Court papers implicate the former ANC treasurer-general in kickbacks worth R4.5m for facilitating deals with the PIC
Minister of Cooperative Governance and Traditional Affairs Zweli Mkhize is alleged to have repeatedly used his influence in his former position as the ANC’s treasurer-general to help facilitate business deals involving money from the Public Investment Corporation (PIC).
In the week that the entire 10-member board of the PIC resigned, City Press can report on at least three deals for which Mkhize was allegedly roped in to exert pressure on the body.
One of those deals saw him flown to Abu Dhabi, the capital of the United Arab Emirates (UAE), at the expense of the company involved.
New court documents, filed in December, shed light on apparent political manoeuvring behind a R210 million oil investment by the PIC which now directly implicates Mkhize.
In that deal – brokered in 2016 and the news of which first broke last year – Mkhize allegedly stood to earn a R4.5 million facilitation fee.
The court papers also implicate a retired general, known ANC deal fixer Joseph Nkadimeng, and JSE-listed company Efora, previously known as SacOil.
But even before then, between 2015 and 2016, a different set of court papers in an unrelated case contains claims that Mkhize allegedly brokered two deals involving an Israeli company, one of which earned his “people” a R1 million payment.
Those court papers, and the 2 000 pages of transcripts of meetings accompanying them, have now been handed to investigators at the state capture commission of inquiry.
The two deals relate to the local subsidiary of an Israeli company called Tahal which was established late in 2014.
Tahal’s mission in South Africa was to score government work in the water and agriculture sectors.
One was for a prison farming scheme to let prisoners grow their own food.
The other was related to a farming deal in Limpopo. Although the prison deal failed to proceed, the farm deal went ahead.
Tahal’s boss, David Hirschowitz, died recently and the local company was liquidated.
Last week, Mkhize denied any wrongdoing.
“When I was treasurer-general of the ANC, various companies – both listed and unlisted, big and small businesses – requested meetings with me. They presented their business plans to me, their future plans and various areas of interest,” he said.
“My role was mainly to engage them on ANC policies with regard to growing the economy, job creation and the role their businesses could play in transforming the economy.
“The insinuation that when I engaged with business, it was with an unscrupulous intention of doing them a favour or obtaining a ‘facilitation fee’ for them to secure work, contracts or deals with government, is false, unfounded and demeaning.”
In her papers before the labour court in 2018, former Tahal chief executive Neshika Pillay-Naidoo said Mkhize was involved in a meeting about a prison contract for Tahal on January 21 2015.
The meeting, held at the Fire & Ice hotel in Melrose Arch, Johannesburg, was also attended by a senior sitting government minister, whose name is known to City Press.
A senior ANC official had already been flown to Israel in 2014 to visit prison farms – farms managed by Tahal on which prisons produced food for inmates.
In her papers before the labour court, where she fought a constructive dismissal case against Tahal, Pillay-Naidoo states that Mkhize was allegedly brought in by Tahal to help facilitate the PIC’s investment in the other deal involving a farm in Limpopo.
Hirschowitz, Mkhize and the ANC official were allegedly flown to Abu Dhabi at Tahal’s expense.
Their mission was to secure funding from the Royal Group, a conglomerate in the UAE, to conduct a feasibility study, which would be taken to the PIC.
The group apparently went there with two separate projects mooted – one of which was a “private thing” involving Mkhize and “his people”, transcripts say.
In transcripts of meetings that Pillay-Naidoo recorded, Tahal executives discussed their dealings.
About the trip to Abu Dhabi, Hirschowitz tells her: “Obviously, I took Zweli there, you know, because they have bigger issues. Zweli brought his project, which is quite a huge project.”
After the trip, payments were allegedly made to “Zweli’s people”.
“There is a million rand that I’ve got to pay out ... for something that I have to do for one of Zweli’s people,” Hirschowitz says.
