Gangster State
Page 28
According to documents contained in the IgoFiles, on 22 December 2014 the FSHS transferred R20 million to an FNB business account that had been jointly opened in the names of Blackhead Consulting and Diamond Hill Trading 71. This payment represented a deviation from the initial plan. As mentioned earlier, the IPW signed by Mokhesi promised an upfront payment of R51 million, payable on 1 December.
Several sources explained to me that the department’s finance office was completely caught off guard by the new contract Mokhesi suddenly brought to the table. ‘There was no business plan or budget
for this asbestos thing we were now hearing about,’ a current FSHS
staffer told me. ‘We asked the HOD where we were going to get the money to pay for this thing.’ As an unforeseen expense, the R51-million prepayment was simply too large to pay out all at once. The department instead opted to break up the prepayment into smaller amounts, of which the R20 million was the first. This was followed by a second payment of R31 million, which was transferred to the Blackhead–Diamond Hill FNB account on 15 January 2015. The entire haul of more than R200 million was eventually paid out in eight batches.
According to insiders familiar with the saga, some FSHS staffers queried the prepayments. They were concerned that proper procedures were not followed with regards to the appointment and payment of Blackhead and Diamond Hill. At that point, Magashule’s alleged involvement in the deal came to the fore. ‘Ace worked behind the scenes with Mokhesi and other senior managers to get the asbestos thing going, but his role was revealed when some officials questioned the contract,’ alleged one department insider. ‘They were told that Ace was behind the contract and that they should stop questioning things if they wanted to keep their jobs.’ In response to staffers’ concerns over the prepayment, Mokhesi and other senior managers apparently told them that Ace had issued ‘political orders’ to ensure Blackhead and Diamond Hill got paid.
22
A blueprint for bribes
One of the most damning documents in the IgoFiles is an innocuous-looking Excel spreadsheet titled ‘Free State Asbestos’. One cannot imagine that many corrupt tenderpreneurs would be reckless enough to create a document detailing exactly how they intend to share their earnings from government with officials and politicians, yet this spreadsheet appears to be exactly that.
It is not clear whether Mpambani or Sodi created the document, but its creation date – November 2014 – is reflected in the file’s metadata.
It was later emailed between the two businessmen, and went through various revisions. In essence, it appears to be a blueprint for the distribution of bribes to Magashule and officials from the Gauteng, Free State and national housing departments who played a role in the asbestos auditing contract. Its very existence may explain why Magashule and others wanted the FSHS to pay the Blackhead–
Diamond Hill joint venture, despite concerns from mid-level officials that the deal looked suspicious.
Emails contained in the IgoFiles show that Sodi sent a version of this document to Mpambani under the subject line ‘Fees Calculation’.
Mpambani then altered the document. Later, in March 2015, in a draft email intended for Sodi, Mpambani wrote the following: ‘Sho Eddie, please note that payments in yellow are the ones you will take care of and rest, us. As discussed, I have effected the payments in 2 batches.
Kindly find attached the updated schedule with minor adjustments.’ By this point, Blackhead–Diamond Hill had received its upfront payments
worth R51 million.
The spreadsheet, on face value, provides rare insight into how corrupt government deals involving millions of rands are put together. Under the heading ‘cost of business’, the document lists several names, many of them abbreviated, with the amounts that each was due to receive. A certain ‘AM’, for instance, was to be paid R10 million. ‘TZ’ would receive R10 million, while ‘TM’ would receive R5 million. ‘JT’ was to get R3 million, ‘MEC’ R2.5 million and ‘OM’ R1 million. Those unabbreviated included a company called Mastertrade (to be paid just over R44 million) and an individual called Diedricks (R1 million). The
‘total cost of business’, reflected on the spreadsheet, amounted to R82.6 million. The ‘project value’ of R255 million minus this ‘total cost of business’ left an amount of R172.4 million. This was the profit Blackhead and Diamond Hill would split after settling their expenses –
R86.2 million in pure profit each. According to the spreadsheet, the third parties were set to receive their ‘fees’ in staggered tranches coinciding with payments received from the FSHS in the Blackhead–
Diamond Hill joint FNB account. Mpambani’s Diamond Hill would be responsible for making most of the payments to third parties, according to the spreadsheet. This may explain why Mpambani did not pay Sodi’s company exactly half of each of the first three payments from the FSHS, seeing as he would have needed to settle the third parties’
claims first.
