Yengeni backer probed for dodgy sale
ANC heavyweight Tony Yengeni’s former financial backer bought a R7-million mansion in Johannesburg two weeks after selling road maintenance vehicles to a struggling rural Eastern Cape municipality for R132-million.
The deal between Mcebisi Mlonzi’s company, Laman, and Amathlathi municipality is being investigated by the provincial government after it emerged that:
The transaction with Laman was concluded under Section 32 of the Supply Chain Management Act, which gives the municipality powers to award contracts outside the normal tender process in special circumstances;
That Laman also sold machinery to Ngqushwa municipality, where the municipal manager has been suspended for concluding the estimated R60-million transaction allegedly without following proper procurement processes; and
That in both transactions the poor municipalities would allegedly have to pay more than double the value of the machinery in the hire-to-buy transactions.
Mlonzi was exposed by the Sunday Times in 2002 for secretly paying R55 000 towards Department of Public Enterprises chief director Andile Nkuhlu’s wedding while vying for a R335-million state forestry contract that his company, Zama Resources Corporation, later won.
Provincial Local Government and Traditional Affairs MEC Fikile Xasa’s spokesman, Mamnkeli Ngam, this week said his department was in the process of investigating the sale of the machinery to the two municipalities.
The municipalities, he said, must submit a response on what motivated them to acquire the machinery and whether supply chain management processes were followed. He said related issues had led to the suspension of Ngqushwa municipal manager Vuyokazi Mbelani.
The lucrative contract between Amahlathi and Mlonzi to supply 19 machines, ranging from an offhighway truck to a motorgrader, was concluded on April 1.
Deeds records show that on April 15 Mlonzi and his wife, Siyasanga bought a R7-million home in Illovo, Johannesburg.
A R4-million bond was financed through Absa Bank while the R3million balance was paid in cash.
Commenting on the purchase, Mlonzi said: “Taking transfer of the Illovo property and the conclusion of the deal with Amahlathi at about the same time is coincidental.”
The businessman, who owns a small fleet of cars including a Porsche 911 Turbo S which retails for about R2-million, had rented the house before buying it.
Mlonzi said he was unaware of any investigations into the transactions at either municipality.
“However, if an investigation were to be conducted, I would cooperate fully,” he said, adding that the transactions were properly authorised.
The contract with Amahlathi shows that the municipality paid a R10.3-million deposit and has to pay 33 monthly instalments of R2.9-million, while Ngqushwa was to pay an initial R2.1-million fee followed by 36 instalments.
Amahlathi municipal manager Balisa Socikwa, who signed the contract, said the municipal council took a resolution in October last year to buy the machinery.
DA councillor Taki Kyriacos said details of the deal were disclosed to council only in June, after the contract had been signed. The municipality, which has an annual budget of R200-million, would not be able to afford to repay the instalments next year.
Ngqushwa’s shipment, worth an estimated R30-million, will ultimately cost ratepayers more than R60-million.
In May the municipality pleaded for a financial bailout from the provincial government.
In 2002 Yengeni, then ANC chief whip, named Mlonzi as his main benefactor in that year’s register of members’ interests in parliament.
Under the sponsorship category, Yengeni named Mlonzi as the person who paid R317 000 for an advert placed in several newspapers in a bid to clear his (Yengeni’s) name in a corruption investigation.