Justice Minister Thembi Simelane. (Luke Daniel/News24)
- Gundo Wealth Solutions provided a loan of R575,600 to Minister of Justice Thembi Simelane.
- The loan was disbursed directly to the owner of a café in Sandton, which Simelane bought, in late 2016.
- At the time, Simelane bore her ex-husband’s surname, Nkadimeng, and was mayor of Polokwane.
Justice Minister Thembi Simelane, during her tenure as mayor of the City of Polokwane in 2016, took out a loan of more than half a million rand from a company that facilitated the Polokwane municipality’s illegal investments of R349 million in VBS Bank.
She used the R575,600 “business loan” from Gundo Wealth Solutions, owned by Ralliom Razwinane, to buy a cafe in Sandton.
But Razwinane and Gundo also brokered investments on behalf of VBS Bank – and the Polokwane municipality, of which Simelane was mayor, invested 349 million rand in the bank.
When VBS collapsed in March 2018, forensic investigations revealed that Bank Razwinane had paid bribes totalling R24.2 million to facilitate investments by various municipalities and government agencies.
The investigators found that these were corrupt transactions and violations of the Municipal Finance Administration Act.
Razwinane is currently on trial for fraud, corruption and money laundering arising from his role as a commission agent who linked municipalities, including the Polokwane Municipality, to VBS Bank.
As Minister of Justice, Simelane oversees the National Prosecuting Authority (NPA), which is actively involved in the investigation and prosecution of the collapse of VBS Bank.
READ | VBS banking scandal: Victims demand justice after former CEO admits billions in fraud
She is also a member of the Justice and Crime Prevention Working Group in the Cabinet, which also includes the Police and the Hawks, who continue to deal with the VBS issue.
She was mayor of Polokwane between 2014 and 2019 and was appointed Minister of Justice in June.
Kickbacks for investments
Simelane used the “loan” to buy the cafe in two transactions in October 2016. The payments appear to be linked to bribes received by the Polokwane Municipality in exchange for large investments in VBS.
In October 2016, VBS paid a total of R1.66 million to Razwinane and Gundo Wealth Solutions as a bribe in exchange for two investments by the Polokwane Municipality totalling R130 million. The investments were made shortly after Gundo signed a three-year contract to provide investment brokerage services to the municipality.
In return, Razwinane paid R575,600, almost 35% of his bribes, to a company called Ricovert, the then owner of Silvana’s Coffee Shop on the ground floor of Fredman Towers in Sandton.
Simelane has confirmed that the Ricovert transaction helped her buy the company. She described the deal as a legitimate “commercial loan” that was “fully repaid” and said that “the transaction was completely flawless.”
A graph showing the cash flows associated with the purchase of a cafe in Sandton.
Simelane’s deal is linked to at least five investments made by the Polokwane Municipality in VBS between September 2016 and May 2017, totalling R349 million. For each of these investments, Razwinane received bribes from VBS.
Simelane, previously known by the surname Nkadimeng, assured her commitment to “exercising ethical leadership” and welcomed “any legitimate scrutiny of her affairs, including her private business affairs”.
However, she did not provide the contract for the “commercial loan” or any proof of repayment of the loan – although, according to her, this is information that exists.
Simelane pointed out that Gundo is registered as a financial services provider.
However, she did not respond to further questions and stressed that Gundo is not a registered lender and therefore cannot offer credit services.
Nor did she comment on the obvious conflict of interest that arose from her using Gundo as her personal service provider while the company offered “consulting services” to the municipality of which she was mayor.
A joint investigation by News24 and Daily Maverick based on bank statements, indictments, the confession of former VBS Bank CEO Tshifhiwa Matodzi, a report by lawyer Terry Motau and unpublished reports by investigators Crowe Forensics and law firm BDO suggests that the transactions are questionable.
Purchase of Silvanas Coffee Shop
Between September 2016 and May 2017, the Polokwane Municipality made at least five illicit investments in VBS Bank totalling R349 million.
Unlike other municipalities that lost large sums when VBS went bankrupt, Polokwane got all its money back in time. One report said it expected interest of around 12 million rand (2.3 million euros), but gave no clear indication of whether the municipality actually earned that much.
Around March 2016, Gundo signed a contract with the municipality to act as its “investment broker and manager,” as BDO investigators discovered during an investigation authorized by the Ministry of Finance.
Polokwane Municipality’s investment in VBS Bank.
The first unlawful investment made by the Polokwane Municipality to VBS on or around 16 September 2016 was for R50 million. Six days later, on or around 22 September 2016, VBS paid a total of R755 314 to Gundo – approximately 1.5% of the first investment.
In an indictment presented to the court, prosecutors described these payments to Gundo as cash intended to solicit the first investment and used for “corrupt payments to various municipal officials known and unknown to the state.”
Simelane is not named in the indictment.
According to the indictment, the transaction violated several sections of the Act on the Prevention and Combating of Corrupt Activities.
Sources familiar with the investigation said one of those “corrupt payments” to benefit a “city official” went to a coffee shop. A report from Crowe Forensics flagged the transaction for further investigation by law enforcement.
Bank statements show that about a month after the initial R50 million investment, Gundo paid R300 000 to Ricovert. The payment descriptions were “Silvana loan” and “Silvana’s sale”. Ricovert owned Silvanas Coffee Shop in Sandton’s Fredman Towers in Fredman Drive at the time.
One of two transactions related to the purchase of a cafe in Sandton.
A second illegal investment by the Polokwane Municipality was made on or about 7 October 2016 and totalled R80 million. In connection with this investment, Gundo received bribes totalling R912 000. This represents approximately 1% of the second investment.
Gundo then made a further payment of R275 600 to Ricovert. The payment descriptions were again “Silvana Loan” and “Silvana”.
The payments to Ricovert for Silvana’s Coffee Shop represent almost 35% of the two bribes of R755 314.31 and R912 000 that Gundo received from VBS.
The second of two transactions to purchase a cafe in Sandton.
Simelane declined to answer specific questions but admitted that Gundo’s payments to Ricovert were made in her name.
According to Simelane’s version, the R575,600 was “a loan” for “the purchase of a café”. She states that “the loan in question has since been fully repaid” but did not respond to requests for evidence to prove this version.
Three years later, in 2019, she registered a company called Silvana’s Bistro to run the business, apparently around the same time she was questioned by investigators.
Simelane explained that at the time she was a client of Gundo, who was her financial advisor.
Trouble is brewing
Simelane does not believe there is a conflict of interest between her previous involvement with VBS and her position on the management board.
“There will be no conflict of interest. The minister is the first to insist on the independence of all law enforcement agencies. The NPA has the full support of the minister to carry out its constitutional mandate without fear, favour or prejudice,” she said in a written response to questions.
The commission agent system operated by VBS management was identified as an illegal method of bribing municipal officials to make “huge deposits” in the bank, according to Motau and Werksmans’ extensive investigation into the VBS implosion in 2018. Motau’s report, titled “The Great Bank Robbery,” laid out the findings in detail.
In 2021, Razwinane was charged with 13 counts of violations of anti-corruption laws related to the commission agent system.
A request for Simelane’s declarations of interest to the Polokwane Municipality for this period is still pending.
Razwinane read but did not answer detailed questions.
This was a joint investigation by News24 and Daily Maverick.
