Financial misappropriation, use of a company credit card for flight tickets and a R170 million interest-free loan are some of the allegations that have emerged in the run-up to this week’s national elective congress of the Police and Prisons Civil Rights Union (Popcru).
And, on the eve of the all-important gathering, in which the union’s 30th anniversary was also celebrated, Reuben Mdletshe, the chief executive officer (CEO) of Popcru’s investment arm, the Popcru Group of Companies (PGC), was suspended for misconduct.
However, Mdletshe has hit back, claiming he was made a scapegoat over the raft of questionable transactions which benefited the union’s president, Zizamele Makhaza Cebekhulu. At the heart of Mdletshe’s grievance is a R170 million interest-free loan received from Popcru members’ funds in 2016 and invested in petroleum wholesaler Royale Energy, of which Cebekhulu is a nonexecutive director and the chairperson.
City Press understands that the R170 million loan – and transactions associated with it – was one of the reasons that auditing firm SizweNtsalubaGobodo-Grant Thornton (SNG-GT) pulled out of doing the books for PGC.
Victor Sekese, the firm’s CEO, confirmed on Friday that SNG-GT had resigned as Popcru’s external auditor in October, but declined to provide reasons, saying: “We were appointed auditors in 2018. We are not in a position to respond to any questions as we are bound by confidentiality agreements.
“And, we are professionally prohibited by our regulatory code to discuss client matters with third parties.”
Mdletshe was suspended on October 24 over allegations of financial irregularities involving loans, unauthorised payments and using the company’s credit card to buy flight tickets for his family.
This week, Mdletshe told City Press: “This is an orchestrated plan to remove me, which would not have been a problem if they had approached me and told me I was no longer wanted. But they chose to remove me like this to hide the monies that have disappeared and hide their loot. I know that the R170 million [loan to Royale] did not go back to PGC … and I am going to defend myself.”
In his letter of suspension, PGC board chair Loyiso Mdingi alleged that Mdletshe had used the company’s credit card to buy R12 600 worth of flight tickets for his family without authorisation, had authorised payments to people who were not entitled to be paid, and had allowed for the purchase of a Land Rover Discovery to be settled at a higher amount by one of the group of companies under his management.
But sources have alleged that Mdletshe’s suspension was a smokescreen. They say that he was targeted for having questioned the 2016 loan to Royale Energy and expressed concern that the loan had not benefited Popcru members, only Cebekhulu.
Mdletshe claimed that neither PGC nor Popcru received any returns, alleging that the terms associated with the granting of the loan were changed to be interest-free. The loan’s settlement date, payable by PGC, is March next year.
On its website, Royale Energy refers to itself as a 100% black-owned and licensed petroleum wholesaler having supply agreements with major fuel filling stations.
A source with intimate knowledge of the loan details told City Press that Royale – of which former PGC financial officer Mpho Dipela is co-director with Cebekhulu – could not properly account for the loan amount. Instead, the source alleged, the loan was used for the directors’ personal benefit, including the purchase of a number of properties and a car dealership.
Popcru spokesperson Richard Mamabolo said issues regarding the union’s financial report and the auditors pulling out of the PGC were matters that the PGC would handle with affected parties. “We, as a union, cannot be expected to discuss the PGC’s contractual obligations.”
Regarding Mdletshe’s suspension, Mamabolo said: “He was suspended after the PGC had conducted a forensic investigation. His suspension has nothing to do with our union and the leadership of our union does not take any decisions on behalf of the PGC board.
“It is an independent board matter, and ... it is for the board to deal with. We are, however, aware that there is a criminal case against Mr Mdletshe and that the Hawks are in pursuit of him – they even came to the venue where the congress was held in search of him.”
Mamabolo declined to comment on claims that Cebekhulu had allegedly unduly benefited from members’ funds when the loan was granted to Royale Energy, saying this was “hearsay” based on “unfounded speculation”.
In response, Mdletshe said he was unaware of the Hawks’ case against him and of their search for him during Popcru’s congress. However, he said he had been informed by his nephew that four members of the Hawks had asked of his whereabouts this week.
Phone and text messages sent by City Press to Dipela and Royale Energy CEO Stephan Nothnagel went unanswered. Dipela’s phone was on voicemail, while Nothnagel answered but said the line was not clear before hanging up. Subsequent calls went to voicemail.
The PGC’s Mdingi said that Mdletshe was charged with maladministration, which “relates and contributes largely to the audit issues” following a forensic investigation into the business affairs of the PGC.
On allegations that Cebekhulu and Dipela misused the loan, Mdingi said: “We are not going to deal with hearsay in relation to the sources. We want to place it on record that Cebekhulu and Dipela do not make any transactions with the entities, but Mdletshe – as CEO of the PGC Group – was the transactor.”
On the Hawks investigation, he said: “This is an internal matter between an employer and an employee.”