On 23 October the United Democratic Movement (UDM) President posted an open letter to the Standing Committee on Public Accounts on the UDM website alleging maladministration and corruption at the Development Bank of Southern Africa (DBSA) and the victimisation of board members.
His concern centred on the appointment of the DBSA Board Chairperson, Mr Enoch Godongwana, by the Minister of Finance, about suspect loans made by DBSA, the appointment process of the new DBSA Board and victimisation of two former board members. A central concern was Cranbrook Properties and the alleged desire of the DBSA Board Chairperson not to have the matter explored by board members, seemingly leading to the refusal to reappoint two board members. The management and follow up of the repayment of certain loans were negligent.
DBSA loans that were suspect were included those granted to Blue Horizon Investments 11 Pty Ltd (BH11); Moeparutsi Properties, which is not a registered company, and Proline Trading Sixty (PT60) – all of which allegedly form part of Cranbrook Properties with Mr Godongwana and his wife as shareholders. The Irene Charnley case was raised in respect to deals which may suggest the siphoning off of money to Saudi Arabia.
The Committee committed to a hearing on the matter and would be advised by Parliamentary Legal Services to pave the way forward for a hearing involving all parties. It would use its powers of subpoena if need be. The Chairperson said that the Directorate for Priority Crime Investigation (DPCI) and Minister of Finance should also appear before it to account. The Committee did not deliberate on the matter in this meeting as it needed time to consider the matter and hear all parties involved.
The Director General of National Treasury clarified the organisational structure of the Ministry of Finance, so that the Committee would have a better understanding of where DBDA was placed within the structure and who the accounting officer was.
The Special Investigating Unit (SIU) and the Directorate for Priority Crime Investigation (DPCI) attended this briefing. DPCI undertook to check the status of investigations mentioned in the briefing. SIU confirmed that there was no active case being investigated on this matter at present.
The Chairperson opened the virtual quorate meeting and explained that on 23 October 2020, he received a letter circulated to all members, from UDM President, General Bantu Holomisa. The letter contained allegations to do with the Development Bank of Southern Africa (DBSA). Amongst other things, he implored SCOPA to consider this matter, and made recommendations including but not limited to the formation of a judicial commission.
The Chairperson had referred the letter to Parliament's Legal Services, as one of the Committee’s stakeholders, for advice. This was primarily to carefully consider and confirm if the matter fell within the Committee’s jurisdiction. This is because, in the main, parliamentary rules prescribe that the basis of SCOPA’s work is reports received from the Auditor General (AG). However, real time work and real time audits have become common practice in the Committee. Legal Services replied that the Committee could continue hearing the matter if it linked to previous financial statements or financial issues which it had previously heard, as this is the Committee’s work. SCOPA therefore asked General Holomisa to brief it on the contents of his letter, so that it can make a determination on how it will proceed on the matters raised. Therefore, the purpose of the meeting was a fact-establishing one. It aimed to enable Members to interrogate and interact with what the General presents, to test what is said. Further, this briefing was for the General to take the Committee into confidence on the issues at hand, so that it does not make a decision on the basis of a letter alone.
SCOPA took this step recognising the importance of whistleblowing as part and parcel of the fight against corruption. A number of matters which SCOPA receives come from people who may not be in a position to come out publicly on what that they raise. It is therefore encouraging when Members of Parliament and South Africans are prepared to speak out so that SCOPA can take them forward. The annexures were only sent by the General that morning. This would impede its efficiency and asked the General to be patient with Members. He had invited National Treasury and the Director General would clarify the structure of reporting, accounting and management of DBSA, once General Holomisa had finished presenting. The meeting would be a fact establishing one. The DG had explained that this matter is a ministerial competence, however, his team does offer the necessary technical support. This would be explained later by the DG.
Mr B Hadebe (ANC) noted that he had received an email with eight attachments at 08:30 that morning but the Chairperson suggested that this be discussed when the General was on the platform.
The Chairperson said he had been advised that General Lebeya, Hawks National Head, was in a Cabinet meeting, but since this was merely a fact-finding mission, his presence was not crucial.
