By Lehlohonolo Lehana.
Thembi Simelane has provided detailed insights into the role of the Department of Justice in matters concerning prosecutions, particularly in the case of the VBS Mutual Bank.
Simelane’s appearing before the committee was the first opportunity for her to publicly pronounce on the 2016 loan of R575,600, which was repaid together with R274,399 interest four years later.
It is understood Simelane obtained a “commercial loan” of R575,600 from Gundo Wealth Solutions owned by Ralliom Razwinane to purchase a coffee shop in Sandton.
Razwinane and Gundo also brokered investments on behalf of VBS Mutual Bank, and the Polokwane Municipality invested R349-million in the bank. When VBS was put under administration in March 2018, forensic investigations found it had rewarded Razwinane with kickbacks totalling R24.2-million for being a commissioning agent for various municipalities and state entities through corrupt transactions and contraventions of the Municipal Finance Management Act.
Razwinane is on trial for fraud, corruption and money laundering for his role as a commission agent connecting municipalities, including Polokwane Municipality, with VBS.
Simelane was the mayor of Polokwane between 2014 and 2021 and was appointed as justice minister in June. As minister of justice, Simelane oversees the National Prosecuting Authority (NPA), which is investigating and prosecuting those involved in the looting and collapse of VBS.
Appearing before the committee on Friday, Simelane said she had no improper relationship with Gundo as mayors and councillors are not involved in procurement processes.
As an office-bearer in the public service, political positions were short-term and it was difficult to find work outside the public service. She thought of a feasible option to find employment opportunities and support her family by buying a coffee shop.
“I intended to withdraw partially from my retirement savings coming from pensions of being an employee of the public service for 15 years. I experienced difficulties because of the cost of the charges. The pension was about R800,000 and the percentage of tax and all of that was making the whole idea not feasible,” she said.
She then turned to Gundo for advice on how she could best finance the coffee shop and was advised against withdrawing her retirement savings. Instead, Gundo told her about a loan product they had which she could access.
After weighing her options, she saw no conflict in securing a loan from Gundo, as the company was a municipal contractor.
She then concluded the registration of her own company, T5 Investments Group on September 26 2016. On September 30 she signed with Gundo Wealth and Ricovert, the owner of the coffee shop, to purchase the bistro.
The coffee shop employed between eight to 12 people, she said.
As per the loan agreement, the money was repaid over three instalments by T5 Investments and Silvana to Gundo. These payments were made on October 9 and November 12 2020 as well as January 7 2021, totalling an amount of R849,999. This amount included an accumulated interest of R274,399, which Simelane said was about 11.2%.
As the loan only covered the purchase of the business, T5 still had to pay for the shop’s operational costs, including rent and equipment which Ricovert had left behind, until October 2019 when it was fully registered.
Simelane said she had nothing to hide regarding her loan from a VBS fixer.
“I have nothing to hide, that’s why I’m here. But the sitting itself has its own position, and it’s not an inquiry. It’s a sitting of the committee getting an explanation from the minister, and that’s why I’m here,” Simelane said.
She said she had given President Cyril Ramaphosa a full report on what transpired, as requested, and that this included proof of the loan and the subsequent repayment in three instalments in late 2020 and early 2021.
She emphasised that the municipality lost no money in the VBS scandal because once she became aware that the bank was in trouble she gave instructions that Polokwane’s deposits be withdrawn. The money was taken out before the bank collapsed.
Simelane was grilled by Democratic Alliance (DA) MP Glynnis Breytenbach, saying this was cold comfort, and left the question as to why she sought personal financial advice from an entity that was doing business with the municipality for which she had ultimate responsibility as mayor.
“You were the head honcho, the top of the pyramid and they knew it, so of course they would be happy to accommodate you.”
Breytenbach noted that the forensic investigations that followed the collapse of VBS in 2018 showed that Gundo made a lot of money in return for soliciting deposits from municipalities.
She added that this was certainly the source of the money lent to Simelane.
“What is clear from the analysis of the money is that they were certainly richly remunerated by VBS for garnering investments, and made a vast amount of money for doing very little. Also paid huge kickbacks, and that is not even a dispute. So the whole scheme was a cynical, sick and dodgy scheme to defraud the poorest of the poor people, particularly in Limpopo.
They did it to make dodgy money and they made dodgy money and lots of it. All of their money was dodgy money and you were the recipient of some of that dodgy money.”
Breytenbach said when one considered the interest Simelane ultimately paid Gundo when she repaid the loan she used to buy a coffee shop in Sandton, the decision to take money from the company became more baffling.
Simelane resisted strenuous warning from MPs from several parties that the controversy and the ongoing investigation into Gundo created an untenable conflict of interest because, as justice minister, she holds ultimate political responsibilty for the National Prosecuting Authority (NPA).
Furthermore, Simelane assured the committee that there was no conflict of interest, referencing Section 96(2)(b) of the Constitution, which governs the conduct of Cabinet members and deputy ministers.
The Justice Minister was clear in her position: “The minister doesn’t decide who should be prosecuted or not prosecuted.”
Simelane noted that this distinction highlights the independence of the National Prosecuting Authority (NPA) from executive influence.
Xola Nqola, the chairperson of the parliamentary committee, said he would seek the advice of parliament’s legal counsel with regard to obtaining the documentation from the minister.
Meanwhile Fullview learned that Hawks executed a search and seizure warrant on Simelane’s former personal assistant, based at the Polokwane municipality, last week to secure possible evidence of corruption linked to the municipality’s R349 million investment with VBS Mutual Bank in 2016 and 2017.
The warrant was obtained in secret to prevent possible suspects of the investigation from being alerted.
The warrant demanded that the former personal assistant hand over cellphones, laptop, documents and the passwords to their private email accounts.