Friday, October 23, 2020

R65m laundered through one of SA’s biggest unions

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Pensions meant for impoverished orphans of deceased mineworkers allegedly plundered

One of South Africa’s biggest unions was used as a conduit to launder about R65 million in pensions allegedly plundered from impoverished orphans of deceased mine workers.

City Press can today reveal that Bongani Mhlanga, the erstwhile owner of financial services group Mvunonala, allegedly used the SA Transport and Allied Workers’ Union (Satawu) as a conduit to move pension funds into his family’s trust and a company owned by him.

Details of the money laundering web are contained in a hard-hitting set of findings by forensic investigations firm SekelaXabiso Chartered Accountants.

In November 2017 Satawu’s interim task team commissioned the firm to look into the union’s finances for the period January 2012 to May 2015.

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This followed the discovery of suspicious transactions which the report says had the hallmarks of “insider trading, money laundering, theft, fraud and corruption”.

In November 2017 Satawu’s central executive committee appointed a task team to run the union after it suspended its former general secretary Zenzo Mahlangu.

Home affairs deported Mahlangu to Zimbabwe in May 2017 after discovering that he was an illegal immigrant.

SekelaXabiso’s report shows that R65 million from the Bophelo Beneficiary Fund was transferred into Satawu’s investment arm, Bashumi Investment Holdings.

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Bank statements seen by the firm’s investigators reveal that Bashumi later transferred R44.5 million to two entities which were under Mhlanga’s direct control.

“The analysis of bank statements of the Bashumi bank account over the period January 20, 2012, and May 5, 2015, revealed that an amount of R44.5 million was transferred to two entities, R12 million to the Gasela Family Trust and R32.5 million to Nzalo Afrika Investments.”

According to the report, the Gasela Family Trust belonged to Mhlanga and his family. Mhlanga was also the sole director of Nzalo Afrika.

The report shows that Bashumi had received a total of R77.9 million. All the money was later paid to other companies, including the Gasela Family Trust and Nzalo Afrika.

Two weeks ago City Press revealed that a report by SizweNtsalubaGobodo Grant Thornton (SNG Grant Thornton) last year had allegedly found that Mhlanga and his employees had irregularly transferred R67 million from the Bophelo Beneficiary Fund to Bashumi Investments, purportedly to acquire a stake in the Parktonian Hotel in Braamfontein.

The deal did not go through but the money was not returned to the beneficiary fund’s account.

The Bophelo Beneficiary Fund and Bashumi Investments had established a joint venture known as Bashumi Hotels.

It was Bashumi Hotels that would have eventually bought a stake in the Parktonian. SekelaXabiso’s findings reveal that Mahlangu, a one-time friend of Mhlanga, was the sole director of Bashumi Investments.

He was also the sole signatory on the company’s Standard Bank account.

The SNG Grant Thornton report had revealed that Mhlanga had allegedly splurged R21 million from Bophelo on a mansion at the Meyersdal security estate in Alberton, Ekurhuleni.

Funds totalling R280 million had also been irregularly transferred from Bophelo’s account into Mvunonala Properties, one of Mvunonala’s subsidiaries, the report claims. Of that, about R173 million was allegedly channelled into Nzalo Afrika.

THE UNRAVELLING OF MVUNONALA

The Bophelo Beneficiary Fund was administered by Bophelo Benefit Services, a subsidiary of the Mvunonala Group, which was liquidated last month.

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The beneficiary fund had been contracted by, among others, the Amplats Group Provident Fund (AGPF) to manage more than R500 million on behalf of more than 7 000 dependants of its deceased employees, most of whom were mine workers.

A beneficiary fund manages pension benefits of deceased people on behalf of their dependants.

The mismanagement of Bophelo’s funds started unravelling in mid-2017 following an exposé in City Press that the entity could not account for more than R255 million from its AGPF account.

In its 2017 financials, the Bophelo fund falsely claimed it owned “two investment properties” worth R255 million.

The fund had claimed that it owned an office block in Grayston Drive in Sandton and the Parktonian Hotel.

However, the Bophelo fund didn’t own the two properties.

Following City Press’ exposé, in June 2017 the Financial Sector Conduct Authority placed both the beneficiary fund and Bophelo Benefit Services under administration.

Juanito Damon, who was appointed to curate the companies, has concluded his investigation and sources told City Press that more than R500 million has allegedly been plundered from the beneficiary fund.

The Mvunonala Group crashed completely in March last year after VBS Mutual Bank was placed under curatorship by the SA Reserve Bank.

VBS was owned by Vele Investments, which had acquired Mvunonala for about R500 million in September 2017.

SATAWU ALSO PLUNDERED

SekelaXabiso’s report accuses Mahlangu of having misled the Satawu executive committee into believing that the union had paid R22 million in cash for its three-storey headquarters in Braamfontein.

Investigators found that the building, which Satawu bought in 2013, was financed by Standard Bank for R13.65 million.

The building was bought through a company called Bashumi Properties, in which Mahlangu was also the sole director.

The report further shows that Mahlangu and other office bearers had paid R18.4 million to three companies to do renovations at Satawu House.

But there appear to be no supporting documents to show how the money was used.

The failed purchase of a R4.8 million house at the Emfuleni Golf Estate in Vanderbijlpark shows that Mhlanga and Mahlangu were friends or business partners, the report says.

Mhlanga had signed the deed of sale for the house but estate agents had liaised with Mahlangu and congratulated him for buying the property, says the report, adding that the sale fell through because payment was not made.

“The transaction, however, demonstrates that the relationship between Mahlangu and Mhlanga was beyond a client/supplier relationship. This further supports the allegation that Mahlangu and Mhlanga were acquaintances and/or business partners.”

Further, the report alleges that:

. Mahlangu took away two minibuses which had been sponsored, by Salt Employee Benefits, for the union to use for two years;

. A Mercedes-Benz S350, worth R750 000, allocated to Mahlangu could not be accounted for; and

. A campaign truck worth R2 million was missing.

The report says “the union has been embroiled in a series of financial irregularities that culminated in it being unable to meet its financial obligations, including, but not limited to payment of salaries and other statutory obligations, such as the SA Revenue Service. The discovery of the dire financial situation of Satawu became more evident when the former general secretary of Satawu, Zenzo Mahlangu was deported by home affairs for being an illegal immigrant in South Africa.”

With more than 110 000 members, Satawu is one of union federation Cosatu’s biggest affiliates. The “serious” financial challenges and the collapse of governance structures were discovered after the departure of Mahlangu, SekelaXabiso’s report says.

WHAT THEY SAID

Satawu’s general secretary, Jack Mazibuko, said the report should not have been leaked as it was “work in progress”.

“But we can confirm that the contents of the report are true. We were told that Satawu House was bought for R22 million, only to discover that there is a R13 million bond. It means the R22 million was looted because it is not there. The report has now revealed to us that we paid more than R18 million to renovate our headquarters. But who buys a building for R13 million and renovates it for more than R18 million? There are no invoices or any supporting documents to show how the R18 million was spent.”

He said the union has laid charges of fraud, money laundering and corruption.

“The police have completed their investigation and they have handed their report to the National Prosecuting Authority. Two weeks ago we met prosecutors and they are ready to prosecute.

“They have applied to subpoena banks to submit all of Bashumi’s accounts from 2015 to date.” The union is in a bad shape financially, he said, adding that the rank and file had to know what happened to their money.

Mhlanga, who was also deported to Zimbabwe in April 2017, did not respond to messages sent to him requesting comment. Mahlangu could not be reached for comment.

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