Soon after six Limpopo- and Johannesburg-based companies implicated in allegedly irregular contracts to decontaminate Gauteng classrooms were paid, they splurged on cattle and hunting trips. But first they did the responsible thing and settled their outstanding tax bills.
This is according to the latest tranche of affidavits by Special Investigating Unit (SIU) and Financial Intelligence Centre investigators probing how provincial education officials awarded the contracts last year.
Last week the Sunday Times reported claims by investigators that seven companies had splashed out on designer watches, jewellery, luxury cars, plastic surgery and paying off home loans after being paid R63.5m by the provincial education department to clean classrooms during lockdown, with some contracts awarded via WhatsApp. The Special Tribunal ordered that assets worth R40.7m be frozen while investigations continue.
In the second strike, the tribunal this week ordered the freezing of the bank and investment accounts of a further six businesses.
The SIU recommends the directors be investigated for money-laundering. The investigation is part of larger probe into the alleged irregular awarding of R431m worth of school cleaning contracts to 280 companies between June and December.
The work has been shown to have been largely unnecessary. On June 10 last year, the national health department said on the reopening of schools after the easing of the hard lockdown that “there is no need to deep clean or implement any other form of cleaning in areas that were unoccupied for more than seven days”.
Traces of the funds show that the companies made large payments to unidentified recipients who have, in turn, disposed of them
— Kaizer Kganyago, SIU spokesperson
The latest affidavits show that straight after paying their taxes, the majority of the companies’ directors, who include a Limpopo bottle store worker and a Johannesburg taxi industry operator, embarked on shopping splurges.
These included payments for cattle, hunting trips, furniture, air fares, holiday accommodation, loan repayments, investments, house deposits, vehicles, diamonds and jewellery and R800,000 of legal bills.
Cleaning contracts worth R44.9m were allegedly irregularly awarded to the six companies, but the SIU has only been able to trace R22.4m.
The order was for the freezing of the bank and investment accounts of Chachulani Group Investments, which was paid R4.7m; Muta Investment Holdings (R4.9m); Netvision Energy Savers (R4m); Psychin Consulting (R5.1m); Home Ground Trading (R6.4m); and Mpale Investments Holdings (R5.6m). Also frozen were the Naledzi Investment Trust’s bank accounts.
The SIU is also probing Find Energy Suppliers, Favoured Street Properties and Imani Portfolio Holdings, which are linked to the companies’ directors and Naledzi Trust’s trustees.
Find Energy, Favoured Street and Imani Portfolio were paid R2.5m, R4.5m and R5m, respectively.
Key to the investigation are Munzhedzi Ivy Motau and brothers Khangala and Ofhani Negota. The trio, according to affidavits, are trustees of the Naledzi Trust.
Consumer searches show Ofhani Negota, who lists his employer as the “taxie industrie”, is a director of Mpale and Home Ground and co-director with Motau of Favoured Street.
The SIU is also probing the trio’s business associates, who include Phumudzo Makhokha, Divhani Madadzhe, Erica Mjamba, Sedzani Modau, Funanani Mudau and Mulalo Felix Mabasha, who works at a Limpopo bottle store, according to consumer records.
Financial records, contained in the affidavits filed with the Special Tribunal, show that the South African Revenue Service (Sars) received R5.8m from the implicated companies between October 2020 and February 2021.
SIU spokesperson Kaizer Kganyago said the “companies began dissipating the funds received from the department upon receipt”.
“Traces of the funds show the companies made large payments to unidentified recipients who have, in turn, disposed of them. Some funds went towards travel, accommodation and loan repayments.”
The largest payment to Sars was R3.2m, which was made by Modau and Mudau, directors of Finds Energy Suppliers, in November. The payment was made three weeks after the company received R2.5m from the department.
Khangala Negota said: “I don’t know anything. I do my own business. I don’t do business with the [Gauteng department of education]. I am not involved in tenders.”
Ofhani Negota asked the Sunday Times to call his lawyer, whose details he failed to provide. He failed to respond to e-mailed and WhatsApp questions. Motau apparently read questions sent to him on WhatsApp, but did not respond.
Mabasha said he knew nothing about the matter and asked for information on the freezing of his company’s accounts to be sent to him. He then failed to return calls. Mjamba did not respond to e-mailed questions. Madadzhe, Modau and Mudau did not return WhatsApp messages. Makhokha could not be reached, with consumer searches showing no contact details for him.
Kganyago said: “Review proceedings will be launched in [the tribunal] with the SIU seeking an order against the service providers.”
Financial records in the affidavits show, among other things:
- Mpale Investments paid R756,588 to Sars, R1.4m to the Naledzi Trust and R40,000 for cattle
- Chachulani Group paid Sars R645,565 and the Naledzi Trust R2.65m
- Muta Investment paid Sars R685,312,60 and R2.7m to the Naledzi Trust
- Psychin Consulting paid Sars R609,951, R2.5m to the Naledzi Trust and R127,500 for jewellery from Elegance Jewellers and Diamonds
- Home Ground paid R2.6m into Finds Energy’s bank account, R700,000 into E Mjamba’s bank account and R900,000 to the Naledzi Trust
- Favoured Street made deposits of R65,000 to Hunt Farming, paid R200,000 for a BMW, paid R900,000 to the Naledzi Trust and spent R2.3m on a life insurance policy
- Find Energy spent R153,440 on furniture and paid R140,000 for a Mercedes-Benz for Munzhedzi Motau
- Netvision paid R1.5m to the Naledzi Trust and R800,000 to lawyers; and
- Imani Portfolio paid R2.2m for Tshirts and R800,00 to the George Negota Family Trust.
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