Lt Gen Tebello Constance Mosikili, Deputy National Head: Directorate for Priority Crime Investigation (Hawks) confirmed that she would be standing in for him.
UDM President allegations of DBSA maladministration, mismanagement, and corruption
General Bantu Holomisa thanked the Committee for its willingness to hear him. Considering his recent findings, he does not think that the DBSA is as well-run as one would hope. Considering the case of the Public Investment Corporation (PIC), where there was smoke, there was fire. Throughout the course of 2020, various parties have shared information of wrongdoing at DBSA. He wanted to begin by sharing new information that had come to light since his letter to the Committee. The larger part of his presentation, however, contained the initial submission, for the sake of completeness and for the record. In addition, he asked the Committee to note that some information has since been exposed in the media. For instance, the Sunday Times article of 8 November 2020, labelled as Annexure A.
He had taken the liberty of contacting the two former board members mentioned in the article. He tabled two letters sent by Finance Minister Tito Mboweni to the now former board member, Ms Bulelwa Ndamase, labelled as Annexure B and C, to show some peculiarities which bring unease to the mind of the General. The first letter dated 30 September 2020, informed Ms Ndamase of the expiry of her term as a non-executive director. She was given no reason for the non-extension of her period of service, after having served only one term. It is important to note that DBSA used excuses to get rid of Ms Ndamase and two of her colleagues, whilst choosing to retain five other board members to retain valuable skills and knowledge to maintain continuity within the board. This is detailed in Annexure D. He found it interesting to consider what set the two groups apart. For all the rationalisation and defensiveness of DBSA, it was at least two of the independent board members who did not tow the Godongwana line, who saw themselves unceremoniously shown the door. The second letter from the Minister, dated 11 November 2020, is addressed to Ms Ndamase at the DBSA postal address. The General asked why the Minister would use the DBSA postal address if he clearly is aware that she is no longer associated with DBSA since 30 September 2020. The content of the letter is a clearly considered response to correspondence from Ms Ndamase. This means that Ms Ndamase had written to the Minister some time in August, informing him of the Cranbrook matter and her subsequent experiences. The entire tone of the letter suggests that the Minister regards Ms Ndamase as a member of the board, and very much still part of the DBSA establishment. When comparing the two letters, one sees something very unusual is taking place.
He found it extremely irregular that a letter from the Minister, which was not merely a run-of-the-mill administrative letter, had absolutely no reference number. He understood that DBSA forwarded these letters directly to the affected board members, meaning it did not come from the Ministry’s registry. This begged a number of questions: whether the letter was forged; or whether someone at DBSA has the electronic signature of this Minister, and if so, what havoc have they been causing.
Another strangeness is that the new DBSA board was seemingly announced on 5 October 2020, with the information available on DBSA website. Ordinarily, however, such board appointments would go in tandem with some media fanfare. However, one would be hard-pressed to find any article to this effect in the popular media. A simple Google search will leave one wondering if the media was even aware that there was a new board appointment. National Treasury’s press-release page does not have a statement to this effect. One does not have to be a conspiracy theorist to read between the lines and arrive at unsettling questions on exactly what selection process was followed in the appointment of new DBSA board members, and who exactly the role-players were in selecting the new DBSA board. He added that Mr Godongwana may have too many skeletons in his closet, of the wrong kind.
DBSA Board Chairperson
All can agree on the strategic importance of DBSA. It is essential that all agree that it is imperative that the chairperson of such a government financial entity has an unblemished record. Aside from the fact that DBSA Board Chairperson, Mr Enoch Godongwana, is a well-known politically exposed person (PEP), government’s due diligence reports conducted on him, which the General has seen, paint a picture of a man with less than sterling credentials.
These due diligence reports state that around 2003/04, Mr Godongwana was implicated as the then Member of the Executive Council (MEC) for Economic Development in the Eastern Cape, together with Mr Mcebisi Jonas, then CEO of Eastern Cape Development Corporation; Mr Stone Sizini, and the then Premier Stofile. in serious misconduct involving millions of Rands.
