VBS. Dewald van Rensburg
Matodzi’s old friend and estranged partner, Maanda Phalanndwa, told me that, as early as 2013, Matodzi had some kind of plan to co-opt Nesane by giving him secret shares in Dyambeu as soon as it invested in VBS.8 Subsequent events lend a lot of credence to this claim.
Whether or not there was a plan to cut Nesane in with a secret shareholding, the chain of events that followed was a lot less sophisticated. And not even that well hidden. At the end of 2015, Nesane got a mortgage and car loan totalling R2 million from VBS. This occurred when the bank was contemplating its first rights issue and the plan for a PIC-funded fuel venture was starting to take shape.
When VBS collapsed and journalists started poking around the bank statements of Vele Petroport and Vele Investments, it didn’t take long to uncover further questionable transactions.9
On 25 August 2016, Petroport made a rapid succession of seven payments totalling R1.25 million from its VBS account. This was the ‘pot’ of fees Ramavhunga claimed Petroport had at hand on a monthly basis. Along with Matodzi, Madzonga, Ramavhunga and Makhavhu, two mysterious companies – Investar Connect Holdings and Parallel Property – each got R150 000. A few days later, Investar received another R750 000.
A month later, the same beneficiaries, excluding Investar, were paid the same amounts. This time, however, there was a new company in the mix called Hekima Capital, seemingly in the place of Investar. It also got R150 000. The group as a whole received similar monthly payouts until December 2016, when the Petroport plan collapsed.
That could have been the end of it, but on 20 December 2016 Vele Investments made additional payments to the same beneficiaries. Parallel got R1 million, but instead of Hekima or Investar, the other recipient of a R1 million windfall was ‘Magula P’. You don’t get much more on-the-nose than that. Someone had slipped up.
When the monthly payments from the Petroport ‘pot’ ceased, Vele Investments seemingly stepped in and continued to pay out varying amounts in the same way. ‘Magula P’ is an obvious reference to Paul Magula, but what were Parallel, Hekima and Investar?
A simple search of company records brought up two Parallel companies: Parallel Capital and Parallel Property Holdings. Over the course of its existence, Parallel Capital was registered at two addresses tied to Ernest Nesane – addresses at which he had either lived or run other businesses. Parallel Property Holdings used the same address as Parallel Capital. Records from the deeds office showed that Parallel Property had a whole bunch of mortgages from VBS. So, there were two Parallel companies – both at an address linked to Nesane and one loaded to the hilt with VBS debt.
All of this was relatively easy to discover based on Vele’s bank statements alone. Later, forensic investigators tallied up Nesane’s illicit payments and unpaid debts to R16.6 million. Half seem like bribes through Parallel Property and the other half mortgages and a vehicle loan, which were never declared to the PIC when Nesane was weighing in on investment decisions about VBS. Among Nesane’s acquisitions were a R4 million farm in Limpopo in June 2016 and another R2.25 million property in Polokwane around the same time. Both were bonded to VBS. He bought a handful of other properties using cash he had lying around in his account.
Another search of company records showed that Investar and Hekima were both registered at an address owned by Magula. He had even been a director of Hekima in the past. He was very sloppy. His payments and loans from VBS came to R14.8 million over less than two years.
The scale of these payments has to be measured against what Magula and Nesane were earning at the PIC. Magula’s salary was R200 000 per month and Nesane’s was under R170 000 per month.10 The Petroport/Vele payments easily tripled their income. It is not difficult to surmise where their loyalties probably lay.
In return for this money, they had a very simple job: do nothing. Don’t raise anything you see at VBS with your employer, the PIC, and let VBS’s executives do as they please. After VBS collapsed, Nesane told SARB investigators that he would, for instance, turn a blind eye to financial statements he knew were false and stand back from controversial appointments to key jobs even though he served on the bank’s human resources committee. Magula, sitting on the VBS credit committee, should have had an eye on all major loans and, for instance, the wildly inappropriate use of the R350 million PIC fuel facility.
Apart from their roles in the fuel facility, Magula and Nesane also helped convince the PIC to invest new capital in VBS in successive rights issues, leaving the PIC with a total loss of R482.7 million when VBS crashed.
Magula was fired shortly afterwards and Nesane took the initiative to resign straight after giving evidence to the SARB. They would later face criminal charges alongside VBS executives. Whatever the outcome, the two are unlikely to ever find work again. They have both been struck off the list of registered financial service providers and are now listed as debarred because they do not ‘comply with personal character qualities of honesty and integrity’.11 They were also both declared delinquent directors after a court application brought by the PIC, meaning they cannot be the directors of any company, not so much as a family restaurant, for seven years.
When the payments to Nesane and Magula were put to Ramavhunga by Motau’s investigators, he said he had no idea who Parallel, Hekima or Investar were. ‘I was gobsmacked,’ he later said in an affidavit. ‘I simply could not accept that amounts had been paid through the same banking account to Magula and Nesane for “petrol money”.’ He expressed ‘horror and shock’ about many things that were put to him.12
Whatever favours VBS dished out directly to PIC officials, the story goes much deeper – into what looks like a wholesale patronage machine operating in the background of several PIC deals. When Magula and Nesane got their VBS millions through front companies, those front companies had what seem to be real stand-in directors.
Hekima Capital had as its sole director a man named Lot Magosha. Magosha was well remunerated. According to banks records, Magula’s two front companies paid him R1.35 million,13 almost 10 per cent of the benefits Magula received. These payments were made directly into Magosha’s personal Investec bank account. When I first contacted Magosha in 2018, he told me he had bought Hekima from Magula as an ‘empty’ shelf company and that the payments it received were all loans.14
The payments to Magosha, however, came from both Hekima and Investar, and sometimes had obscure references in the bank records. Among others there was a cryptic ‘loan for eggs’ and ‘nandoni land’. Nandoni is a place outside Thohoyandou in Limpopo known for its scenic dam. Other payments from Investar were referenced with ‘shareholder loan’. It is conceivable that Magosha was also a shareholder in Investar.
Another obscure entity that received money from Investar was HillCity, which listed Magosha as its sole director, but like Hekima previously belonged to Magula. Both Hekima and HillCity had Magula resign as a director in late 2016 to have Magosha take the reins instead. HillCity got a small ‘INTCO LOAN’ (inter-company loan) of R20 000, according to bank records – reinforcing the idea that Magosha was a shareholder in Investar and that his affairs were entangled with Magula’s.
Up to this point it just looked like Magula was hiding behind Magosha, but the reality was more complicated and a lot more damning. Blackgold Capital, which listed Magosha and businessman Lawrence Mulaudzi as directors, also received money. Mulaudzi had been a serial beneficiary of huge PIC-funded deals going back to 2015 – the year Magula became head of risk at the PIC. Investar also paid R200 000 in VBS money to an FNB account simply marked ‘Lawrence’. Furthermore, Susan Comrie from the amaBhungane Centre for Investigative Journalism found that Investar had shares in two other major deals funded by the PIC and involving Mulaudzi.15
What emerged was that Magula, as head of risk, was apparently receiving kickbacks in cash and shares from other PIC deals beyond VBS, and that these deals seemed to always involve Magosha and Mulaudzi. The alleged kickbacks started shortly after Magula rose to his position as head of risk in 2015.
Mulaudzi hit back at reports. ‘Since 2016 after the conclusion of our transactions with PIC [we were] subjected to various offensive, unfounded allegations that intended to create a narrative that we as a company did not act ethically and properly in our dealings