Simelane 'loan' debacle piles pressure on Ramaphosa

Pressure is mounting on President Cyril Ramaphosa to act against minister of justice & constitutional development Thembi Simelane, after she admitted to soliciting a loan from a company that facilitated payments from the Polokwane municipality to the now defunct VBS Mutual Bank.

Simelane appeared before the parliamentary portfolio committee on justice on Friday, where she was grilled about her alleged involvement in the VBS scandal. It seems her explanation to the committee was not convincing enough to make the matter go away, and political parties including GNU partners such as the Democratic Alliance (DA) and lobby groups are repeating their calls on her to step aside while the allegations are investigated. The EFF called for her resignation.

It was reported on Friday that the Hawks had  raided the Polokwane municipal offices in what is believed to be part of an investigation into the matter.

Simelane was  mayor of Polokwane when the municipality invested more than R300m in VBS. The money was  later withdrawn. At the time of the investment, Simelane  had received a R575,000 loan from Gundo Wealth Solutions, the  company that facilitated the investment. Gundo owner Ralliom Razwinane is  on trial for corruption related to the investment. Simelane bought a coffee shop in Sandton with the money.

Immediately after Simelane’s appearance before the parliamentary committee on Friday, the DA, which is a key partner in Ramaphosa’s GNU government, issued a statement calling on her to step aside as justice minister.

Lobby groups said the version of events Simelane related to parliament was not convincing. The NGOs Judges Matter and Open Secrets added their voices, saying Simelane has a cloud hanging over her.

Presidency spokesperson Vincent Magwenya had not responded to questions at the time of going to press. Magwenya last week asked for Ramaphosa to be given space to deal with the  matter.

Michael Marchant, head of investigations at Open Secrets, said yesterday that Simelane had not satisfactorily answered questions put to her.

“The complete inability from her side to provide [us with] the agreement is a big question  given the amount of the loan,” Marchant said.

“The second concern for me is that Gundo Wealth Solutions paid for Simelane’s coffee shop directly, even though it was a loan ... the minister still has not properly explained why, in that position, she would seek  a loan, as the mayor at the time, from a company that was providing services to the municipality — especially given that the interest rate was so high.  

In South Africa we have to look at that through the context of a general lack of trust, particularly in the criminal justice agencies. And any perception of conflict provides a huge risk in that regard

—  Michael Marchant, head of investigations at Open Secrets,

“Assuming that she has provided the president with no other information than she has given the public and the parliamentary committee, I think the president would be in a strong position to at least ask the minister to step aside pending a full investigation. And I think his position would be strengthened by the fact that the public is extremely concerned about this and has lost trust.

“In South Africa we have to look at that through the context of a general lack of trust, particularly in the criminal justice agencies. And any perception of conflict provides a huge risk in that regard.”

Simelane had a difficult time on Friday trying to convince members of the parliamentary committee that her  R500,000 loan from a VBS  fixer was above board. She was at pains to explain  that there was no conflict of interest  as she had repaid the loan in full, with interest.

She told the committee that she did not have a dodgy relationship with the company owners who are now facing criminal charges.

“I want to categorically state [that] I did not have an improper relationship with a contractor appointed by a municipality, and I did not receive any improper benefits from any contractor as alleged,” she said.

Simelane said that she applied to Gundo Wealth Group for a loan  as tapping into her R800,000 pension fund seemed to be too costly. She further said  she wanted to explore a coffee shop business to help herself and her family, as getting a job was difficult owing to issues around nepotism, among others.

She added that she agreed with her lender that the repayment of the loan should be halted as Limpopo’s Treasury had  begun telling municipalities that they would want to  launch an forensic investigation into the bank. She said  she informed the lender  that she would halt the repayment until the investigations were completed.

She said that after an  investigation period of about 20 months she made the first payment to service her debt. Coincidentally, this was on the same day she received the report into the investigation by the Limpopo Treasury.

“I made the first payment on that day, October 9 2020. And again on November 12 and the final one, totalling around R849,000 with interest calculated at about 11.2% or so at the time. So in excess of about R250,000 was the interest that was paid to Gundo,” she said.  

But MPs did not seem to  believe her story as she fielded questions about why  she  felt she could get a loan from a company that was doing business with her municipality. She said she was under the impression that the company was a registered financial services provider,  but later  learnt that it was not.

Simelane conceded that, in hindsight, she “would have done things differently”.

Some MPs suggested she should step down  because as justice minister  investigations sometimes go  to her office and her presence could hamper the National Prosecuting Authority (NPA)  investigation into VBS and  her possible links to the looting of the bank.

The president needs to seriously reflect on her performance, and whether it fits with the overall goal of fighting corruption and instilling the rule of law

—  Mbekezeli Benjamin of Judges Matter

Mbekezeli Benjamin of Judges Matter was not convinced by Simelane’s performance before the parliamentary committee, saying she had failed to answer three crucial questions:

• whether she had made the necessary disclosures while she was  an MP in 2020 and 2021 and the loan was outstanding;
• the timing of the loan and possible conflict; and  
• the onerous interest rate charged on the loan.

“Overall, her performance didn’t show that she was really sensitive to the concerns about her office and the NPA being in charge of prosecuting this case … It’s very difficult to assess the credibility of her explanations and it would have helped if she had simply said, ‘This is the loan agreement that I had with this person, and these are the bank statements to show that these are the payments coming out of my business account,’ to show she was repaying the loan.”

Benjamin said the nature of any meeting of parliament was that anything said was under oath “and parliament has the powers to subpoena any document in the Republic”.

“The committee doesn’t seem to be necessarily eager to get answers to these questions, so the committee itself did not cover itself in glory. Overall we still have really serious questions about the minister and her explanation, and it does concern us because she is the chief overseer of our anti-corruption infrastructure.”

Benjamin added: “The version she is giving us now, two weeks after the news broke, could have been given in 24 hours. The only reason she would have needed more time was to source the documents that support her version, but she has not done that.

“This raises serious questions about her appreciation of the seriousness of the situation, in a context where we are facing an overwhelming number of cases of corruption that are yet to be prosecuted. The same justice system that she oversees is the one that is supposed to undertake that work.

“The president needs to seriously reflect on her performance, and whether it fits with the overall goal of fighting corruption and instilling the rule of law.”