In June 2011, Mr Godongwana was accused of being related to Canyon Springs Investments, which allegedly disappeared with hundreds of millions of Rands in pensions belonging to clothing and textile workers union. The money allegedly went missing after a trust company which Mr Godongwana had chaired from 2007 to 2009 apparently lent money to Canyon Springs, which it subsequently lost. Mr Godongwana and his wife had a 50% interest in Canyon Springs. Although the pair were served summons and offered to repay R1.5 million, nothing happened and the company was seemingly liquidated.
Another questionable deal includes alleged payments made by the Recycling and Economic Development Initiative of South Africa (REDISA) to Mr Godongwana, his wife and another prominent ruling party leader. REDISA is now in liquidation, yet it allegedly made monthly payments of hundreds of thousands to Isivuno Consulting from February 2015 to February 2017, which reportedly has Enoch and Thandiwe Godongwana as its directors. Recommendations were made for the Hawks to investigate, but no clear decision has been forthcoming on this investigation.
The Finance Minister was fully aware of these allegations, and yet he still appointed Mr Godongwana as DBSA Board Chairperson. General Bantu Holomisa asserted that by virtue of his politically exposed person (PEP) status, Mr Godongwana should never have been asked to head a governmental financial institution. He found it very disconcerting that the Minister went ahead with the appointment, having this information.
The General included the DBSA top brass response posted on the DBSA website on 6 November 2020 as Annexure E. The General made the following observations. Firstly, the response to the letter was anonymous. Who exactly was defending DBSA here? Secondly, DBSA was selective as to which allegations it chose to respond to. He did not understand why it did not answer all the allegations in the same blow-by-blow manner it chose to answer some of them. Thirdly, DBSA went to great pains to avoid giving him information on the Poseidon Water Project and refused his Promotion of Access to Information Act (PAIA) application, based on technicalities that it chose to hide behind. On the other hand, it was happy to answer to the Cranbrook Properties deal, without any worry.
It is also convenient that DBSA commissioned an independent investigation into the Poseidon deal, even before the President attended to the matter as addressed in the General’s letter to him dated 17 June and 20 July 2020 in Annexures F and G.
DBSA’s version of the story on its webpage differs from the information contained in DBSA's own documents, which he has in his possession. Only a proper investigation and comparison of these documents would establish the facts. DBSA merely posting text on the internet cannot be a litmus test for truth.
DBSA is denying for the sake of denying. DBSA specifically states about Mr Godongwana that it followed an enhanced due diligence. The General, however, knows that because he saw the due diligence. The point is that following due diligence does not mean that the due diligence must be ignored.
Now that the role-players are known as revealed in the Sunday Times, SCOPA is able to call the parties to account for themselves.
Poseidon Water Project
For the sake of completeness, he quote his 23 October 2020 letter, with additional bits of information, which he thought would enhance understanding.
Earlier this year, DBSA funded a company called Poseidon, with alleged links to Harith General Partners, a company which had not been painted in a favourable light by the Mpati Commission of Inquiry into the Public Investment Corporation (PIC). In fact, the Mpati Commission Report stated:“ Harith’s conduct was driven by financial reward to its employees and management, and not by returns to the GEPF. In essence, the PIC initiative, created in keeping with government vision and PIC funding was ‘privatised’ such that those PIC employees and office bearers originally appointed to establish the various Funds and companies reaped rich rewards.”
Poseidon was allegedly funded to the tune of R50 million to conduct feasibility studies for some kind of water project in South Africa and other southern African countries. At that time, another R300 million was apparently still to be disbursed for the implementation of this project. It is important to know, the importance of which will become apparent, that Poseidon’s shareholding is allegedly as follows. Firstly, a screenshot of a DBSA document and secondly, his rendition to make the information clearer was made available. He did not go into them, but said they could be revisited.
He continued that information about Poseidon reads like a veritable who's who of directors of public-owned entities. The following PEPs were identified within the group structure: Jabu Moleketi; Lungile Cele; Renosi Mokate; Patrick Xola, Rohan Mora; Ata Moloto; Alex Mary Lugenwa and Tshepo Motlhale (sp?). It would appear that some PEPs are allegedly accessing government funding at DBSA in the same way that they allegedly accessed funding at the PIC.
