Cronies R1.7bn score in PIC deal
A confidant of Jacob Zuma finds himself a wealthy Total SA shareholder, thanks to pensioners’ money. Another beneficiary owns R122m in assets ‘for charity’
A close confidant of President Jacob Zuma and a charismatic religious leader are among a host of people who landed a significant stake in a R1.7 billion deal funded through state employees’ pension money.
The lucrative deal, to buy a 22.95% stake in oil company Total South Africa, was red-flagged by UDM leader Bantu Holomisa, who asked the Public Protector to investigate.
Although Kilimanjaro Capital was only registered in February 2015, it asked the Public Investment Corporation (PIC) to fund 100% of the acquisition.
ACity Press investigation has established how a close confidant of President Jacob Zuma’s landed a significant stake in a controversial R1.7 billion deal – and then had his shareholding doubled shortly before the deal was signed. Sizwe Shezi has served as a trustee of two of Zuma’s trusts – the Friends of Jacob Zuma Trust and the Jacob Zuma RDP Children’s Trust – and has been described as “one of Zuma’s most committed backers”.
His company, TheMan Investments, received shares worth an estimated R122.4 million courtesy of a generous loan from the Public Investment Corporation (PIC), which makes investments using government workers’ pension money.
The lucrative deal, to buy a 22.95% stake in oil company Total SA, was one of the deals that United Democratic Movement opposition leader Bantu Holomisa red-flagged in his letter to Public Protector Thuli Madonsela last week.
Holomisa said he had “anonymously received serious allegations [of] possible corruption” at the PIC, including allegations that the governing party had benefited from PIC funds.
City Press’ investigation raises several red-flags the Public Protector may wish to consider:
During mid-2015, a company called Kilimanjaro Capital approached the PIC with a request for funding to acquire a 25% stake in Total’s South African operations from its BEE partner, Tosaco.
Consortium chairperson Lawrence Mulaudzi said: “We approached the PIC, Standard Bank and Nedbank. Standard Bank and Nedbank offered us term sheets – the PIC said they could not give us term sheets until we were selected as the preferred bidder, but they gave us an expression of interest.”
Although Kilimanjaro Capital was only registered in February last year, it asked the PIC to fund 100% of the acquisition.
Apart from Mulaudzi, Kilimanjaro Capital’s directors included businessman Kinesh Pather, MD of the politically connected Bataung Group.
It is not clear why the PIC did not bid directly for the shares but chose to work through a middleman. However, Mulaudzi claims theirs was not the only consortium the PIC was negotiating with.
The PIC denies that they had any involvement at this stage. In a written response, PIC chief executive Daniel Matjila said “the consortium approached the PIC after being awarded the status of being the preferred bidder”, which was only in early August.
However, this is contradicted by various sources, including Mulaudzi himself.
City Press understands that by early June, Matjila had already informed Tosaco that the PIC was interested in giving Kilimanjaro Capital 100% of the funding necessary to buy their shares in Total.
Matjila declined to comment on most of the detailed questions City Press sent through, but said the Kilimanjaro bid was put through all PIC’s internal processes and – despite Holomisa’s allegations regarding a lack of scrutiny – the bid had been subject to “thorough due diligence”.
Although there is no trace of Shezi’s involvement in the deal in publicly available records, share registers provided to City Press by Mulaudzi show that he holds his stake through a company called Shira Holdings ( see graphic).
Share registers show that when Kilimanjaro initially approached the PIC, he and Pather each held 31.5% of Shira, while Shezi held just 10%.
However, on July 10, Shezi’s stake was inexplicably doubled when Pather and Mulaudzi transferred some of their shares to Shezi’s TheMan Investments.
The change in shareholding ultimately increased TheMan’s stake from R61.2 million to R122.4 million. City Press tried to speak to Shezi, but Mulaudzi said he was unavailable and all questions should be directed to him.
Days before the final bid was made, the consortium changed again when a new partner, Sakhumnotho, came into the deal. Not long after, the new consortium – Kilimanjaro Sakhumnotho – made a binding offer to Tosaco.
None of the parties involved on either side of the transaction would confirm the final figure, but City Press has established that a generous R1.7 billion was paid for a smaller 22.95% stake in Total SA, short of the full 25%.
Although Kilimanjaro Sakhumnotho will have to repay the PIC’s R1.7 billion loan, there is substantial value in the shares: Tosaco was able to repay a R1 billion loan from Total in less than 10 years thanks to the dividends.
Matjila says the PIC had no involvement in picking the final bidder and the decision was made by Tosaco.
None of the participants was willing to discuss what terms the PIC had offered, but Mulaudzi confirmed these were generous: “The financial institutions were willing, but their money doesn’t come cheap,” he told City Press. “You need cheap money, and the PIC’s terms were favourable compared with commercial banks.”
The Global Fund for Christ
Some of the major beneficiaries of the PIC’s largesse are Sakhumnotho’s charismatic chairman, Sipho Mseleku, and the two not-for-profits he heads up – the Global Fund for Christ and the Global Business Roundtable.
Mseleku described the Global Business Roundtable as “a forum focused on the holistic development of people” while the Global Fund for Christ supports “projects in health, education, job creation and enterprise development”.
The Global Fund for Christ was launched in 2010 after Mseleku received a divine mandate, telling him: “Arise, set up a global fund for Jesus.” Mseleku encourages businesspeople to donate money, shares, property and even bequeath their estates to the charity. But despite R122 million in assets, it appears no charitable projects have been started yet because Mseleku says the charity is “still in a collection phase”.
Their most recent financials show the Global Fund received R4.3 million in donations but spent R3.6 million of that on conferences and glitzy gala dinners.
They have attracted prominent figures, including Chief Justice Mogoeng Mogoeng, the late minister of public service and administration Collins Chabane. On more than one occasion, Matjila himself spoke at their events.
The PIC’s boss was a speaker at the Global Business Rountable’s Men of Integrity Imbizo for two years in a row and is listed as one of the key speakers at the fiveday Global World Congress scheduled to be held at the Sandton Convention Centre in April, which costs R5 000 to attend for just one day.
“[Matjila] is not an official of the Roundtable or the Global Fund,” said Mseleku. “There’s nothing sinister about inviting any CEO to come to present … I know what a conflict of interest is, and this is not a conflict of interest.”
Asked about his connection to Mseleku and whether this influenced the PIC’s decision to grant it such a generous funding arrangement, Matjila said: “The PIC uses different platforms to create its brand awareness as well as to educate its stakeholders about its product offering and role in the economy. Speaking at conferences is just one of the many platforms we use.”
He added that the PIC would cooperate with any investigation by the Public Protector: “The [transaction] is being considered by the Public Protector for possible investigation … should the Public Protector decide to proceed with the investigation, the PIC will offer its full cooperation.”