Sunday, August 22, 2010

Inside an ANC cover-up

The Mandela Archives: The billionaire, the bureaucrat and the missing party funds
Aug 22, 2010 12:00 AM | By SIMPIWE PILISOand BUDDY NAIDU

Confidential ANC documents provide fascinating insight into the inner workings of the ruling party - and how top officials were accused of covering up an investigation into a billionaire's alleged theft of R400000.

NOT ME: Mzi Khumalo dismisses allegations that he helped defraud the ANC, saying the party's NEC cleared him Picture: FINANCIAL MAIL

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A series of journals, letters and internal reports - salvaged from a neglected storeroom at Eastern Cape's Fort Hare University - show that senior ANC members were investigated after allegations that they had fleeced the party of investments worth millions.

The "brazen" looting and cover-ups resulted in one of the party's finance heads submitting a strongly worded resignation to the then ANC president, Nelson Mandela.

Some of the ANC members who were investigated now hold senior government posts, and others are empowerment multi-millionaires.

Last week the Sunday Times revealed the contents of a confidential report which disclosed how, in the early '90s, Thabo Mbeki, who was the deputy president of South Africa at the time, advised Schabir Shaik to create a company, Nkobi Holdings, to fund the ANC through "patriotic" dividends paid out for major government contracts.

Today the Sunday Times can reveal that mining billionaire Mzi Khumalo, and eThekwini city manager Mike Sutcliffe's former company, Vukani Consolidated Services, was probed for allegedly defrauding the ANC - allegations Khumalo and Sutcliffe this week dismissed .

Letters dated between 1993 and 1996 show that Khumalo and Sutcliffe were investigated for allegedly colluding to "enrich themselves" by using ANC funds to buy commercial properties in Durban's KwaMashu.

An audit report and letters addressed to Mandela deal with a sum of R400000 earmarked by the ANC to buy investment properties for the cash-strapped party. In 1993 the money was paid to Vukani Consolidated Properties for properties that included a bottle store, supermarket and offices.

But it "transpired that the sellers (Vukani) had fraudulently misrepresented themselves as the owners of the property", Nathan Marcus, the party's former auditor and secretary of finance, writes to Mandela.

At the time, the directors of the company were Sutcliffe and businessman Dennis Mzoneli (who could not be reached for comment). Khumalo was the ANC's KwaZulu-Natal treasurer-general.

Marcus alleges that Khumalo and the Vukani directors orchestrated an elaborate scheme to use ANC funds and a mortgage to acquire the properties.

Three years after the supposed sale, Marcus writes that the properties had "never become the property of the ANC, nor provided any income". By then, the properties were estimated to be worth R2.5-million.

In a letter dated September 26 1996, Marcus tells Mandela that Khumalo had acquired the party's R400000 under "false pretences". Marcus reported the matter to the police and the ANC's lawyers.

On September 27 1996, the ANC's treasurer in KwaZulu-Natal, Zweli Mkhize, who is now the province's premier, stepped in: "I wish to inform you that this office is attending to the matter and it has been brought to the attention of the provincial and national chairperson Comrade Jacob Zuma," he writes.

Mkhize instructed lawyers appointed by Marcus to withdraw from the investigation.

On October 23 1996, Marcus told the ANC's KwaZulu-Natal leaders: "Over the years, I have tried to resolve this matter internally, but have not received any co-operation from the parties concerned."

Frustrated by the interference, Marcus resorted to discussing the matter with Mandela.

This week, Khumalo dismissed the investigation and, without answering any of the Sunday Times's questions, claimed he had acquired the properties for the ANC with a loan from Nedbank.

"In my role at the time ... I was involved with the purchase of certain commercial properties in Durban on behalf of the ANC. Unfortunately, some of these properties were situated in crime-ridden areas and the businesses were not successful.

"Nedbank was forced to foreclose on the properties and as I had signed surety in my personal capacity, I settled the outstanding amounts with Nedbank.

"As far as the ANC was concerned, the matter was concluded after a thorough investigation by the national executive committee."

Yesterday, Sutcliffe said he was "never really" involved in Vukani and was unaware that it had ever been investigated.

"From what I remember of my involvement in Vukani, I was approached by (Dennis) Mzoneli in the early '90s who asked me to be a director of a company. After signing such registration documents I had no further dealings with him and when I once inquired about him was told he had retired and no business had ever been conducted. I then presumed the initiative had simply not taken off." Sutcliffe said he made further inquiries about the company in 2004. "I then resigned as I had never had any dealings with either Mzoneli or Vukani ... for the record, I have never had any business dealings with Mzi Khumalo."

Khumalo was later involved with eThekwini municipality in the estimated R1.8-billion development of the Durban Point area, a narrow 55ha spit of land which today features luxury apartments and canals.

Marcus, in his resignation letter, stated: "The treasury has manifested an extraordinary reluctance to expose serious fraud, theft and abuse of funds. The perpetrators of these acts have gone unchallenged.

"In these circumstances, I wish to express my lack of confidence in the leadership to affect the necessary changes which, in my opinion, are vital to the future of the organisation. I, therefore, have no alternative but to tender my resignation as internal auditor."

Sunday Times

Comments by Sonny

Is this the organisation you voted into power?

This is just the tip of the iceberg!

Where does Mathews Phoza stand in this fray?

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