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More Corruption - On A Massive Scale?

12 December 2012, 13:12

Nkandla Freeway Corruption Potentially Exposed...

Much has been said, fought and argued over the funding of the R250m Nkandla Compound, and rightly so. But what's received little attention is the funding of the freeway set to run through Nkandla following the development of the president's luxury compound. This freeway is set to cost R1.5bn, so this is no small chunk of change, so Mybroadband's amateur, volunteer, investigative journalists gave it a crack and uncovered what appears to be a case of corruption on an arms deal scale. Here's what we uncovered:

Claim #1

Public Works claim that the freeway is being constructed by a private company called Korong Capital Partners who will, following the road development's end, donate the entire road to the government at no cost to them. Now that sounds incredible. So incredible that it sounds almost too good to be true. That's because it is.

Debunking

Korong Capital Partners appears to have been a dormant shell company since 1999, and who's only director is Moeti Mpuru, who claims to have secured the funding of R1.5bn for this project. The problem with this scenario is that Korong Capital Partners have no history of this sort of work. In fact, they have no history of any work whatsoever. So they certainly couldn't have secured revenue of around R37bn to place them in a position to fund this internally. This would have made them the most successful company in history (to put this into perspective, this would equate to more than double Vodacom's 2011/2012 revenue, and Korong would have achieved this in about a year of operations). They couldn't have raised this finance in the capital markets either because no financial institution would originate and secure a bond for a company with zero balance sheet strength and zero cash flow. So the only other option is that there was an angel investor involved, and this is the next claim:

Claim #2

An angel investor is funding the entire project at no cost to government whatsoever.

Debunking

Who was this angel investor? Well the claim is that the cash originated from the USA, through an attorney who is set to make $100,000.00 for simply arranging the transfer of the cash. Apparently Mpuru, after being turned down for a R1m loan to fund a small portion of the project, managed in just a few months to secure R1.5bn in funding for a project that will see absolutely no return on investment. It is a straight R1.5bn loss to whoever funds this project. And why is the donor not being made public? What has he got to hide? And who in their right mind would philanthropically fund a minor freeway in SA through the president's home town? It makes no financial sense, nor logical sense.

So on to brass facts: Korong Capital Partners has its registered offices at the following address:

UNIT 2 CHIANTI ESTATE
39 LEEUWKOP ROAD
SUNNINGHILL
2196

So this company that apparently has R1.5bn spare to flush down the toilet, or will be managing R1.5bn worth of angel investor cash, is situated at unit 2, Chianti Estate in Sunninghill, a residential complex that does not have business rights for its units. This is a tiny, 60sqm residential complex - not an office park, or the premises you'd expect for a company with R1.5bn to spend and manage. Yet Public Works feel happy for this company to complete this project on their behalf. Ever wondered why?

So who owns Unit #2 at Chianti Estates? None other than MBANJWA NQOBILE ZINHLE (Zinhle Mbanjwa). Who is Zinhle Mbanjwa? He is the manager of the Housing Development Agency of South Africa. This is the governmental department that oversees investments in housing related infrastructure on behalf of the Human Settlements Department. They also manage inter-departmental projects. Why is Korong Capital Partners' premises at the HDA manager's personal premises? The answer to that is simple - he owned the shelf CC from the outset. This means that the CC used to move the money around to pay for the Zuma freeway is in fact located at the HDA manager's house and directed by the man who supposedly secured the funding. This makes no sense in terms of the government's official statements that this is a private entity funding the project through angel investment. What this actually means is that the HDA more than likely used the CC owned by their manager to move Human Settlements money to Korong Capital Partners to fund the Zuma Freeway. If this was angel investment, the investor would ensure that he had board representation to ensure he had oversight over the use of his funds. 

What does this mean? Well it means that Zuma's compound is only the tip of a very large iceberg. The real corruption is worth in the region of about R1.5bn, as it indicates that the HDA facilitated government cash (which is what they do) to be moved to Korong Capital Partners to fund the Zuma Freeway, and the government knowingly lied to the public about how the project was being funded. It indicates that behind the scenes, HDA, Public Works and Human Settlements arranged a secretive transaction to spoof legitimate business operations, when in fact they were simply trying to hide their money-trail of corruption, knowing that using public money would cause outrage among South African citizens. 

None of this makes any sense in terms of the official story by the government. It makes perfect sense when you add a corruption element to the mix though. Public Works and Human Settlements found cash to fund this project. In order to hide this from the public, they engaged with the manager of the Housing Development Agency, who are the middle-man for inter-governmental transactions. Together with a lawyer in the US, they siphoned cash out of the country to make it appear as if the cash was from an angel investor, and would not be subject to disclosure to the public. They then moved the money to a CC owned by the HDA manager called Korong Capital Partners who are now officially funding the Zuma Freeway. 

On the surface it seems like an extraordinarily unlikely investment - that some unknown source of billions of dollars donated all of the funding capital to a private company that coincidentally happens to be owned by the HDA manager, to build a freeway through Jacob Zuma's Nkandla hometown, with no oversight of the spending, no recourse whatsoever to the cash, no return on investment, while remaining completely anonymous, and then with the intention to hand the entire road over to Public Works upon completion. And that is because this is ridiculous. It reminds me of the SANIP arrangement with SAAB and BAE, where Fana Hlongwane received the bribe payments for the arms deal.

What has happened however is that government appears to have attempted to pull the wool over the eyes of its citizens, in anticipation of backlash for R1.5bn funding of the Zuma Freeway, by hiding cash in an entity they thought would be safe from public scrutiny. As it turns out, this wasn't quite as private as they expected. The crucial oversight was using a private CC owned by the HDA manager and forgetting to remove his personal address from the company information records, which are public. 

So government has a lot to answer for here and we the public should demand answers. Not only does this appear to be corrupt to its very core, but the spending at Nkandla is outrageous too. See here for more details relating to how exorbitant the Nkandla spend is:

http://mybroadband.co.za/vb/showthre...projects/page2

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