The General had written to the President on 17 June 2020 about this case, and has not received a response to date. However, he noticed that DBSA had then commissioned an independent inquiry into Poseidon’s pedigree, without consulting him despite his making the allegations in the first place. Needless to say, the independent commission which DBSA powers would have a predetermined outcome. Harith General Partners have since taken the United Democratic Movement (UDM) and himself to court, in an effort to prevent exposing the alleged corruption related to Poseidon. In the first instance, they withdrew their urgent application and were ordered to pay UDM's costs. The day before this meeting, they lost another urgent application with costs in the High Court. The judgement is labelled Annexure H.
Quite a while after the Poseidon matter, the matter of Cranbrook Properties appeared on the General’s radar through different anonymous sources. His initial concern that something was wrong at DBSA now received confirmation. The entire saga relates to the alleged mismanagement and maladministration of three loans that DBSA had allegedly granted to three entities: Blue Horizon Investments 11 (BH11); Moeparutsi Properties and Proline Trading Sixty (PT60); all of which allegedly form part of Cranbrook Properties.
The total of the outstanding loans allegedly stood at R426 million, including accumulated interest. There is no evidence of any repayments since disbursing the loans in the mid-2000s, aside from an alleged partial repayment on the BH 11 loan. The DBSA allegedly approved the write-back of hundreds of millions of Rands in interest according to the in duplum-rule, but also wrote off a whopping R259 million.
In 2007, DBSA loaned R10 million to Shokeng Mahlake and Mashupye Matlala to acquire 17% of the shares in Cranbrook Properties as part of a BEE deal. There have been no repayments of the loan after 2012. No letters of demand have ever been issued for the outstanding obligation. No such entity as Moeparutsi Properties has ever been registered with the Companies and Intellectual Property Commission (CIPC). The original loan agreements were very poorly drafted, missing registration and identity numbers. DBSA does not have any contact or financial information on the borrower or any of the sureties on record. The loan was directly deposited into Cranbrook’s account. The DBSA board recently wrote the debt off as it was not able to find the people who were given the loan.
General Holomisa was subsequently able to find the identity numbers of the borrowers, which means that the Business Support and Recovery Unit (BSRU) of DBSA did not exhaust all avenues in locating them.
Blue Horizon Investments 11 Pty Ltd (BH11)
In 2007, DBSA loaned R124 million to BH11 to develop the Ledibeng Eco-Estate in Limpopo. 65% of the loan was repaid, but this is unsubstantiated. BH11 was placed under liquidation in 2017. The liquidator’s attorney had apparently hinted to DBSA about potentially fraudulent transactions, and that funds may have been disbursed for the benefit of certain directors and to the detriment of the Cranbrook group and its creditors. The BSRU asked the board to agree to a carve-out, in favour of DBSA, of up to R20 million as suggested by the liquidator’s attorney. This is irregular as the relevant legislation prescribes a fair distribution of the relevant company’s assets for the benefit of the general body of creditors. There was also a request to write back the interest of R11.6 million which the BSRU argued exceeded the amount which may be claimed in terms of the in duplum rule and to cease any further interest charges.
Properties and Proline Trading Sixty (PT60)
In 2008, DBSA approved a further loan of R125 million for PT60 as funding required to install municipal services for the Spekboom River Estate in Burgersfort, Limpopo; which Cranbrook would later develop. The granting of facilities to PT60 was a part of a greater restructuring of the Cranbrook loans, which was agreed to at the time. This seems to be an odd arrangement for DBSA to have entertained. The DBSA never issued any letters of breach or letters of demand to the debtor. PT60 continues to be in default, with total debt due over R311 million, which reportedly constitutes the total unpaid debt and accrued interest.
Although the loan was secured by a mortgage bond, the value of the property is currently worth R61.8 million at forced sale value. This is according to BSRU which requested that legal action against the individual sureties be delayed until the underlying secured properties in PT60 have been disposed of, to ensure cooperation of the directors with the proposed legal process as well as the writing back of interest which exceeded the amount that may be claimed in terms of the in duplum rule, as well as to cease any further interest charges in light of the in duplum rule.
