Simelane linked to ‘unlawful’ VBS investments
Justice Minister Thembi Simelane took a loan of R575 000 from a company that brokered unlawful investments into VBS Mutual Bank by the Polokwane Municipality while she was mayor of the city in 2016.
Simelane used the ‘commercial loan’ from Gundo Wealth Solutions owned by Ralliom Razwinane to purchase a coffee shop in Sandton.
A joint investigation by Daily Maverick and News24, based on bank statements, indictments, former VBS bank chairperson Tshifhiwa Matodzi’s plea deal, a report by Advocate Terry Motau and unpublished reports from investigators Crowe Forensics and law firm BDO, suggests that the transactions are questionable.
Razwinane and Gundo also brokered investments on behalf of VBS Mutual Bank, and the Polokwane Municipality invested R349m in the bank.
When the institution imploded in March 2018, forensic investigations found it had rewarded Razwinane with kickbacks totalling R24.2m for being a commissioning agent for various municipalities and state entities.
Investigators found these to be corrupt transactions and contraventions of the Municipal Finance Management Act.
Razwinane is currently on trial for fraud, corruption and money laundering for his role as a commission agent connecting municipalities, including Polokwane Municipality, with VBS.
Ironically, Simelane now oversees the NPA which is investigating and prosecuting those involved in the collapse of VBS.
She is also a member of the Justice and Crime Prevention cluster in the Cabinet, which includes the police and the Hawks, who are also investigating the case. DM notes that Simelane used the ‘loan’ to buy a coffee shop in two transactions in October 2016. The payments appear linked to kickbacks received in exchange for large deposits by Polokwane Municipality into VBS.
In October 2016, VBS paid R1.66m in kickbacks to Razwinane and Gundo Wealth Solutions in exchange for two deposits totalling R130m from the Polokwane Municipality.
They were made shortly after Gundo signed a three-year contract to provide investment brokerage services to the municipality.
In turn, Razwinane paid R575 600, almost 35% of his kickbacks, to a company called Ricovert, the then-owner of Silvanas Coffee Shop on the ground floor of Fredman Towers in Sandton.
Simelane has confirmed the Ricovert transaction was to aid her purchase of the business.
She characterised the deal as a legitimate ‘commercial loan’ which was ‘fully repaid’. ‘The transaction was completely above board,’ she said.
In an indictment submitted to court, prosecutors described the payments to Gundo as cash meant to solicit the first deposit and used for ‘corrupt payments to various municipal officials, both known and unknown to the state’.
Simelane is not named in the indictment. According to the indictment, the transaction contravened several sections of the Prevention and Combating of Corrupt Activities Act. DM notes that sources familiar with the investigation said one of these ‘corrupt payments’ for the benefit of a ‘municipal official’ was paid towards a coffee shop.
A report by Crowe Forensics flagged the transaction for further investigation by law enforcement. Bank statements show that Gundo paid R300 000 to Ricovert about a month after the R50-million deposit. The payment descriptions were ‘Silvana loan’ and ‘Silvanas sale’.
Ricovert at that stage owned the Silvanas Coffee Shop at Sandton’s Fredman Towers.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