I showed the document to a source who had been privy to certain aspects of the asbestos auditing scheme. Working through the spreadsheet, he suggested the initials ‘AM’ stood for Ace Magashule.
The source thought that ‘MEC’ could be Mathabo Leeto, the former mayor of Matjhabeng and current Free State MEC for sport, arts,
culture and recreation. My source explained that Leeto maintained close ties with Mpambani after her tenure as mayor, and that she sometimes acted as a facilitator for some of Mpambani’s deals in the Free State. This may have been the reason why she was included in the asbestos auditing scheme, the source suggested. After Mpambani’s death, Leeto posted the following comment on Facebook: ‘I am so hurt.
Igo was like a younger brother to me.’
Leeto sang a different tune after I asked her about her ties to the late businessman. ‘There is no relationship between MEC Leeto and Mr Igo Mpambani including his family other than the former being known as a person who grew [up] and stayed in her neighbourhood in Welkom,’ said her spokesperson. Leeto denied that she had ever influenced a contract awarded to Mpambani, and she claimed she was unaware of the asbestos audit deal. ‘MEC Leeto harbors no knowledge of her name being used in any documents by Igo Mpambani and further denies that she received a payment of R2.5 million from Igo Mpambani.’
A senior ANC figure from the Welkom area told me that the Leeto family was almost certainly involved in the asbestos auditing scheme.
‘When that deal was being put together, Mathabo’s husband, Lehana, spoke about how he was going to be involved in the project,’ said this source. ‘He went into quite a lot of detail, like the proposed sites near Welkom and Odendaalsrus where the asbestos roofs would be safely disposed of once the audit was finished.’
Leeto denied this. ‘The MEC has established from her husband that the said allegations are devoid of any truth,’ said her spokesperson.
The source with whom I shared the spreadsheet suggested that ‘TZ’,
‘OM’ and ‘Diedricks’ were also government officials involved in the
asbestos saga, and that ‘JT’ was most likely retired soccer star Jimmy Tau. I asked this person how Tau had got involved. Apparently, the former Kaizer Chiefs player had represented Nomvula Mokonyane, under whose reign as Gauteng premier Blackhead had first started clinching major government contracts. This sounded a little far-fetched, but I then remembered having seen something about a link between Tau and Mokonyane before. In fact, it was EFF leader Julius Malema who first claimed at a press conference in August 2016 that Tau was one of the younger men with whom Mokonyane was allegedly romantically involved. 1
The spreadsheet is compelling, but it does not prove that Magashule and the others received their share of the asbestos auditing contract loot. Luckily, further information and documents in the IgoFiles show that Mpambani did indeed make payments in accordance with the spreadsheet’s payment schedule. Bank records in the trove of documents reveal that Mpambani channelled payments totalling exactly R19 983 427.16 fr
om the Blackhead–Diamond Hill joint FNB
account to several recipients on 23 December 2014. This was a day after the FSHS made the first payment of R20 million.
That exact amount, to the very last cent, appears in the spreadsheet under the heading ‘first payment’. According to the spreadsheet, it was the sum of ten separate payments that Mpambani had to make to third parties after Blackhead–Diamond Hill received its first payment from the FSHS. The document lists a payment of almost R13.3 million to Mastertrade; R1 million each to AM, TZ, TM and MEC; R500 000 to Diedricks; R200 000 to OM; R1 million to ‘others’; R500 000 to
‘Martin’; and R500 000 to Diamond Hill, Mpambani’s own company.
This all equalled exactly R19 983 427.16. This amount is captured as a
‘consolidated payment’ in bank records for Blackhead–Diamond Hill’s joint FNB account, meaning it is the sum of several payments.
