Corruption net closes in on KZN big boys

How tens of millions of rands were siphoned off under the guise of bringing the North Sea Jazz  Festival to Durban.

The hot winds that signal political climate change may, it seems, finally be blowing through the foothills of Kwa-Zulu-Natal.

This story is about how R29-million of public money that was intended to fund a visit to KZN by the North Sea Jazz Festival that never happened - was stolen by senior ANC politicans and their co-horts.

But before we tell you the exciting news, a recap from nose154 of August 2012:

“As, increasingly over time, shady businessmen and other criminal elements in pursuit of government contracts, favours and protection have corrupted South Africa’s politicians and infiltrated its political structures, so the politicians in power and friends in crime have made common cause in undermining the country’s law-enforcement agencies.

“The word is out: to survive in the police or prosecution services you must be either very brave – or bent.

“But there is another element to the story: as faction feuds and power struggles occur in the political establishment or major areas of the economy dominated by criminals (such as Eskom), the same feuds and power struggles now invariably ripple through the law-enforcement services, where each faction has its friends.”

Noseweek related several examples in that issue – all worth re-reading today – but one is particularly relevant here: “Also in July 2012, KwaZulu-Natal’s acting prosecutions head, Simphiwe Mlotshwa, was removed from his post – supposedly in line with government policy which does not allow for someone to hold a senior post in an “acting” position for more than 12 months. (He had already been there for 18 months, without comment or complaint from anyone.)

“It is widely accepted, however, that Mlotshwa was removed from the post because of his determination to prosecute KZN Premier Zweli Mkhize for his role in the “Three Amigos” fraud case – the Three Amigos being Economic Development MEC Mike Mabuyakhulu, former Health MEC Peggy Nkonyeni (who subsequently became Speaker in the KZN legislature) and South American businessman Gaston Savoi.

“Savoi is accused of bribing the duo – as well as other civil servants – to sell over-priced water filters and other high-end pieces of medical equipment to the province. (The three KZN politicians were accused of soliciting a R1-million bribe from Savoi.) The expectation now is that the case will not proceed.”

It didn’t.

The Mail & Guardian put a new spin on the story when it reported claims of “interference” by advocate Lawrence Mrwebi, the head of the Specialised Commercial Crimes Unit, in this and other politically sensitive cases.

Mrwebi was the NPA official who controversially ordered the withdrawal of fraud charges against former crime intelligence boss Richard Mdluli.

The M&G reported seeing internal memos that showed that Mrwebi had also intervened in the “Three Amigos” case and in the “Madhoe” case which was linked to the investigation of politically connected businessman Thoshan Panday by then-provincial Hawks commander Major General Johan Booysen.

They were proved right. Charges were withdrawn against the “Three Amigos” and against Panday; Booysen was (unlawfully) arrested and fired.

Already at that time there were allegations of political partiality relating to provincial factions around Premier Zweli Mkhize and his perceived rivals, Mabuyakhulu and Nkonyeni. Which was thought to explain why Mkhize, who was also involved in the suspect procurement, was not charged. Mabuyakhulu and Nkonyeni, who were both regarded as closer to President Jacob Zuma than Mkhize, were initially charged. It required an intervention at national level to get them off the hook.

Throughout the period in  which he was MEC for Economic Development and Tourism (2009 to 2016) Mabuyakhulu and the entities he oversaw were clouded in scandal. During that time, major fraud was discovered at Dube Trade Port (noses190,214) for which no one has been prosecuted.

Feeling the heat: KZN Economic Development MEC Mike Mabuyakhulu receives the Freedom Flame during the province's celebration of 20 years of democracy in 2014

He was welcomed into the provincial cabinets of both Zweli Mkhize and Senzo Mchunu.

So much for background.

Lo and behold, in February 2018 – five-and-a-half years later – ex-KZN MEC Mike Mabuyakhulu (one of those thought to be “closer” to Zuma) is back in the dock. This time around he is charged with the looting of nearly R29m from the department he once ran. At his most recent appearance, the Durban Commercial Crimes Court released him and several co-accused on R50,000 bail. Their next court appearance is in April. 

In total, there are 16 accused, seven being companies. They face 77 charges:  27 for corruption, two for fraud, one for theft and 46 for money-laundering. There is also one count of contravening the Public Finance Management Act.

To summarise: In January 2012 a genuine pitch was made by a South African-based company called MPM Productions and International Projects (Pty) Ltd to bring the acclaimed North Sea Jazz Festival to Durban. It is the biggest indoor festival in the world, hosted annually in Rotterdam, Netherlands.

By April 2012, Mabuyakhulu agreed that the province would pay for it and by June 2012 agreements were signed between MPM and local firm Soft Skills Communication 100 CC, owned by Walter Mkhize. This agreement has been deemed illegal. MPM was given no other option by Mabuyakhulu’s then Head of Department Desmond Golding but to use Mkhize – or else the deal would fall flat.

On 21 June 2012 Soft Skills which, it had been agreed, would handle the money, received its first tranche: R969,000.

