Bosasa’s multimillion-rand state bribery scheme
LINDA Mti and Patrick Gillingham.
These are the two names former chief operations officer at Bosasa – now African Global Operations – Angelo Agrizzi, placed at the centre of the lucrative, multi-million-rand prison contract scheme that helped the company coin it for years. The contracts were found to be illegal by the Special Investigating Unit (SIU) in 2009, as the prescribed state procurement processes were not followed in securing them.
All efforts to bring to book those fingered by the SIU’S report bore no fruit, until recently, and following the submission of Bosasa-related evidence to the Zondo Commission.
Mti was national commissioner of the Department of Correctional Services (DCS), while Gillingham was a DCS regional manager when his relationship with Bosasa started in the early 2000s, before moving up to become chief financial officer. Both resigned amid investigations into their conduct in relation to the contracts, Mti in 2006 and Gillingham in 2010.
Agrizzi told the inquiry how Gillingham first presented the concept of outsourcing catering services for certain prisons across the country, while in his former position. Early in the previous decade, during a meeting of DCS management, he shared the benefits of the department handing over the management of its prison kitchens to a private company.
Bosasa at the time had experience in this field, with a contract for Lindela Repatriation Centre in Krugersdorp, which it secured with the Department of Home Affairs in the 1990s.
It was also known in the mining industry as a service provider for hostels, so the company was well placed for the DCS contract.
When the idea got the nod, the paperwork outlining the tender specifications was prepared, with Bosasa in mind. In fact, Agrizzi and other Bosasa executives were party to the design of the contract, so as to gain the upper hand once the tender went out.
Bosasa secured the contract in 2004, and this was valued at R300 million per annum. Soon afterwards, Bosasa added seven more satellite sites to the contract, with Gillingham’s approval, for an additional R14m per month. Gillingham, his boss Mti, Bosasa chief executive Gavin Watson and the rest of his executive team were happy campers.
An agreement between the two sides was struck: as long as Bosasa had the contract, the public officials would always get a cut for helping to seal the deal. The loyalty of the Bosasa executives involved was bought in the same way.
Agrizzi spoke of bonuses Watson would give indiscriminately, in varying amounts, to buy their silence.
The show was far from over though, as more contracts would be conceptualised in the same way for the same purpose. They, too, were meant to favour Bosasa, and put it at an advantage over other potential bidders. Contracts for CCTV security cameras (R224m); high-tech security fencing (R471m) and TV set installations (R106m) secured between 2004 and 2006, meant Bosasa was pocketing over R1 billion per annum, just from its prisons work.
The company executives laundered the payments to generate cash for bribes, using different cash-based businesses, among them a liquor wholesaler in Johannesburg and a petrol station in Mpumalanga.
Agrizzi told the inquiry that Bosasa would transfer a certain amount to a cash-based business that would return it in cash via an agent, and would then be distributed to the beneficiaries. To keep track of who was paid what amount when, Agrizzi had a number of “little black books” that he kept in the office. Around 80 public officials were paid monthly cash bribes by Bosasa at one time or another.
When the scheming between Bosasa and DCS started attracting the attention of the press and authorities, plans had to be made to avert potential prosecution. With the stakes high, the company had to rope in lawmakers and the public prosecutions authority into its cabal.
Enter Vincent Smith, whom Agrizzi first met in 2010 in Parliament, with the purpose of trying to sway him towards doing business with Bosasa. Smith was chairperson of the portfolio committee on correctional services.
On Agrizzi’s evidence, the former MP wanted nothing to do with Bosasa in the beginning, but with time warmed to its advances and brought fellow MPS and committee members Vuselelo Magagula and Winnie Ngwenya into the scheme. While Smith allegedly got a monthly cash bribe of R45 000, the other two received R30 000 and R20 000 respectively. Smith would later get further benefits of a security upgrade at his home after a crime incident, as well as payment towards his daughter’s tuition fees at a university in the UK.
When Magagula and Ngwenya ceased being members of the committee, their payments were stopped and Smith’s increased to R100 000 per month, at his request. With the MPS support bought, Bosasa ensured it would stave off any negative opinions and protect it from scrutiny.
The MPS could help control what happened in Parliament, but their powers did not extend to the National Prosecuting Authority (NPA), which now had its sights on Bosasa, thanks to the SIU report.
To mitigate against potential prosecution, Bosasa again employed the method that had always worked for it: it paid for loyalty and silence with cash. According to Agrizzi, Mti – who had continued to benefit from cash payments even after his resignation – arranged for help from within the top echelons of the NPA.
Senior advocates Nomgcobo Jiba and Lawrence Mrwebi would provide Mti with crucial updates on the progress of the case stemming from the SIU report. He would then relay this to his Bosasa associates. In return, the pair would allegedly get cash bribes. Jiba and Mrwebi recently faced an inquiry into their fitness for office over allegations of abuse of power.
African Global Operations was recently stripped of its DCS contracts, with Justice and Correctional Services Minister Michael Masutha saying in a statement in February that the department will be reviewing them.
Prior to this, Agrizzi, Gillingham and several former Bosasa executives were arrested on corruption and money laundering charges. They appeared in the Specialised Commercial Crimes Court in Pretoria on February 6. Although Mti was also sought by the Hawks, he had not been apprehended at the time and did not appear in court with the others. Watson has to date not been charged. The Hawks said the arrests were linked to the SIU report.