R42m dirty money probe
An investigation into an alleged money laundering scheme involving NGOs and the social development department will be launched
The Gauteng department of social development is in a quandary after it emerged that rogue officials allegedly robbed it of R42 million in a sophisticated money laundering racket. The allegations have led to Gauteng Premier David Makhura and the provincial Treasury launching two separate investigations into the matter.
An investigation by City Press and Kaya FM News has revealed that the social development department allegedly used three nongovernmental organisations (NGOs) to channel R42 million to two NGOs operated by Life Esidimeni Healthcare and an NGO called 20 PTP, which is not even operational.
The investigation reveals that the following activities were carried out by officials in Gauteng’s department of social development:
In April 2016, officials used the SA National Council on Alcoholism and Drug Dependence (Sanca) as a conduit to channel R14 million to Witpoort Treatment Centre, an NGO owned and operated by Life Esidimeni.
In June 2016, they used A Re Ageng Social Services, an NGO in Randfontein, to channel R13 million to Life Recovery Centre, another NGO run and owned by Life Esidimeni.
In October, officials tried unsuccessfully to use A Re Ageng again without the NGO’s consent to channel a further R10 million to Life Recovery Centre. This led to a court case, launched on November 23, which blew the lid on the sinister scheme.
In November 2016, A Re Ageng’s account was hacked and R5 million was stolen and transferred to the account of Kish Gas, a Pretoria-based petroleum products merchant, according to court papers.
Bank statements obtained by City Press and Kaya FM reveal that Life Recovery Centre and Witpoort Treatment Centre used a bank account linked to Life Esidimeni.
Officials used an NGO in Mohlakeng as a conduit to channel R5 million to 20 PTP, another Mohlakeng NGO which, as stated above, is not operational.
Yesterday Makhura’s spokesperson, Phumla Sekhonyane, said: “Treasury has confirmed that an independent investigation is under way regarding the transfers of money to A Re Ageng and two other NGOs by the department of social development.
“[In a meeting] on Friday, it was decided that, given preliminary indications that the practice of transferring monies to NGOs in a questionable way may have involved several NGOs over a decade, the premier has ordered a wider independent investigation into the transfers of these monies to NGOs.”
RUSHED TO COURT
On November 23, the department rushed to court to freeze A Re Ageng’s Absa account which had the R10 million, without giving the NGO an opportunity to oppose the case. And on December 14, the department did the same with the NGO’s FNB account, which it used for day-to-day operations and to pay salaries. The High Court in Johannesburg granted both orders. In court papers, the department made startling claims that A Re Ageng stole the R5 million to settle its debts with Absa, claiming as follows: “A Re Ageng, Absa and Martie Mostert, a bank manager at Absa, apparently [between] November 17 and 21, unlawfully and intentionally caused R5 million to be paid from said account over to Absa as settlement for an alleged debt by the first respondent [A Re Ageng] to the second respondent [Absa] and third respondent [Mostert].”
The department also argued that A Re Ageng had agreed, on June 22, to receive R23 million on behalf of Life Recovery Centre and Life Esidimeni.
In addition, it claimed that A Re Ageng reported the hacking on November 17.
“I have been further informed by an anonymous source that between November 17 and 21, the directors of A Re Ageng authorised that R5 million be transferred out of [its] account in favour of Absa to settle outstanding debts,” said the department’s legal services director, Victor Languza, in court papers.
However, in an affidavit written by A Re Ageng director Mpule Thejane-Lenyehelo to unfreeze the NGO’s FNB account, she argued that she had written to Social Development MEC Nandi Mayathula-Khoza on November 10 2016 to report the hacking of the account and the dispute over the R10 million.
Her affidavit goes on to reveal that in June last year, the social development department’s officials asked her if they could use her NGO’s bank account to transfer R13 million to Life Recovery Centre, which was going to be launched in a few days. Thejane-Lenyehelo agreed.
A few days later, officials deposited the money into A Re Ageng’s account, and she transferred it to an account which she thought to be that of Life Recovery Centre, which was now operational. References linked to the deposit later revealed that the account was associated with Life Esidimeni.