On 4 July 2012, then KZN Treasury MEC Ina Cronje was flown to the Netherlands to experience the festival and make a final decision. With the provincial bean-counter out of town, a further R969,000 was hurriedly paid to Mkhize’s closed corporation – just one day after Cronje flew off. 

Then, on 2 October 2012, Rotterdam-based Mojo Concert BV, who owned the North Sea Jazz Festival brand, pulled the plug on MPM’s rights to host the event. Golding was informed. This made the agreement that had been signed in June null and void.

But according to the indictment, Golding didn’t care. He instructed his legal department to draft a sham agreement between Mojo and Soft Skills, which the former never signed, and on 26 November 2012 he ordered his general manager, Babalwa Mapisa, to pay R26,886,900 to Soft Skills Communication. Four days later the transfer went through.

What followed was a feeding frenzy. From the day the loot arrived in Mkhize’s control, the money was laundered through various companies and used to buy cars, including a Mercedes Benz and Range Rover, paid to front businesses for services obviously not needed, and to pay off deal-makers  who in turn would pay off other people connected to the theft.

For example, on 30 November 2012, Soft Skills transferred R2,650,999 to Mzandile and Nonhlanhla Ninela and then R2,204,000 to Super Size Investments 20 CC owned by a financial backer of Jacob Zuma, Mabheleni Ntuli. Then R5m was paid to another company that Mkhize owned – also on the same day. Soft Skills transferred R300,000 to the personal bank account of Mabuyakhulu using the reference “Ndiyema”, the clan name of Mabuyakhulu. 

In the indictment, Mabuyakhulu is described as “an adult male person whose place of residence is unknown to the State” (a situation that normally precludes the granting of bail) and in a schedule titled “Main role-players” he is listed as a “[former] Member of the Executive Council (MEC) for the province of KwaZulu-Natal and MEC in the Department of Economic Development and Tourism”. 

The other main role players are Desmond Golding – Mabuyakhulu’s former head of department – and local business owners Ceaser [sic] Walter Mkhize, Nothando Zungu and ANC benefactor Mabheleni Ntuli. 

Of the 77 charges Mabuyakhulu faces, five are counts of corruption and one is for money laundering. He is co-charged on six of these offences with Walter Mkhize, Mkhize’s wife Zandile Mbongwe and Durban businessman Ntokozo Ndlovu. Mkhize and Mbongwe face 61 and 27 counts of fraud and money laundering. 

The indictment, unless it is entirely made up, appears fairly convincing: a serious crime of corruption, fraud, racketeering and money-laundering took place. 

This case will be a test for the Cyril Ramaphosa camp, to which Mabuyakhulu belongs. Will the new ANC president allow the prosecution of one of his lobbyists, or will he protect Mabuyakhulu, a trademark Jacob Zuma move?

In 2011, Mabuyakhulu was arrested alongside then Health MEC Peggy Nkonyeni for their roles in accepting a R1m “donation” by Uruguayan businessman Gaston Savoi in 2008/09. It was widely speculated that the donation was a bribe, when Savoi was awarded a water-purification contract by the health department.  At the time of the payment, which Savoi admits to paying, Nkonyeni was the MEC for Health, and Mabuyakhulu was MEC for Local Government, Traditional Affairs and Housing.

In August 2012, the newly appointed KZN director of public prosecutions Moipone Noko – now a key decision-maker on whether Arms Deal-era charges will be reinstated against Jacob Zuma – announced the withdrawal of charges against Nkonyeni, Mabuyakhulu and others.

The KZN DA took the matter on review but after long delays and mounting legal bills they eventually withdrew their objection. However in light of the recent arrest, there are hints that they may revisit the case.

Already there are murmurings in ANC circles that Mabuyakhulu’s arrest is politically motivated as he holds a senior role in the KZN ANC transitional structure. Mabuyakhulu is the convenor of the team that is supposed to prepare the province to host another elective conference after tits 2015 conference was annulled by the Pietermaritzburg High Court late last year.

He is said to be considering contesting the election.

Mabuyakhulu was accused of taking the R1m bribe from Savoi when he was KZN ANC Treasurer. However even his support base in his home region of Empangeni, on the KZN North Coast, is now deemed shaky.  The last time he tried to run for chairman in the North Coast’s Musa Dladla Region in 2012, the now-deceased Thulani Mashaba, a close ally of Sihle Zikalala, beat him convincingly. Zikalala is likely to be Mabuyakhulu’s opponent if he runs for KZN ANC chairman this year.

As Noseweek has said, the progress of this case will be closely watched to establish whether the warm winds of change are finally blowing in the foothills of KwaZulu-Natal.

North Sea Jazz Festival
Gaston Savoi
Peggy Nkonyeni
Sihle Zikalala
Soft Skills Communication
Zweli Mkhize
Three Amigos
Mike Mabuyakhulu
Moipone Noko
Jacob Zuma
Cyril Ramaphosa
political factions
political interference in law enforcement
Ina Cronje
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