According to bank statements in the IgoFiles, Mpambani transferred almost R13.3 million to Mastertrade’s FNB account on 23 December, exactly as listed in the spreadsheet. Despite the payment records, Mastertrade’s director, Sello ‘Sydney’ Radebe, flatly denied that his company had received the money. He also denied that he had in any way participated in the asbestos project. Radebe’s behaviour only fuelled my suspicions about the entire affair. Mastertrade’s company records showed that it was operated from an office in Sandton, but I established that Radebe hails from the eastern Free State. According to his CV, Radebe grew up in Phuthaditjhaba, in QwaQwa. He worked at the QwaQwa Development Corporation, which has since been incorporated into the FDC. A source who worked with Mpambani told me that Radebe was close to then Gauteng ANC chairperson Paul Mashatile.
A noteworthy observation is that Mpambani was in Bloemfontein when he effected these first payments. Records from the Grasmere toll plaza south of Johannesburg and the Brandfort toll plaza near Bloemfontein show that he passed through these points on 23
December. The following day, he withdrew a few thousand rands in cash from an FNB ATM in Bloemfontein’s Brandwag suburb. This ATM is located 2.3 kilometres from Free State House, the official residence of the premier. Records show that Mpambani frequently withdrew money from this and other ATMs near Magashule’s residence shortly before or after his company received a payment from the FSHS. So often, in fact, that it became a pattern.
On 23 December, Mpambani moved R3.5 million from the joint
venture’s FNB account to an account held by 605 Consulting Solutions, the company he had registered earlier that year. The next day, Christmas Eve, he paid R1 million from 605 Consulting’s account to Kingdom Impact General Trading. The payment was marked as
‘Consulting Services Invoice 001’. It was not a once-off payment. On 24 August 2016, just after the FSHS transferred its final payment to the Blackhead–Diamond Hill joint account, one Motsamai Kareli emailed an invoice for R990 000 to Mpambani for ‘professional engineering services’. It was made out to 605 Consulting Solutions.
That same day, Mpambani transferred R990 000 from 605
Consulting’s FNB account to Kingdom Impact. We therefore know for a fact that Mpambani channelled at least R1.9 million to Kingdom Impact in two payments that were made right after Blackhead–
Diamond Hill received money from the Free State government.
For those in the business of uncovering corruption, money laundering and other dodgy dealings, terms such as ‘consulting services’ count among the most common red flags. Paying third parties for vaguely described services such as consulting is one of the ways in which facilitators of bribes channel large payments to venal politicians or officials. And when the third party is unable to provide evidence that it performed any actual work, the alarm bells start to sound.
Kingdom Impact’s sole director is a woman named Thulisiwe Kareli.
Her husband, Motsamai Kareli, is the founder and senior pastor of the evangelical Empowerment Ministries International church in Bloemfontein. While Thulisiwe is also a pastor and heavily involved in the church, she has held other jobs. I found her name on a 2015 tender document from Centlec, the Mangaung metro municipality’s state-owned power distributor. She worked in Centlec’s procurement
division. At the time, FSHS HOD Tim Mokhesi was a Centlec board member. Other board members included Kenosi Moroka and Blacky Seoe, both former business partners to Magashule.
Empowerment Ministries International can also be linked to Magashule and Mathabo Leeto. According to the former’s diary, he delivered a keynote address at an Empowerment Ministries event in November 2012. And in August 2017, Leeto was a speaker at the church’s Affluent Women’s Conference hosted by Thulisiwe. Sources in the Free State’s political circles told me that Magashule kept a few pastors and other religious figures close to him. These clergymen would sometimes include messages of support for his administration in their sermons. One contact, a senior provincial official, told me Motsamai Kareli was one of Magashule’s ‘favourites’. Kareli denied this. ‘I have no connections with Mr Makgashule [ sic] or Mr Tim Mokhesi. I doubt they even know me,’ he responded when I asked him about it.
This is hard to believe. The Karelis’ listed residential address is a property in the upmarket Woodland Hills Wildlife Estate on the outskirts
of
Bloemfontein.