On October 18, Thejane-Lenyehelo claimed in the same affidavit that another amount of R10 million was deposited into the NGO’s account without her consent.
SOURCE OF THE MONEY
As she did not know where the R10 million came from, she called possible donors and checked with the bank if it could trace the origins of the money, all to no avail.
In an affidavit written by Thejane-Lenyehelo to Mayathula-Khoza, which was also later attached to court papers, it states: “We were told [by the bank] that it was difficult to trace as the reference number was not electronically generated and did not resemble any official reference. To date, the reference number cannot be traced by Absa to ascertain where the money originated from.” Twelve days after the R10 million was deposited, Thejane-Lenyehelo said in the court papers that she received a call from a social development official, who demanded she transfer the money to Life Recovery Centre.
“On the same day I was contacted by a Ms Maluleka, who said I had agreed to transfer R23 million into the account of Life Recovery Centre. I told her this was incorrect as I had only agreed to transfer the initial amount of R13 million, as stipulated in my acceptance letter. At a subsequent meeting, I brought the matter to [social development officials’] attention and Ms Maluleka, who was also present in that meeting, insisted there could have been a communication breakdown as the amount to be transferred to Life Recovery Centre was meant to be R23 million. And Ms Maluleka apologised [for this].”
Thejane-Lenyehelo went on to say officials harassed her and asked her to transfer the money. “I told them that without bankgenerated proof that the money came from their bankers or the provincial Treasury, I will not transfer the money.”
She also claimed that A Re Ageng’s Absa account was hacked twice last year. Two amounts of R1 000 each were stolen in October and November.
Thejane-Lenyehelo also said that in October her cellphone number was illegally switched from Vodacom to MTN, making it impossible for her to get withdrawal notifications from the bank.
On November 11, the account was hacked again, and R5 million was transferred into an account that was later revealed in court papers to be that of Kish Gas.
Thejane-Lenyehelo told City Press that on December 15 – and not 17, as claimed in court papers by the social development department – she informed MayathulaKhoza through her chief of staff, Thandaza Dlulane, about the debacle. On December 30, the court granted A Re Ageng access to its FNB account.
Bank statements obtained by City Press and Kaya FM News show that in April last year, social development department officials transferred R14 million into Sanca. The drug rehabilitation NGO then transferred the money into the account of Witpoort Treatment Centre.
It happened to be the same account in which A Re Ageng was asked to deposit the R13 million in July and the R10 million in October.
Sanca director Sandra Pretorious said while she and her board did not suspect any foul play, they did raise questions about why the department did not transfer the money directly to Witpoort Treatment Centre.
“They told us that the centre was newly established and that it had not yet been loaded on the provincial Treasury’s system,” she said.
Another Mohlakeng NGO, which did not want to be mentioned, told City Press that in 2013, social development officials had used it to channel more than R5 million to 20 PTP, an NGO which is yet to open its doors to the public.
A manager said: “They gave us more than R5 million for 20 PTP. We used about R3 million to buy equipment and inventory for 20 PTP. There is about R2.5 million left in our account, and we use the interest, which amounts to about R15 000 every month, to run our own place.”
The manager failed to produce receipts to prove this.
Tanya Bennets, group communications manager of Life Healthcare – which owns Life Esidimeni – confirmed that Witpoort and Life Recovery were owned by Life Esidimeni. However, she denied that these establishments shared the same bank account with Life Esidimeni.
This is despite the fact that Thejane-Lenyehelo’s affidavit reveals that social development officials had told her that there was nothing wrong with depositing funds meant for Life Recovery into the account of Life Esidimeni as the two were “run by the same people”.
The department’s own founding affidavit claimed that A Re Ageng had deposited the initial R13 million into Life Esidimeni and Life Recovery Centre’s account.
Mayathula-Khoza’s spokesperson, Mbangwa Xaba, said the MEC had called for a forensic probe into allegations of money laundering. “The MEC approached the police and the Gauteng Treasury to conduct the investigation into the money laundering allegations involving her department and A Re Ageng,” he said.
Xaba said the probe would run concurrent with the court proceedings that his department had instituted against A Re Ageng to recover the outstanding amount.