Zondo fingers Edwin Sodi, Nthimotse Mokhesi and Thabane Zulu in graft in asbestos scandal

Part four of the Zondo state capture report has termed the Free State asbestos project rotten from the start and recommended that the government obtain a legal opinion on recovering the money wasted on it.

It has also recommended the criminal prosecution of businessman Edwin Sodi, the former head of the Free State department of human settlements, Nthimotse Mokhesi, and the former director general of the national department of housing, Thabane Zulu, for their role in the scandal that cost the state R255-million.

The National Prosecuting Authority should notably consider corruption charges against Sodi and Zulu over a R600 000 payment made to a car dealer in KwaZulu-Natal for the benefit of the latter, given the likelihood that it constituted a bribe for authorising the project.

The report makes no direct findings against former Free State premier Ace Magashule, who is facing fraud, corruption, theft and money-laundering charges in connection with the project in a case where his co-accused include Sodi, Mokhesi and Zulu. 

The Free State high court in March dismissed an application by Magashule, Sodi, Mhokesi and Zulu to have the charges against them thrown out. Sodi, accused number three in the case, had argued that the state’s reliance on any of his testimony to the commission compromised his fair trial rights. The state some 18 months ago moved to attach Sodi’s assets in a bid to recover funds lost in the scandal.

The commission found that Mokhesi had chosen not to exercise any scrutiny when the provincial department was confronted with an unsolicited proposal by Sodi, who headed Blackhead Consulting, and Igo Mpambani’s Diamond Hill Trading to audit and remove asbestos fixtures in the Free State in a joint venture.

The project was two-fold, with the audit price tagged at R230-million and the second phase of removal, demolition and reconstruction set to cost R3.8-billion. Mokhesi fully intended the work to proceed to the second phase, although he failed to disclose the full cost, the commission found.

“This was not a Free State Asbestos Project. It was a Free State Asbestos Project Debacle,” the report noted, adding that the intention was plainly that not the people of the province but the consortium and a handful of officials who smoothed its path would benefit.

“The conceptualisation and implementation of this project are such as to suggest that this project was a considerable scam from its inception. 

“There was every indication from the outset that the project was designed to benefit a certain business consortium and for financial benefits to flow, at least, to the head of the provincial department of human settlements Nthimotse Mokhesi and the director general of the national department of human settlements, Thabane Zulu.”

Mokhesi signed an instruction to undertake the work on 2 December 2014.

The commission stressed that the proposal to undertake the audit came “out of the blue”. 

At the time, it said, there were no plans in the province to set aside funds for asbestos eradication and all indications were that other priorities were considered more pressing. 

Yet it came to fruition at surprising speed.

The cost was set out in a report signed by Mpambani, who was murdered in Sandton in 2017.

The commission found that attempts by Sodi to claim in his testimony that he was ignorant of the details and had relied on his late partner, were not credible.

“His explanations are unconvincing and his explanations do not ring true.”

This included his denial of any knowledge of people who were to receive R25-million from their joint venture as part of the project. The problem for Sodi, the report found, was that Mpambani had made no effort to conceal these payments from him, having borrowed his computer to prepare the spreadsheet on which they were detailed.

The report therefore concludes that Sodi received and understood the schedule.

His denials included that he could not have guessed the identity of the person identified in the spreadsheet as “AM” — Magashule’s initials. The commission found that Magashule’s personal assistant, Maroadi Cholota, had asked Mpambani to pay$12 000, and that Sodi made payments of R6.4-million and R174 760 to former ANC treasurer general and health minister Zweli Mkhize and former ANC spokesman and current deputy state security minister Zizi Kodwa respectively.

Of the payments to Mkhize, Sodi testified that these went directly to the ANC’s account. Mkhize denied ever personally having benefited from the money.

“There are many difficulties in comprehending the nature of the assistance given by Mr Sodi to the ANC,” the report noted.

This was partly because the way in which Sodi recorded the payments leaves Mkhize, current ANC treasurer general Paul Mashatile and Labour Minister Thulas Nxesi — who also received transfers — open to suspicion that they may have received the money in their personal capacity.

It posed the question as to what they may have done for Sodi in return, the commission added. 

The commission found that Mokhesi’s attitude to the proposal was cavalier, with him seeing no need to interrogate the value of the project.

“Merely on receipt of the proposal and without much further ado, Mr Mokhesi already had a view that monies should be paid over to the Blackhead/Diamond Hill Joint Venture for the purposes claimed in the proposal and the Mr Mokhesi’s only interest was in in finding the method for implementation thereof.”

It rejected the explanation offered by Mokhesi and Sodi as to why the latter’s company contributed R650 000 to the purchase of the house in which Mokhesi lived at the time of his testimony to the commission.

The commission said the manner in which the contract was concluded, in breach of treasury regulations, did not speak of ignorance or incompetence. There was a deliberate agenda to pursue unlawful ends.

Treasury regulation 16A6.6, which allowed one government entity to participate in a contract arranged by another by means of a competitive bidding process, was used as a ruse to legitimise the Free State contract on the basis that the consortium already held a contract with the Gauteng housing department, which had been confirmed by the national department.

The problem was that Blackhead Consulting’s appointment as a service provider on asbestos removal would lapse in late 2014 and the province had no arrangement with Diamond Hill trading and the consortium they formed that could be extended to the Free State.

“In each part of the process there was deceit.”

Once the proposal landed, there was strikingly no attempt to weigh it against similar past endeavours in other provinces or to ask whether or why it should be done sooner rather than later — or to inquire as to the repute of the businessmen making it. 

The commission found that Mokhesi made a telling admission when he conceded that the joint venture had not been included upfront in negotiations because, if it had, there would have been no way the Gauteng contract could be transferred to the Free State. And it criticised him as having been “duplicitous in the extreme”.

He knew that the project was two-fold and that the sum of R255-million paid over did not cover asbestos removal but only auditing, but failed to mention the full cost. His testimony to the commission carelessly indicated that he was always planning to commit the department further “to the tune of billions of rands of taxpayers’ money”.

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