R500m taken from the poorest


Documents show how money belonging to dependants of deceased miners was splurged by executive on costly mansion

A pension fund boss entrusted with looking after billions of rands allegedly splurged R21 million belonging to orphans of mine workers on a luxury mansion in a security estate in Alberton, Ekurhuleni.

Invoices obtained by City Press show that, in October and November 2016, Bongani Mhlanga paid for a property at the Meyersdal Eco Estate, apparently using money from, amongst others, the Amplats Group Provident Fund, which was managed by the Bophelo Beneficiary Fund (BBF).

Amplats contracted the BBF to manage more than R500 million on behalf of the dependants of its deceased employees, most of whom were mine workers.

A beneficiary fund manages pension benefits of deceased people on behalf of their dependants.

Documents City Press obtained show that, on November 15 2016, Mhlanga instructed an employee to pay R2.3 million into the trust account of a law firm involved in the sale of the property.

“Please pay R2.3 million into the conveyancer’s account,” he wrote, and it was paid the same day from the account of Mvunonala Properties.

Further documents show that R19 million was paid from the same account into the same conveyancing attorneys’ trust account for the same property two weeks before.

Three executives involved in the administration of pension funds told City Press this week that R500 million was allegedly squandered from the BBF – nearly double what City Press had reported two years ago.

At the time, City Press reported that Mhlanga raided the fund and related companies, leaving more than 7 000 dependants of deceased mineworkers penniless.

Five months later, in September 2017, Vele Investments, which owned VBS Mutual Bank, agreed to buy the Mvunonala Group for R500 million.

Vele paid R300 million immediately, which was used to recapitalise Bophelo and other companies in the group.

However, after VBS was placed under curatorship last year, it was found that the bank’s directors plundered more than R2 billion from the bank.

The BBF was administered by Bophelo Benefit Services, a subsidiary of the Mvunonala Group, which was liquidated last month.

A 2018 forensic report by SizweNtsalubaGobodoGrant-Thornton (SNG), obtained by City Press last week, found that Mhlanga and his employees also spent R67 million from the fund to acquire a stake in the Protea Parktonian Hotel in Braamfontein.

The report shows that the BBF, through Mvunonala Asset Managers and Bashumi Investments, an investment arm of the SA Transport and Allied Workers Union (Satawu), had formed a joint venture called Bashumi Hotels.

Mhlanga, who was deported to Zimbabwe in 2017, is a one-time friend of former Satawu general secretary Zenzo Mahlangu, who was deported to Zimbabwe the same year.

Calls made to Mhlanga – on a number obtained from those close to him – were not answered and a WhatsApp message indicated that it was read but was not responded to.

The intention was to buy sectional title units in the Protea Parktonian Hotel, but the deal didn’t go through, and the money was never returned to Bophelo.

In 2017, City Press reported that Bophelo claimed in its financials that it owned two investment properties – the Protea Parktonian Hotel and an office block on Grayston Drive, Sandton.

The Sandton office block is owned by the Government Employees’ Pension Fund through the Public Investment Corporation.

The Parktonian, which has about 300 units, is owned by a trust associated with the management company and individual investors.

At that time, Bophelo’s financials reflected a balance of R578 million, made up of equities totalling R323 million and R255 million in “investment properties”.

Two sources told City Press that “several units were purchased by Bashumi at the Parktonian, but they were not registered under Bashumi. They are hidden behind trusts.”

Investigators found that the decision to invest in the Parktonian Hotel was irregular because Mahlangu initiated it through a letter to Mvunonala Asset Managers.

The correct investment procedure was that Bophelo would issue an investment instruction to Mvunonala Asset Managers.

The Financial Sector Conduct Authority placed the BBF and Bophelo Benefit Services under curatorship in July 2017 three months after the City Press exposé, and appointed Juanito Damon as curator.

At that time, it was estimated that BBF could not account for R255 million from its books. But this week, sources told City Press substantially more millions were missing.

“Remember that Amplats on its own had entrusted Bophelo with more than R500 million. The company was administering many other funds. They also lost money there. However, their losses are not as big as the money lost by Amplats,” said one.

The SNG report further found that other funds had entrusted the BBF with their administration, including the Satawu National Provident Fund, the KwaZulu-Natal Municipal Pension Fund, the McDonald’s Provident Fund, the Idwala Pension Fund, the Nzalo Pension Fund, the Bargaining Council for the Road Freight and Logistics Industry Provident Fund, the Bargaining Council Contract Cleaning Services Industry, and the General Employees Association of SA Pension Fund.

It is not yet clear whether these funds lost money.

Damon declined to comment, but another source said he had completed his job and was compiling the final report.

“He is now preparing to start processes to go after Bongani and everyone who unduly benefited at the expense of poor people,” another source said.

In 2017, City Press reported that Mhlanga owned two other houses, one in Umhlanga’s exclusive Ridge Road and another one in Mulbarton, southern Johannesburg.

The SNG report, signed off last August, also shows that an amount of R269 million was transferred from the BBF to Mvunonala Properties without proper authority.

“We did not find evidence of investment instructions, approvals and correspondence between BBF and the board of trustees, the principal officer(s) and asset managers to disburse a total amount of R269 million. This is contravention of fund rules,” read the report.

“The amounts disbursed to Mvunonala Properties were not paid out and accounted for with due care. Based on our findings, we could not confirm that funds paid by the BBF to Mvunonala Properties were used for legitimate investment-related purposes or invested in any asset investment portfolio as there were limited financial records available for our reviewing.”

Investigators found that Mvunonala Properties should not have received funds from the BBF as the company was not a registered financial services provider.

The report also found that R280 million meant for beneficiaries was transferred from Mvunonala Properties to other accounts. The largest amount of R173 million was transferred to Nzalo Afrika, of which Mhlanga was the sole director.

The second-largest amount was the R21 million for the Meyersdal property.

Of the payments to Nzalo Afrika, investigators found the company “received a significant portion of the funds, R173 million”.

“There were various descriptions noted in the Nzalo Afrika investment payment, which were broker fees, commission, building and construction payments and other fees and expenditures. There was no evidence available for us to review in as far as the relationship between Mvunonala Properties and Nzalo Afrika are concerned,” the report found.

Sipho Masondo
City Press
p:+27 11 713 9001
w:www.citypress.co.za  e: sipho.masondo@citypress.co.za
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