There is a considered legal opinion that BSRU did not apply this rule correctly in the BH11 and P60 deals. This begs the question as to how many other deals this has also been the case. The 6 November 2020 DBSA response on its website disagrees with this, but these opposing views can easily be tested. It also appears that for years, BSRU has been negligent in its monitoring of this bad debt and that it wanted to cause the Audit Risk and Finance Committee to make decisions that would effectively excuse negligence. There has also allegedly been conspicuous material non-disclosure by BSRU in its reporting memo to the board. False assurances were also allegedly given that entities on non-performing lists were in fact being monitored. There are clear signs that this entire transaction may constitute BEE fronting, and that DBSA has either wittingly or un-wittingly been a party to that. Now that BSRU has woken up to the bad debt, the board has seemingly been asked to depart from its fiduciary duties and implement a total write-off on a transaction which amounts to fraud and theft.
Lastly, aside from the larger principles at stake, there seem to be deficiencies in DBSA’s administration, with a cacophony of alleged errors, maladministration and mismanagement such as: decisions apparently being made without honouring internal systems; poorly written contracts; lack of identity and entity numbers; and no follow-up when borrowers neglected payments for years.
The problem here is that where there is smoke, there is fire. This may not be an isolated instance of shoddy administration. A simple desktop search of the Cranbrook Properties prospectus in Annexure I, contains information which in some respects contradicts information provided by BSRU. It is unclear who is telling which lies to whom. What the exact picture of Cranbrook was at inception as per the prospectus; what was presented to DBSA at the time that the loans were approved and what BSRU recently presented to the Board must be reviewed through forensic investigation.
Victimisation of Board Members
Earlier this year, it appears that the Board Chairperson, Mr Enoch Godongwana, unilaterally wrote to the Minister of Finance, about two vacancies and the re-appointment of eight executive directors; all of whom were eligible for reappointment. The board allegedly had no knowledge of his action and there were allegedly board members who were unhappy with the entire process and the Chairperson’s action on the Board’s behalf, without its knowledge. What happened is that a now, former board member allegedly questioned Cranbrook and other matters, only to become the subject of malicious action by the Chairperson and senior DBSA management, who as far as the UDM is concerned, have shown their true colours. The seemingly petty action of the Chairperson includes his alleged instruction to DBSA officials, that this former board member's fees be withheld for two months. This allegedly happened after DBSA management all of a sudden recalled all electronic devices issued to board members and some executive staff under the pretext of a forensic investigation. This could rather be seen as an effort to tamper with the ICT to cover acts of corruption by the very same people who were being questioned by this board member.
He reminded the Committee that this board member had asked for an enquiry into management, but the same management then collected all documentation to ensure that it cuts others out.
To give further context to the sophistication of this alleged manipulation, it is alleged that when the Cranbrook matter arose at board level, the company secretary asked for outside legal opinions on the situation. Those legal opinions apparently clearly advised that the entire Cranbrook matter had to be investigated forensically. This advise was allegedly wilfully ignored and DBSA management scrambled to have board members’ access to the DBSA ICT system revoked and electronic devices re-called. This response speaks to wrongdoing and a concerted cover-up effort. The former board member refusal to return the tablet was therefore for good reason and ultimately correct given has emerged.
This person’s board membership was ended through what seems to be a concerted effort of the chairperson to rid the DBSA of a board member who would not toe the line of condoning alleged maladministration and corruption. Even though an independently appointed executive search firm was apparently appointed, albeit under allegedly irregular conditions, Finance Minister Mboweni had still decreed that the appointment process should still be led by Mr Godongwana, who the General believed had compromised himself with a clear bias towards the aforementioned board member.
He understood that Minister Mboweni had been made aware that the appointment of the independently appointed executive search firm, was allegedly done unilaterally by Mr Godongwana, in contravention of DBSA internal processes, without the knowledge or involvement of the board or human resources and nominations committee. As far as General Holomisa is aware, the Minister did not act, which is evident in the continuation of processes that led to the recent announcement of the new board; which excluded the previous board members who refused to toe the Chairperson’s line. The DBSA board is constituted in terms of DBSA Act 13 of 1997, yet in 23 years, regulations which the Minister must make for this appointment process have apparently never been promulgated. It was unsettling to hear that Chairperson, CEO Patrick Dlamini and Company Secretary Bathobile Sowazi were ruling the roost at DBSA to the extent that some board members were being offered favours while others were wilfully being frustrated for fulfilling their duties. The fact that there are allegations that the Company Secretary has been tampering with board meeting minutes is disconcerting.
