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’

CityPress - - Front Page - SU­SAN COM­RIE in­ves­ti­ga­tions@city­

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:

The deal

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.

En­ter Sakhum­notho

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.”

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