Whistle-blower accuses rent collector Zakhumzi Construction of ‘creative accounting’, which allegedly ensured the money did not reach intended beneficiary
Two rental payments from government totalling R14 million earmarked as rental for Gallagher Estate and destined for the coffers of Silver Vanity Investments – the investment vehicle of the National African Federated Chamber of Commerce and Industry (Nafcoc) – never arrived.
All of Silver Vanity’s directors were shown a letter on Wednesday from a purported whistle-blower, claiming that more than R14 million was paid to Zakhumzi Construction in August last year.
But the money never found its way to Silver Vanity.
Silver Vanity owns Gallagher Estate in Midrand. Zakhumzi is a property management company that collects rent on behalf of Silver Vanity.
The department of public works pays rent for space leased for the Pan-African Parliament at Gallagher Estate, on behalf of the department of international relations and cooperation.
According to the document, the two payments were made seven days apart.
The first payment, one for R4 072 047, was made on August 7. The second, made on August 14, totalled R10 633 356.
The payments were made by the public works department and included arrears owed.
The document was allegedly authored and distributed by Nkosana Thobela, a whistle-blower who also recently opened a criminal case against all the directors of Silver Vanity for alleged fraud and theft.
In the document, it is alleged that Zakhumzi employed “creative accounting” tactics to ensure that the money did not reach Silver Vanity shareholders.
Thobela declined to shed light on the matter when contacted by City Press, saying: “It would be difficult for me to comment publicly or otherwise on the case unless in a court of law, as the matter is sub judice.”
The letter was also distributed to all members of the Nafcoc council.
A search into Zakhumzi’s history indicated that one of the company’s former directors was Nthabiseng Mosena, the daughter of Silver Vanity’s CEO Gilbert Mosena. Another former director was Tizapro, a company created by Gilbert Mosena along with four other directors of Silver Vanity.
Mosena confirmed that Nthabiseng was his daughter and said he did not recall her being a director of Zakhumzi, but was quick to add: “She is an educated professional in her own right and can be part of any company.”
He also said he would not respond to a list of questions sent to him by City Press as the organisation planned to hold its own press conference soon.
Questions sent to Mary Baggott, the sole director of Zakhumzi, were not responded to, and attempts to get hold of Nthabiseng Mosena were fruitless.
EXPLOSIVE INVESTIGATIVE REPORT
In another development, it has come to light that the public works department appears to have been sitting on an explosive investigative report into allegations of suspected fraudulent payments made to Zakhumzi Construction.
It allegedly implicates both Mosena and Nafcoc’s former president, Lawrence Mavundla.
The report was finalised in May 2016, but was not released.
It was conducted by the department’s anticorruption unit after trustees of Silver Vanity’s shareholder trusts requested an investigation into allegations of fraudulent and unauthorised payments made to Zakhumzi Construction by the department.
The department said it had decided not to implement the report’s recommendations because it was flawed.
The report details how the Companies and Intellectual Property Commission (CIPC) registration documents were manipulated to allow for the current directors to be appointed, ousting the previous ones.
The ousted directors, who are mostly part of the now-sidelined faction under Joe Hlongwane, opened a criminal case at Sunnyside Police Station in Pretoria in 2017.
At the time of the report, Zakhumzi had been paid R31.8 million in rent and a further R684 000 for municipal services over 10 months up until January 2016.
The company’s bank statements, which the investigators obtained through a court subpoena, according to the report, apparently show that the company was allegedly not paying any money to Silver Vanity.
The report further claims that Mavundla presented a letter, dated February 2014, purportedly indicating that Silver Vanity directors had resolved to appoint Zakhumzi as the management company meant to receive the rent – only to discover that Zakhumzi was only registered with the CIPC in April 2014.
The report also alleges that Mosena “lacked integrity” because of a series of misrepresentations.
It recommended that the department pay rent to Silver Vanity directly, instead of through Zakhumzi, because the latter did not have the proper authority to collect the rent.
It also recommended that civil action be brought against Mavundla and some of the individuals involved in Zakhumzi, and that the company be blacklisted from doing business with government.
In addition, the report recommended that disciplinary action be taken against the department’s own officials who were implicated in the matter.
Thami Mchunu, spokesperson for the department of public works, said the report was declared highly defective and flawed, so its recommendations were not implemented: “The department decided to disregard it. It is therefore null and void.”
Mchunu said the department was paying R3.6 million a month in rent for its Gallagher Estate lease and that a total of R158 million had been paid to Zakhumzi since the lease expired four years ago.
“The lease has been running on a month-to-month basis since March 2015 to date,” said Mchunu.
He said the department did not have valid tax clearances for Silver Vanity and Zakhumzi because it had not requested them.
In response to the above, Mavundla said that, at the time of the alleged fraud, he was executive chair of Silver Vanity, with the power to decide on the day-to-day running of the company.
“From 2014, I was faced with a situation in which the contract of the company that was doing the property management and rental collection had expired,” he said.
“Parliament is an important place; you cannot default even for one day. So we used the net rental income to fund Nafcoc and the affiliates’ day-to-day operational expenses. Afterwards, I did obtain board approval and ratification of the [new] contract, which is still working.
“The lease of the Pan-African Parliament building is in place ... There is no complaint about me and what I did, from both the client’s and the board’s perspectives. Instead, I have been congratulated several times for the wonderful work done and for the decision to appoint Zakhumzi Construction. The company was in existence already, otherwise how were they able to be on National Treasury’s database?
“Zakhumzi is not an agent of Silver Vanity, but a property management and construction company in its own right. The company is also entitled to tender in its own name anywhere,” he said.
MACINGWANE UNDER SIEGE
Meanwhile, lawyers representing Nafcoc president Sabelo Macingwane have sent a letter of demand to the organisation’s general secretary, Stephen Sikhosana, to the effect that he cancel the meeting Sikhosana called to remove Macingwane from the presidency.
The lawyers also gave Sikhosana until Friday afternoon to cancel the meeting or they would apply for an urgent court order to interdict it.
But by Friday afternoon, Sikhosana had not cancelled the meeting.
In the letter, a copy of which City Press has seen, the lawyers also stated that the attempt to remove Macingwane was as a result of his supporting a criminal complaint laid by Thobela against the directors of Silver Vanity, who include Sikhosana and most of the executive committee members.
Sikhosana issued a notice for an urgent special federal council meeting on Wednesday to oust Macingwane, who has been at the helm of Nafcoc for seven months.
Both Sikhosana and Macingwane were voted in as part of SA Federated Chamber of Commerce’s new leadership at a conference held in Durban in November.
The notice issued to all federal council members had two main items on the agenda.
The first concerns the passing of a motion of no confidence in Macingwane as president for bringing the organisation into disrepute after receipt of “a written expression from more than two-thirds of Nafcoc council members, supported by the majority of the Nafcoc executive members and the overwhelming vote of members of the Nafcoc presidents’ council”.
The second item, the notice states, concerns a vote on a resolution to ban members from approaching the media and the courts regarding Nafcoc matters.
Nafcoc has been involved in more than 50 court cases over the past decade while Mavundla was at the helm.
“I am not empowered to talk to you about those things,” Sikhosana told City Press when questioned on the matter.