Irene Charnley case
In his June 2020 letter to the President, General Holomisa addressed the inclusion of Ms Irene Charney’s inclusion on the PIC’s interim board and whose term has since been extended. Her company, Smile Telecoms received approximately R1.7 billion (in today’s terms) from the PIC. He also wrote to Minister Mboweni about this on 3 June 2020 (Annexure J) and received no answer. Since writing that letter, he was informed that PIC wrote off the amount a long time ago. Moreover, Ms Charnley has since received a $20 million US dollar loan which she has allegedly failed to repay. Another group with whom she is partnered is a Saudi Arabian group, which might mean that the PIC and DBSA money were channelled out of South Africa on purpose. This must be investigated.
Considering the information presented, he felt that it behoved SCOPA to investigate. He asked that the Minister be asked to explain the correspondence with Ms Ndamase, one with a reference number and one without as well as the phenomenon of double dipping, where one company secures public funding from more than one government institution.
National Treasury organisational structure
Director General of National Treasury, Mr Dondo Mogajane, said that there is a systemic compact which is signed by the Minister of Finance. National Treasury is an entity in the Ministry of Finance. Its status within the ministry is the same as DBSA in so far as the Ministry of Finance is concerned. The Assets and Liability Management team, would, on behalf of the Minister, engage with DBSA and its board on matters which affect the Ministry of Finance, whether on the compilation of a Cabinet memo to appoint the board or the preparation of the annual financial statements and reports thereof. Ideally, and having listened to the General, these issues fall clearly within the Ministry of Finance; DBSA and its board, which has certain fiduciary responsibilities required of it. National Treasury’s engagement with DBSA in terms of day-to-day matters, including all of the investment decisions they would have made in the past is essentially a board issue from a corporate governance perspective as well as from the perspective of the oversight role which the Minister has to play. The Minister would only be assisted in a very limited way by the National Treasury Unit called Asset and Liability Management. He was happy to engage further on any questions which he is competent to answer, otherwise he would ask that they be referred to either the DBSA Board or the Minister.
Mr M Dirks (ANC) thanked the General for the time he put into the detailed presentation. The presentation deals with a festival of alleged corruption. The allegations, were no small matter and in fact, very scary. He read the legal opinion from Parliament's Legal Services very carefully which stated the alleged financial irregularities at DBSA fall within SCOPA's mandate. He felt that it should not outsource its powers at this point. This matter should be dealt with, however, the Committee should not deal with the matter today before hearing from DBSA. At that meeting, he requested that DBSA bring information on all the loans granted since 1994 and the status of the repayments of all the loans.
Mr Dirks said that the Hawks need to answer to allegations made against them at the beginning of the presentation about an investigation into Mr Godongwana which never took place. He has previously raised selective prosecution in its meeting with the Hawks the week prior. They should be called in to answer to the way that they prioritise what is investigated and what is not. Additionally, all the role-players identified by the General; DBSA and the Hawks must be called in so the matter can be discussed in detail. However he did not think the discussion should take place in this meeting.
Mr B Hadebe (ANC) said that SCOPA had listened to what the General had articulated, and it gave the Committee a sense of what is contained in the annexures. Some allegations deal with alleged misappropriations of the public purse, and some fall outside the mandate of SCOPA, whose mandate is to deal with financial compliance or misappropriation of funds. For SCOPA to do justice to the General and to SCOPA's work itself, it needs to be afforded a reasonable time period to engage with the annexures and to afford all those implicated, be it DBSA and its board, with an opportunity to respond. Some of the matters may need to be referred to other parliamentary committees, such as Finance. It would be unreasonable for SCOPA to have a view at this juncture in a matter that is highly sensitive, as the General has noted that there are politically exposed people. Not all politically exposed individuals are to be painted with the same brush of corruption, meaning that such matters need to be treated sensitively. He agreed with the proposal by Mr Dirks. The matters presented are serious in nature and SCOPA needs time to engage as it would make no sense to begin interrogating now. He added that in future SCOPA cannot set itself up for failure where reports are not furnished well in advance; it should rather not engage but postpone the meeting. It sounds like a broken record repeating the same thing, but receiving eight email attachments at 08:30 does not do justice. The General did not provide reasons why the attachments were sent so late.
