Tosaco, the deal that could sink ex-PIC CEO Dan Matjila

Tosaco, the deal that could sink ex-PIC CEO Dan Matjila

PIC-funded businessman admits ‘love relationship’ with board member

Kilimanjaro’s Mulaudzi told the commission everything was on track with their bid until – just days before the deadline – he discovered that the PIC was entertaining funding a request from a rival bidder, Sakhumnotho, despite the fact that PIC had signed a binding engagement letter with Kilimanjaro which Mulaudzi interpreted to mean their group had exclusivity.

“I then requested a meeting with Dr Matjila to clear this confusion… He then told me that in order for him to proceed with issuing final approval I needed to urgently meet with Mr Sipho Mseleku of Sakhumnotho as the other interested party. He also told me that Mr Mseleku’s company must merge with our company to form one consortium and that we had to give Mr Mseleku 50% of the transaction and the fees that we would ultimately receive when the deal is approved.”

“[I]t was very difficult for us as the directors of Kilimanjaro to accept… But I had no option as you know we are in business, we had to say let’s share the cake of this transaction… ’cause half of loaf it’s better than no bread,” Mulaudzi said.

Both Matjila and Sakhumnotho’s Mseleku deny that Matjila forced Kilimanjaro to split the deal, but the commissioners have been visibly sceptical of their version of events.

Mseleku told the commission that he met Mulaudzi after he followed Matjila, uninvited, into a boardroom at the PIC because he was “curious” to see who the other bidder was on the Tosaco deal.

Matjila echoed this story during his testimony, adding that he told Mseleku and Mulaudzi he could not offer either the binding letter of support – which they desperately needed in order to submit a bid – while there were still multiple bidders in the running, and then left the two businessmen alone in the room.

“I never mentioned [a merger] but in my mind it was there,” Matjila said. Matjila: There will always be bad investments

“Broer, did you give the journalist the share certificate for Tosaco?” Matjila asked Mulaudzi on 16 March 2017.

“Afternoon Dr, We didn’t give them share certificates. We gave them share register only and that was last year. I think her concern is that why we only paid R1,7b whereas we got funding approval of R1,8b. What happened [to the] R100m. I said R50m went to transactional advisors and R50m went to recapitalize the company and we have already paid it back to PIC through first dividends received. I also briefed Sekgoela,” Mulaudzi replied.

The following day, the PIC told us that the extra R100-million was spent on “costs associated with the transaction” but refused to provide any details about who received the payments or why.

When Matjila was asked about these fees at the commission last week he conceded they were “over the top”. But there was no mention of R50-million being spent to recapitalise the company.

“[T]he reason why they had to pay R100-million is because the two [advisors for Kilimanjaro and Sakumnotho respectively] have claimed that they did separate works of almost the same kind of costs and therefore they needed to be paid the same fees,” Matjila told the commission, purporting to relay what he had been told by the PIC deal team.

The problem with the PIC handing an extra R100-million to the Kilimanjaro Sakhumnotho Consortium was that the PIC had already agreed to fund 100% of the R1.7-billion purchase price – something which commercial banks would rarely do.

Added to this, the cost of the deal had already risen rapidly. In June 2015, The PIC had committed to provide R1.4-billion in funding for a 25% stake of Total. But by August 2015, the size of the stake had shrunk to 22.95% while the price had risen to R1.7-billion.

Adding an extra R100-million to the loan raises questions about whether the PIC had adequate cover for its loan.

Questions have also been raised about how the R100-million was spent. While we know that some of it went to transaction advisors, UDM leader Bantu Holomisa, for instance, has asked Ramaphosa and the commission to investigate rumours that some of the money was diverted to companies fronting for politicians and fixers.

Reason 5: A senior PIC official was seemingly cut into the deal

In May, amaBhungane published an investigation based on hundreds of leaked WhatsApp messages exchanged between Mulaudzi, his associates (including EFF deputy president Floyd Shivambu) and officials at the PIC.

One of those officials was the PIC’s then-head of risk, Paul Magula.

Amongst the WhatsApp messages was one sent by Magula to Mulaudzi in December 2016. It contained the bank account details for a company called Investar Connect.

Although Investar Connect Holdings is ostensibly run by Mulaudzi’s accountant, Lot Magosha, the company was named in advocate Terry Motau’s report into the collapse of VBS Mutual Bank as one of the fronts used by Magula to receive what appeared to be kickbacks from the bank’s shareholders.

Share registers, obtained by amaBhungane in terms of the Companies Act, show that Investar Connect also appears as a minority shareholder in both of Mulaudzi’s PIC-funded deals – one of them Tosaco – and received shares worth roughly R24-million at the time.

Last week, Matjila told the commission that he was approached in June 2017 by Mulaudzi’s wife, Mamodupi Mohlala-Mulaudzi, with suspicions that her husband had a corrupt relationship with Magula.

“She basically told me that Mr Paul Magula visits them a lot more often and she believes that there may be [an] exchange of favours in this relationship,” Matjila testified. A subsequent investigation commissioned by the PIC concluded that “he must’ve been giving Mr Magula money”.

Although there is no indication that Matjila benefitted from Magula’s arrangement with Mulaudzi, it raises serious questions about governance at the PIC during Matjila’s tenure.

Reason 6: Quid pro quo – funding for funding

One of the most damning details about the Tosaco deal is what Matjila allegedly expected in return.

In 2016, Matjila was summoned to a meeting at OR Tambo International Airport by then-minister of state security David Mahlobo.

“The minister called me. I mean, I will not disrespect the minister and not go… I see him as one of the stakeholders in the PIC. Whether he is in … state security or whatever portfolio they hold,” Matjila told the commission.

Instead of discussing matters of state security, Mahlobo introduced the PIC boss to two young entrepreneurs and asked if he could assist them to get funding from the PIC.

“Dr Matjila, would you agree with me that it is totally improper and unethical for a Minister of State to call the CEO of the PIC to an airport to deal with a matter like this?” advocate Jannie Lubbe, one of the evidence leaders, asked Matjila last week.

“I don’t agree,” Matjila replied. “I’ve met Ministers not only at the airport; some at their places for convenience.”

When Lubbe asked whether other ministers had called the PIC boss to come to their homes to talk about PIC funding for deals, Matjila replied: “Commissioner, they talk about various things.”

When the PIC could not fund the two young women, Matjila referred them to Mulaudzi as potential enterprise development partners.

“And when they couldn’t help in time I then asked Mr Mulaudzi if he can … help them in saving their business that was running into trouble,” Matjila told the commission.

The favour Matjila requested was R330 000 to pay off debts that they had incurred. “I just said, ‘Are you able to help them?’ And I left it there so it was within his right to say no,” Matjila said.

But according to Mulaudzi he felt he had no choice but to pay: “[I]t was only natural for me to comply with his request, as I have been funded by the PIC in my business ventures,” he told the commission.

A few months later, Matjila forwarded a request to Mulaudzi from then-ANC treasurer Zweli Mkhize to fund the ANC’s January 8 gala dinner. From leaked WhatsApp messages we know that Mulaudzi assured Matjila that he and Mseleku had already agreed to buy a R400 000 table for the event.

“They could have said no, they had a choice it was not an instruction,” Matjila told the commission last week.

Published at Fri, 26 Jul 2019 06:13:38 +0000