R42m dirty money probe

An in­ves­ti­ga­tion into an al­leged money laun­der­ing scheme in­volv­ing NGOs and the so­cial de­vel­op­ment depart­ment will be launched

CityPress - - News - SIPHO MASONDO sipho.masondo@city­press.co.za

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

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.

20 PTP

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.

LIFE RE­SPONDS

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.

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