Mr R Lees (DA) said that the picture painted is a bleak one and felt it was sufficient to warrant an investigation. He supported the statement by Mr Dirks. However he wished to take it a step further and suggest that the matter be dealt with in the same format as the Eskom enquiry. He was sure the Committee recalled that Mr Gordhan suggested SCOPA could do a similar enquiry. He was fully in agreement with such a procedure. The problems with board appointments were of great concern. Enoch Godongwana himself was a questionable appointment given he left Parliament under a cloud and he has a somewhat cloudy history. Therefore, his appointment to the board of DBSA, a key financial institution, seemed to be problematic . SCOPA, even at the time, opposed it. He referenced the Finance Minister’s appointment of Jenitha John as CEO of the Independent Regulatory Board for Auditors (IRBA). Jenitha John is now under investigation by IRBA the organisation she leads, for her role in the Tongaat Hulett scandal. The Minister of Finance needs to come and explain his role in these appointments given the information General Holomisa has placed before the Committee.
Mr Lees thought DBSA had many problems and gave the example of the R3.5 billion loan given to SAA in January 2020. He had been refused access to the due diligence for the granting of that loan by DBSA. That loan was clearly a politically instructed or motivated loan decision which was made within a day or less. It is clear that proper due diligence was not conducted by DBSA. He suspected that Enoch Gondongwana was involved in that loan as well. When the process gets started he would aim to look into this loan as well as the loans brought to their attention by General Holomisa. He supported both Mr Dirks and Mr Hadebe.
Ms B Van Minnen (DA) agreed that the matter should be investigated. She added that more time is needed for SCOPA to look at the documents.
Ms N Tolashe (ANC) said that the Committee should begin its own investigation and speak with all the parties involved. SCOPA should ensure it gathers all the facts. Corruption is corruption; however, it should be systematic in investigating and not emotional.
Mr S Somyo (ANC) agreed with Members on all points save for one point made by General Holomisa, which he asked the General to look into. This related to the due diligence on Mr Gondongwana. The General made reference to Pillay Commission findings which were made in 2008 on Mr Gondongwana, Mr Mcebisi Jonas, and former Minister Arnold Stofile. The dead could not speak for themselves, however he urged the General to revisit the 2009 judgment made against Judge Pillay and the Report of the Commission of Inquiry into the Finances of the Eastern Cape in 2009 was set aside. Thus that instance quoted in the due diligence on Enoch Godongwana would be rendered a nullity. Jonas was cleared by the court on the same grounds. He agreed with Members that SCOPA needs to give itself time to deal with these matters.
Chairperson Hlengwa said that that was the final comment. He said that a hearing would be possible, and it would prepare a roadmap for hearing with Parliament's Legal Services. Engagement with the Hawks and other organisations will be made. The Committee will then need to talk to the Minister himself, as the DG has made clear. A mammoth task is ahead of the Committee. As the Committee had already received the letter upon which the briefing was founded, the meeting went ahead despite the eight annexures submitted late. He asked the Hawks, National Treasury and SIU to take the Committee into confidence on whether it is currently dealing with any DBSA cases.
Directorate for Priority Crime Investigation (Hawks) remarks
Lt Gen Tebello Mosikili, Hawks Deputy National Head, appreciated the presentation by the General and the invitation extended to the Hawks to check on the matter referred to the Hawks for further investigation. At this point she was able to confirm that a report was tabled before the National Head of the Directorate on the matter that is still under investigation as recorded in 2013. She had noted the reference made in the letter dated 3 June 2020. She requested that the Directorate be given the opportunity to look into the matters referred to. The Chairperson has made the point about the need for the Hawks to return and account for itself, with a briefing on the status of the investigations.
