It has become standard practice for prominent South Africans suspected of wrongdoing to resort to diversionary tactics — for example, recent attacks on the judiciary, accusations about “white monopoly capital” and, more recently, the I-have-been-targeted-because-I-am-fighting-corruption trope.
This week it was the turn of Mthunzi Mdwaba, CEO of Thuja Capital Fund, who faces mounting pressure and the loss of a potential R5bn payday for his dodgy employment-creation scheme.
The charismatic self-styled entrepreneur claimed in weekend newspapers that the scheme — agreed between Thuja and the Unemployment Insurance Fund (UIF) — had been halted because he had refused to accede to a demand for a R500 bribe from three cabinet ministers.
In a television interview following the sensational weekend headlines, Mdwaba, without evidence, named employment & labour minister Thulas Nxesi, finance minister Enoch Godongwana and higher education minister Blade Nzimande. Nzimande has demanded an apology, while ANC secretary-general Fikile Mbalula, whom Mdwaba also drew into the fray, has laid a charge against him.
Sitting “together in that WhatsApp group”, Mdwaba said, was this journalist nonsense.
In December last year, the Sunday Times exposed how the department of employment & labour (DEL) and the UIF were gambling R5bn on Thuja, which at that time had no offices, website or track record. They had planned to invest the first R2bn in Thuja by March without any due diligence having been performed — something that DEL director-general Thobile Lamati and UIF commissioner Teboho Maruping admitted to the Sunday Times.
[Those implicated in corruption] will often use issues South Africans feel strongly about to divert attention from their alleged wrongdoing
Watching the television interview with Mdwaba this week, you would be forgiven for thinking you were watching a brave whistleblower speaking out against the pernicious rent-seeking now synonymous with the government. But it was vintage Mdwaba: big on huge claims and forecasts, but lacking in detail.
During the interview, Mdwaba leapt between his failed bid to become Africa's first head of the International Labour Organisation and his controversial tenure as chair of the council of the University of the Western Cape, where it emerged he had been appointed despite an earlier high court ruling that declared him a delinquent director.
Finally, he landed on Thuja's planned job-creation initiatives, throwing big numbers around — without providing any detail as to how these would be achieved.
It was this lack of detail that frightened officials working in the UIF's labour activation programme (LAP) a year ago. These officials found themselves under pressure from their bosses — Maruping and Lamati, as well as Mdwaba himself — to motivate for Thuja to be awarded R5bn for a job-creation project the bosses themselves admitted was “untested”.
The R5bn — made up of an equity investment worth R1.5bn from the UIF, a R1.5bn loan to Thuja, and R2bn in grant funding — would, Mdwaba claimed, translate into 200,000 jobs, plus stakes in companies Thuja would invest in to encourage them to create more jobs.
The officials, dealing with a highly irregular proposal for which Mdwaba had not formally submitted a bid under the LAP, repeatedly asked Mdwaba to subject his scheme to a due diligence process. By then, the project had already been rejected by the LAP's adjudication committee, as well as the Public Investment Corp, the entity that manages the UIF's surplus funds.
Mdwaba appeared to do his best to avoid this, initially saying it was not possible to test his proposal, and later asking the Industrial Development Corp (IDC) to do it. But the IDC refused, saying it could not perform a due diligence process on third parties.
But that did not stop Mdwaba from falsely claiming this week that a due diligence was conducted by both the UIF and the IDC. But in the Sunday Times report in December, both Lamati and Maruping admitted that no such process had been undertaken.
He also betrayed a poor understanding of the Public Finance Management Act and the National Treasury's role this week when he claimed it had no say in the UIF’s decision to give Thuja R5bn in start-up funds. Section 54 of the act states that any government department or state entity needs Treasury permission to participate in establishing a company.
Tellingly, he also revealed that he and Lamati — who signed the contract a little after midnight on December 18 — are friends, something they had not declared.
In December, the Sunday Times asked Mdwaba to describe the concept behind Thuja, and explain why his position as board chair of Productivity South Africa — a DEL entity tasked with doing the same thing he wanted Thuja to do — did not constitute a conflict of interest. He was also asked if he had the required Financial Sector Conduct Authority licence allowing him to invest money on the UIF’s behalf.
But, instead of answering, he claimed the newspaper’s reporting was all part of a plan to attack him.
Last month, the Sunday Times wrote about a forensic investigation Nxesi commissioned into the saga, which found the Thuja deal to be highly irregular and suggested it be reviewed and set aside. Ahead of publication, we had new questions for Mdwaba, which he again refused to answer. These included:
- Whether he and his company had been willing to participate in the forensic investigation;
- His response to claims he pressured the UIF to conclude the agreement;
- His response to the allegation that had he declined a request from officials for a due diligence process on the grounds that Lamati had told him a different process would be followed;
- Whether he viewed his direct access to Lamati and Maruping as strange, given that their subordinates were evaluating Thuja’s proposal; and
- His response to an allegation that he had insisted payment be made immediately after the agreement was signed in December, and that he had submitted the details of a different company, registered just a few days previously, for payment.
Mdwaba has still not addressed any of these queries.
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