Mosidi
Motsemme,
Magashule’s
‘Bloemfontein wife’, and Moreki Moroka, wife of Kenosi Moroka, also have houses here. Furthermore, Motsamai Kareli is a director of KICS
Holdings. According to the entity’s website, one of its clients is E’tsho Civils, the engineering firm owned by Tlale Mokgadi, the businessman who travelled to Cuba with Magashule in January 2015. ‘You won’t be doing business with E’tsho or Mokgadi without crossing paths with Ace at some point,’ one of Magashule’s former confidants told me.
Kareli later put me in touch with his lawyers, none other than Moroka Attorneys, the firm owned by Centlec board member Kenosi Moroka,
Magashule’s former business partner and one of his closest associates.
A former member of Magashule’s provincial cabinet also poured cold water on Kareli’s assertion that he did not know the former premier.
‘Ace was going to get some award from Kareli’s church in around 2012. He couldn’t attend that event, so he sent one of his MECs,’ this source told me.
I asked the Karelis to explain why Kingdom Impact received almost R2 million from Mpambani for ‘professional engineering services’
when neither of them are registered with the Engineering Council of South Africa. I also applied to inspect Kingdom Impact’s share register.
My queries and requests elicited the following response from Moroka Attorneys: … cognizance needs to be given to the type of economy that the country is currently in and as such any financial information of our clients and/or any individual that is made public, such disclosure opens a person to vulnerability in relation to other negative aspects in our country and these includes [ sic] but not limited to crime and other criminal elements and activities that such information can be used in.
That the Karelis are unable or unwilling to explain the nature of the services provided by Kingdom Impact to Mpambani is cause for concern. A simple peek by any law-enforcement agency into the company’s bank records would no doubt yield some interesting results.
23
Havana nights
A bagman is a person who collects or distributes illicitly gained money, such as bribes to public officials. Igo Mpambani seemingly became a bagman for Ace Magashule when the first millions from the Free State government began to flow into the Blackhead–Diamond Hill joint bank account.
Sources from the province’s political circles, including senior former and current officials, told me that they increasingly saw the Sandton-based businessman in Magashule’s company from around January 2015. These sources held varying views on Mpambani’s prominence among the tribe of contractors
, businesspeople and other moneymen who seemed to orbit around the premier. One current MEC said he knew that Mpambani was somehow linked to Magashule, but that he was under the impression that the young businessman had played second fiddle to Magashule’s more established business associates.
‘There would always be this group of hangers-on at ExCo meetings and other gatherings. They all vied for Ace’s attention, some with more success than others. I always thought Igo was a bit of a wannabe,’ this official told me.
One of Magashule’s former confidants had a different opinion. ‘If Igo was trying to get into Ace’s inner circle, he was making good progress,’
he told me. This impression is supported by documents in the IgoFiles.
In the nearly two years between Blackhead–Diamond Hill’s first payment from the FSHS in December 2014 and the final transfer in August 2016, Mpambani was invited by Magashule’s office to several
distinguished events, including the premier’s State of the Province addresses.
But the devil lay in the finer detail. Mpambani’s bank records allowed me to build a detailed timeline of when he was spending his money, and where. I compared this dataset to Magashule’s official diary. The results were interesting, to say the least. At times, it looked like Mpambani was literally following Magashule around the country.
Other documents from the IgoFiles and additional source accounts confirmed that the young tenderpreneur was indeed spending a lot of time with Magashule and even accompanying him on trips abroad.
A case in point is a trip to Cape Town in early January 2015, between the first payment of R20 million from the FSHS to the Blackhead–
Diamond Hill joint venture in late December 2014 and the second payment of R31 million on 15 January 2015. On Wednesday 7
January, Magashule flew to Cape Town. According to his diary, he attended an NEC meeting there, met with then social development minister Bathabile Dlamini and enjoyed a ‘private lunch’ with controversial tender mogul Vivian Reddy. That Saturday, 10 January, Magashule attended the ANC’s 103rd birthday celebration at the Cape Town Stadium in Green Point before flying back to Bloemfontein the following day.