Bosasa faces dti fronting investigation

2013-09-22 14:00

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Scandal-plagued group has to explain why it appears to be paying highly skilled white employees through an ‘off-the-books’ scheme

For years the scandal-plagued Bosasa group had been receiving lucrative government tenders, partly based on its BEE credentials.

But those credentials are now the subject of a probe by the department of trade and industry (the dti).

City Press can reveal that a number of top engineering and IT specialists rendering full-time services to Bosasa – all of them white – have had their salaries paid from an indistinct shelf company.

The reason? To keep them off the mother company’s books, say inside sources and former employees.

The dti will now investigate whether this arrangement constitutes fronting.

Bosasa, led by politically connected businessman Gavin Watson, denies fronting and said the contractors on the shelf company’s books represented only a fraction of its total staff complement.

Bosasa has been embroiled in numerous scandals over the years, the most damaging of which was a report by the Special Investigating Unit (SIU), which found the group bribed its way into doing work for the department of correctional services.

The SIU found that Bosasa had lubricated its way to the top by dishing out houses, cars and even Blue Bulls rugby tickets to senior prison officials, including former prisons commissioner Linda Mti and his finance chief, Patrick Gillingham.

The SIU report was handed to the Hawks, who have been investigating the case for more than two years.

At the centre of the alleged fronting scheme is Consilium Business Consultants, an opaque company that has no infrastructure or activities of its own, and Sondolo IT, a tender-rich Bosasa subsidiary.

Consilium is headed by Dr Jurgen Smith, one of the founders of the company that later became Bosasa Operations.

Sondolo has scored government tenders worth more than R1?billion in the past eight years, including a R600?million department of justice contract to install security systems at the country’s courts.

The company also installed security equipment and TV sets at the country’s prisons.

Although Bosasa spokesperson Papa Leshabane this week denied that Smith held any position in Bosasa, he has an office at the group’s headquarters in Krugersdorp and uses business cards with the Bosasa logo on it.

Smith did not respond to requests for comment this week.

City Press was recently given a copy of a pay slip of a Consilium contractor working at Sondolo IT.

The employee, who earns more than R40?000 per month, works for Sondolo and has absolutely no contact with Consilium.

But on the pay slip, Consilium is indicated as the employer and Sondolo as the “unit”. The employee, who has a permanent contract with Consilium, is

listed as a “consultant” on the pay slip.

But Leshabane says this is not fronting. “Consilium is a specialist service provider to the Bosasa group of companies and certain subsidiaries providing specialised labour and consultancy services, one of many companies that provide these types of services to Bosasa and its affiliates.”

He said Bosasa did not own shares in Consilium and denied that the shelf company was paying any Bosasa employees.

“Besides, only a total of 15 Consilium contractors render specialised services to Bosasa Operations and all its affiliates, while the staffing complement of the Bosasa group exceeds 7?500 people,” said Leshabane.

Unemployment Insurance Fund (UIF) spokesperson Muzi Mkhwanazi said Consilium had “117 active employees registered for UIF”.

City Press’ sources said the Consilium contractors were all well paid and highly skilled.

“This is clearly a way to keep them off Bosasa’s books,” said one source.

Another source, also a white man who was paid by Consilium, said he was recruited to work for Sondolo, not Consilium.

“I didn’t even know what Consilium was until I received my letter of appointment. Consilium has no offices or branding. Nothing, nothing, nothing. In my entire time there, I never even spoke to the Consilium people. I reported to Sondolo IT.”

Another document seen by City Press estimated that Consilium had 37 full-time employees.

Nomonde Mesatywa, a chief director in the dti responsible for BEE, said she would look into the matter.

“Fronting has become such a catastrophic problem and it is escalating day by day.

“There are many different types of fronting, which are not easy to detect.

“You may find that a scheme or an arrangement looks legitimate, but when you dig deeper, you start to unravel a conundrum.

“As the dti, we are open to investigate any matter that is brought to our attention in order to determine whether it is fronting or not,” said Mesatywa.

A copy of a payslip that shows how a Sondolo IT employee was paid by Consilium Business Consultants

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