to install and maintain streetlights around Johannesburg

Koketso Maphothoma, a director of Mohlawe, said his company paid Anego for subcontracting work it did on the streetlight contract. 

“We have multiple subcontracts on our projects, and for this one we used five companies, including Anego,” Maphothoma said. “When people come looking for subcontracting work, we never know who they are other than what’s on the paperwork. In any case, we could never have known who Anego pays or what they do with their money … Once we pay them, we really have no say.” 

Machite’s Virginia Teffo said only that Anego was a subcontractor before requesting emailed questions. She did not respond to the emailed questions. Nolewu Constructions’ Brandon Louw could not be reached on the cellphone numbers listed for him. 

City Power spokesperson Isaac Mangena said the utility’s board was informed by GFIS, headed by former Gauteng Hawks commander General Shadrack Sibiya, about the allegations. 

“City Power takes any allegations of corruption in a very serious light. Should there be substance in the allegations, appropriate action will be taken against the implicated individuals in line with City Power internal policies and procedures, he said. “In the event that any action against certain employees is necessary, the media will accordingly be appraised of any such steps. 

It is understood the investigation by GFIS is looking at these payments, as well as further monies paid to Hlelele Power by Anego. 

More than a week ago the M&G sent questions to Mphahlele at City Power, as per his request, but he never responded, not even to follow-up WhatsApp messages. The M&G asked Mphahlele if he was using his son’s company, Hlelele, as a front to receive kickbacks; whether he was running the affairs of the company; and what the relationship was between all the companies. The M&G has been unable to reach his son, Prince, as there are no listed contact details in his company records. 

Enter Seanego’s relative, Joe 

Attempts to reach Seanego of Anego Africa were unsuccessful as well; he did not respond to questions sent via text message and WhatsApp. But a relative of his, Joe Seanego — who owns a similarly named company, Anego Power Consulting and Projects, and previously worked at City Power — met the M&G

Joe, who is the chairman of football club Baberwa FC, denied any knowledge of Anego Africa or the payments to Mphahlele’s son’s company. But the M&G was able to link at least one payment of R10 000 from Anego Africa’s records to a staff member at Baberwa FC.

This week Joe confirmed that he has known Mphahlele, as well as his son, since childhood, but he denied any knowledge of payments made by Anego Africa Power.

“I don’t want to comment, because most of those allegations are not true and most of these things are internal fights [against Mphahlele]. I will clear my name with the Hawks. My name is just being used in these fights. My company which is consulting, is not getting any money from anyone,” said Joe.

He said people were trying to discredit him because of his involvement in football as the chairman of third-tier league club Baberwa FC. “This is not a good story at all because it is going to damage my team. I have to look after the players and this is not good. This boy [Prince] is still at school and this story is going to damage the boy,” said Joe. 

Joe’s denials are contradicted by company records, which show that the two Anegos share the same business address on Stirrup Road, Midrand Johannesburg.