Special Investigating Unit (SIU) remarks
Adv Andy Mothibi, SIU Head, said the matters presented fell within the areas of maladministration, malpractice and corruption, which are within the SIU’s purview. He wanted to confirm at this point, after checking with Mr Pranesh Maharaj, Chief Programme Portfolio Officer in charge of new cases and case management, that SIU does not have current or past proclamations on DBSA. He also confirmed that there have not been any allegations which have recently been reported to SIU. He paused here and said that SIU would be guided by SCOPA on how SIU could be of assistance in any way.
National Treasury remarks
Director General Mogajane said that he would await documents which General Holomisa has and would certainly bring them to the Minister’s attention. He would await guidance on the matter including items which it may be aware of and which could be included in the matter being discussed. At the appropriate time, National Treasury could then come to SCOPA to indicate what process has been undertaken in addressing the concerns, including available correspondence between the Minister and the former member of the Board and any other communication identified by General Holomisa. He apologised on behalf of the Minister, who was unable to be present as he is in a Cabinet meeting, which is why the DG is in the meeting on his behalf.
The Chairperson said that the Minister has a Deputy, and that he cannot merely represent the Minister as a DG. All these matters would be referred to the relevant structures.
To the Committee, he said that all the information received that morning would be collated. Parliament Legal Services had been listening in. He would set up a meeting with them to discuss the matter extensively and develop a proposal and operational framework which the Committee would follow in dealing with this matter, whether it is an Eskom-style enquiry or a full-scale Committee hearing, because it might not have the time to place this before the House if it is an Eskom-style enquiry, until next February, given the very packed National Assembly schedule.
If it has a full-scale Committee hearing, it can do this without having to go to the House and it can make its recommendations to the House, whilst having all the necessary resources made to it in any case. He requested that Members go through all issues raised and submit on what is within its purview and the structure and format will then be distilled. What is not in dispute is that there are grave allegations before SCOPA of serious corruption, maladministration and failure to adhere to due process, which requires its attention. General Holomisa would have to be present at the hearing to speak further to the issues raised.
The meeting today was to have him speak to his letter; it was a fact-establishing meeting as the letter on its own would have been insufficient. There are whistleblower matters, and SCOPA needs to establish if the parties are willing to come forward. He indicated that if SCOPA needs to use the power of subpoena, it would do so. This is a matter which SCOPA takes very seriously, and which will have its attention. A judicial commission of enquiry is not within SCOPA’s purview. It is not constitutionally empowered to do so, nor do the rules of Parliament allow it to do so. However, at the end of the Committee’s hearings, it would make a determination to forward to the President, if need be, on the basis of the established facts; or else transfer the matters to the necessary law enforcement agencies. This is why the Anti-Corruption Task Team is so important, as it is where coordination and synchronisation of the pooling and sharing of resources, knowledge, skills and expertise comes in to enable a logical and legal conclusion with full consequence management. These were all the options available to SCOPA and it would consider this matter, as it had already begun to do.
SCOPA wants to encourage South Africans to come forward who are sitting in areas where there is corruption and maladministration taking place. If the Committee does not deal with it itself, it would redirect it to the necessary structures and bodies to deal with it. He urged South Africans not to sit and allow corruption to thrive on their watch. He realised that the safety of people needs to be ensured. However, SCOPA has an open-door policy, and he hoped that today was an open demonstration of that policy.
Mr Hadebe noted the Minister’s apology and said it cannot be that the Minister is represented by the accounting officer. If the Minister cannot come, the Deputy Minister should. He asked that that commitment be made so that the Committee can be seen to be doing real work and not reinventing the wheel.
The Chairperson agreed. The DG should take this into account, and that his presence in the meeting was in his own right, to brief them on organisational structure.
The Director General replied that this was noted.
The Chairperson said that he did not think that SCOPA could deal with the DBSA matter effectively on a virtual platform. He has been informed that venues has been prepared in Parliament for physical meetings and that it should consider gravitating back to normality.
Mr Hadebe and Ms Tolashe agreed.
The Chairperson adjourned the meeting and reminded Members of the subsequent meeting at 11:30.
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