Top Northern Cape officials probed over money laundering scheme

2016-08-31 07:13
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Johannesburg - The chief financial officer and an executive manager in the Northern Cape department of economic development are being accused of running an elaborate corruption and money laundering scheme.

This they did by allegedly setting up companies with front directors in order to get millions of rands in grants from the department.

The Hawks have launched an investigation into the alleged scheme, which has seen the department's premises and staff subjected to search and seizure raids over the last few months.

News24 has seen affidavits by the anti-corruption Hawks unit, which were placed before the Northern Cape High Court when they applied for search and seizure warrants.

The affidavits highlight part of the Hawk's case, and allege that a bed factory was set up, allegedly with the sole purpose of getting grants into the hands of the department's chief financial officer Kuberin Packirisamy, his brother Komalin Packirisamy, sister Subithry Naidoo and brother-in-law Vijayandrakumar Naidoo, as well as an executive manager, Daryll Christians.

The affidavits allege that at the beginning of 2011 a man, who has since turned state witness, was approached by Komalin Packirisamy and asked if he would like to be a partner in a bed factory. He was allegedly told the shareholders in the business would be Komalin and Kuberin Packirisamy, the Naidoo's and Christians.

The witness said the business, called Diamond Bed Factory, was opened with himself as the sole director and he opened a bank account in his name. Komalin allegedly drew up the business plan which the witness would present to government for funding. He alleged however that he had very little to do with the day-to-day running of the factory.

Daily R1m transfers

The affidavit alleges that in April 2011, an amount of R40 million was electronically transferred to his account by the Northern Cape department of economic development.

But the witness said he was instructed by Komalin to transfer the money into the bank account of a Johannesburg company, Ditoro Tsa Ka Trading, in order to buy machinery for the bed factory. The witness said he believed the company he bought the machinery from was in some way connected to the shareholders of the Diamond Bed Factory. He transferred R1 million every day to Ditoro Tsa Ka Trading, until all the money was gone from the account.

A business expansion project plan was presented to government for further funding for the Diamond Bed Factory in 2012. The witness said millions more was transferred by the department to his account. The witness said he was told to transfer the money to a company called Eeeze Foam in Johannesburg for two airshield machines which were delivered to the Diamond Bed Factory. He never saw the machines being used.

The witness allegedly left the company in 2013.

"I feel so stupid. My name was on everything. These people used me and I fell for it," he told News24 when asked about the Hawks investigation.

He allegedly subsequently discovered his name was linked to various companies which he had no knowledge of. These included Kimberley Diamond Bedding, Vidistar, Rabbi Smukelo Trading CC and Corner Couch Trading CC.

Company officially recognised by MEC

News24 understands that the Diamond Bed Factory is not the only company which was allegedly created in order to get money from the department that the Hawks are looking into. 

The Diamond Bed Factory was specifically named by the department's then MEC John Block in the 2012/13 financial year as having received funding under the Economic Growth and Development Fund.

"In my previous budget speech I mentioned that the Diamond Bed Factory has been established and has 65 permanent employees. The Diamond Bed Factory production has been expanded to increase chair and couch production in addition to beds, this has created 20 permanent and 10 temporary jobs," Block said.

This fund became embroiled in controversy more recently when it was revealed by the DA that the spouse of John Block, Noluthando Silungile Block, received funding for a business through it.

DA spokesperson for economic affairs Advocate Boitumelo Babuseng revealed in October last year that Insimbikazi Trading CC, which Mrs Block is a director of, received assistance to obtain public sector contracts.

The company was said in a report to be one of 10 SMMEs that were assisted to "access public and private procurement opportunities through direct contracts/sub-contracts by end June 2015", the DA said.

The programme director of the unit was Christians, the DA revealed.

The Packirisamy and Naidoo families are no strangers to controversy.

Zimbabwe diamond dealings

Komalin Packirisamy is one of the accused named in an illicit diamond dealing syndicate currently before the Kimberley Magistrate's Court. Komalin is the owner of Kim-by-Nite and is charged, along with 21 other accused, with illegal diamond dealing, possession and sale of unpolished diamonds and money laundering, according to IOL.

The families were also named in a 2010 Zimbabwean diamond mining scandal where a company, Zimbabwe Mining Development Corporation (ZMDC), dumped its foreign joint venture partners, confiscated their equipment, barred them from entering the country and took full control of the diamond mining.

The directors, according to The Herald, included Subithry Naidoo, Kuberin and Komalin Packirisamy and Vejayanakumar Packirisamy, all of whom were blacklisted and barred from Zimbabwe.

According to The Independent, a total of US$100 million was at stake in the controversial diamond mining deal which angered President Robert Mugabe. Among the allegations were that bribes and corruption had taken place in the deal.

Saleem Ebrahim, the attorney who represents the Packirisamys, the Naidoos and Christians, said they would not be commenting on any of the allegations.

Northern Cape department of economic development and tourism spokesperson Zandisile Luphahla confirmed to News24 that they were aware of the Hawks investigation, but said they were unable to respond as the matter is still pending.

Hawks spokesperson Brigadier Hangwani Mulaudzi confirmed that there was an investigation at the department and that search and seizure operations had been conducted.

"The case is still under investigation and due to the sensitive nature thereof, information cannot be disclosed at this stage," Mulaudzi said.

Read more on:    hawks  |  kuberin packirisamy  |  john block  |  kimberley  |  corruption  |  government spending  |  crime

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