“These people don’t come for nothing, you know. So, I’ve got to do that.”
Regarding the subsequent PIC funding that Tahal wanted, Hirschowitz told Pillay-Naidoo that Mkhize would handle high-level discussions.
“Zweli said to me: ‘You guys had better sit with the soldiers at PIC.’ He will engage at the high level, once we’re ready,” the transcript states.
Oiling an oil deal
This is the second time Mkhize is alleged to have taken a deal to the PIC.
Court documents, filed in December by The Noble Company – which has as its directors deal fixer Nkadimeng and retired general Thanduxolo Mandela – contain claims that another deal was discussed in May and June 2016.
These 2016 meetings were held to iron out details of a scheme to secure R210 million from the PIC to fund SacOil’s buyout of its shareholders.
The idea was that The Noble Company and ANC-owned investment company Zonkizizwe would help independent fuel wholesaler Afric Oil obtain the PIC loan by enlisting Mkhize’s help. Afric Oil would use the money to buy out minority shareholders – including Nkadimeng’s cousin Tseke Nkadimeng’s company, Moopong, as well as Pembani Group.
SacOil/Efora would then buy Afric Oil for shares, not cash. Afric Oil is now owned by SacOil/Efora.
One of three meetings about the deal was held in June 2016 at the ANC’s headquarters at Luthuli House in Johannesburg.
In attendance were Mkhize, Zonkizizwe’s Paul Langa and former spy boss Billy Masetlha, as well as Joseph Nkadimeng and Afric Oil’s chief executive, Tseke Nkadimeng. At the meeting, the papers say, Tseke made a presentation of Afric Oil’s “objectives for seeking the PIC loan”.
The court papers reveal new details about the alleged “facilitation fees” owed to Mkhize, which were reported on by the Sunday Times last year.
The Noble Company claims the fees totalled R7 million and of this amount:
• R4.5 million was for Mkhize, “exclusive of VAT”;
• R1.25 million was for Zonkizizwe, plus R187 500 VAT; and
• R1.25 million was for The Noble Company, plus VAT of R185 000.
These sums were based on a 3.5% fee on the total R200 million amount that Afric Oil wanted from the PIC, the court papers state. While Zonkizizwe sent Afric Oil a threatening lawyer’s letter as early as October 2017, Noble is now taking formal legal steps.
The court papers state that an initial fundraising agreement was “partially written” out, but afterwards the parties agreed to do business verbally “due to the sensitive nature of the matter”. The PIC loan was agreed to shortly afterwards in October 2016 and paid out in February 2017.
“[Noble] duly performed and discharged its responsibilities, as provided for in the capital raising agreement, through soliciting the assistance of Zonkizizwe and the former ANC treasurer-general, Mkhize,” the court papers state.
A major new allegation made by Noble in this case is that SacOil, now Efora, was always part of the “sensitive” scheme and was meant to pay part of the facilitation fee.
What they said
Mkhize said the allegation that he was part of facilitating a PIC loan for the Afric Oil deal was “totally untrue, unfounded and very mischievous”.
Masetlha has previously admitted to helping Afric Oil for a fee, which he says was not paid. Efora did not respond to emailed questions sent to the company on Thursday.
However, it has filed a notice of intention to defend the action. Mandela received questions on Thursday and acknowledged receipt of them, but did not respond.
Joseph Nkadimeng did not respond to calls and text messages, but previously confirmed his involvement.
No pot of gold
Despite the machinations, the Afric Oil deal has not turned out well for anyone. Not only did the alleged fixers not get paid, Efora/SacOil has been unable to repay the R210 million loan to the PIC.
In May 2018, the PIC gave it a 12-month moratorium on starting to repay its debt, and the original three-year repayment period became five years.
That still was not enough. Adverse market conditions led to Efora/SacOil breaching the covenants in the PIC moratorium, which is now under negotiation again.
This was revealed in its financial statements, released at the end of November last year.
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