|
Getting your Trinity Audio player ready...
|
While Parliament seeks legal advice on the legality of asking Justice and Constitutional Development Minister Thembi Simelane to provide it with a loan agreement at the centre of allegations of corruption against her, more calls have surfaced for her to step down to make way for a formal investigation into her links to VBS Mutual Bank. Simelane is scheduled to meet with President Cyril Ramaphosa soon to discuss the matter, according to her department.
In her appearance before Parliament on Friday, however, she failed to answer a few pertinent questions asked by MPS:
- Who was her direct contact at Gundo Wealth Solutions – the company that provided her loan as well as facilitated the investment of R349-million by Polokwane Local Municipality – in the 2016 negotiation of her loan?
- What argument can she put forward to squash the perception created in the public that the loan was in fact a kickback for Polokwane having invested money in VBS?
- Why did she not investigate the true status of Gundo as a registered financial services provider before entering into an agreement with the company?
- What was the source of income for the three large repayments made to Gundo between October 2020 and January 2021, if she had no initial capital to establish the coffee shop?
Simelane appeared before the portfolio committee on justice to answer to allegations surrounding her involvement with Gundo Wealth Solutions – a company that facilitated investments for government entities with the now defunct VBS.
Fourteen municipalities in Limpopo, North West, and Gauteng made unlawful investments totalling almost R2-billion that were lost when the bank went under in 2019, according to a forensic investigation conducted on behalf of the Reserve Bank by Advocate Terry Motau in 2018, the same year that the bank went into liquidation. Polokwane Municipality, of which Simelane was mayor at the time of its own investment in 2016, withdrew its investment of about R349-million in July 2016, before the monies were lost. She told the committee that the decision to withdraw was on the advice of a municipal manager who had recently joined the entity two months prior, in May 2016.
During her appearance, Simelane also told the committee that she took out a loan with Gundo to expand her income channels, given the uncertainty of job security in politics. She had been mayor for two years, since 2014, when she made the decision. Outside of knowing of Gundo through its dealings with the municipality, she did not have a relationship with the company, she said. She only approached them after having failed to secure loans with commercial banks, for purposes of opening a coffee shop in Johannesburg. Simelane then received a R575-million loan by Gundo, which she has since repaid, with interest.
Late payment
The timing of the payment in contrast with that of the loan, as well as the interest Simelane eventually paid towards it, raised eyebrows with MPs.
The minister was asked to explain why, despite having entered into the loan agreement in 2016 – shortly after Polokwane had placed its investment in VBS through Gundo – she only made the first of three large repayments in October 2020. The first of these was on 9 October, the second on 12 November, and the third only on 7 January 2021, and the three payments totalled R849 000, with an accumulated interest of R274 000 added.
“You entered the agreement in 2016, [but] the payments were only made four years later, which I’m sure that no commercial entity would have entered into, so then the question arises why were you given such a preferential loan agreement, and I suppose the answer was the very high interest rate,” said MP Steve Swart when it was his turn to question Simelane.
The minister replied to this and other questions relating to the nature of the loan agreement by saying it was a term of the agreement that Gundo would finance the capital investment in the shop by paying Ricovet, the company that she bought it from, and that she would in turn make repayments later. The company that she established to manage the finances of the shop, T5, was registered days before the agreement was entered into, in late September 2016. She was the sole director of T5 and until such time that the coffee shop had its own bank account, its operations were financed through either T5 or Golden Threads, a company owned by her brother.
But why did she not first establish if Gundo was a registered financial services provider, she was asked.
“My understanding, which is still my understanding, is that Gundo is a registered financial services provider. Yes, they might not – as I get to know later – that they were not accredited with the National Credit Regulation (sic). My understanding, also on another hand – I’ve requested quite a number of times – either from my brother or anybody ‘can you loan me money’ it does not have to be on the basis of a registration,” was Simelane’s reply.
Conflict of interest
Several of the MPs raised concerns over the position of the minister in terms of her influence over law enforcement agencies such as the National Prosecuting Authority (NPA), which is seized with bringing VBS looters to book.
Simelane said she had to date not interfered with the NPA’s work, nor did she have the intention to. In fact, she said, in her meet-and-greet meeting with the NPA, she assured its team that she would not get involved in matters that have a direct link to her, including a criminal matter involving her sister. Outside of this formal orientation meeting, there had not been any other engagements. MP Kabelo Kgobisa-Ngqaba said this in itself was worrying, given that the minister has been in office for two months.
MP Busisiwe Mkhwebane emphasised that it was important that the committee be assured that Simelane would not make any attempts to influence any future endeavours of the NPA with regards to people or entities that may be prosecuted over the VBS scandal.
MPs were also to be cautious, said Oscar Mathafa, not to jump the gun where the NPA is concerned. He cautioned against casting aspersions on the NPA that it is easily influenced. “Given where the minister is currently, maybe the question might be, is she fit to be in that office, where she might be required to investigate or take decisions around those investigations that are applied to people that can be deemed to have an inappropriate relationship with her?”
Committee chairperson Xola Nqola said the next steps would be for the committee to seek legal counsel on whether it may summon a copy of the loan agreement between Simelane and Gundo.
