Publication: Sunday Times Issued: Date: 2006-10-08 Reporter: Simpiwe Piliso

ANC Chief in R50m Get-Rich-Quick Deal

 

Publication 

Sunday Times

Date

2006-10-08

Reporter

 Simpiwe Piliso

Web Link

www.sundaytimes.co.za

 

Ngonyama central in controversial dumping of Telkom shares

Smuts Ngonyama, the ANC’s Head of the Presidency, has emerged as a central figure in the secret sale of a large chunk of Telkom shares.

The shares are part of a R9-billion stake that the Elephant Consortium bought from a US-based company last year in one of the country’s biggest empowerment deals.

When the deal was announced, Elephant’s purchase sparked an outcry and was billed as a get-rich-quick scheme for a select few.

The consortium included Ngonyama, former government Telecommunications director-general Andile Ngcaba, Gloria Serobe of women’s empowerment group Wiphold, and a string of former civil servants and businessmen.

Ngonyama and the consortium bought a 15.1% stake in Telkom from US-based Thintana, but the deal became mired in controversy when it emerged that the Public Investment Corporation (PIC), which manages R600-billion in civil servants’ pension savings, had warehoused the shares to allow them time to raise cash.

Ngonyama has consistently denied making money from the deal, maintaining that he is yet to be “rewarded” for his role.

The latest revelation comes as the ANC’s National Executive Committee (NEC) was this week finalising recommendations on dealing with the issue of its members’ business ethics.

The Sunday Times has established that Ngonyama, through an adviser, controlled about one million shares, held via two private companies.

One of the companies, Clidet 532 was run by a former banker, Alan Norman, the man who represented Ngonyama at several meetings of the consortium.

On Friday, Tshepo Mahloele, who previously handled the deal for the PIC, confirmed that his office issued documents for permission to allow Clidet 532 to sell in June this year.

This company had a 5% stake, worth more than R50-million.

It is not clear how this deal was structured as the agreement with the PIC stipulates that no one is allowed to sell for another four years.

PIC chief executive Brian Molefe confirmed that the terms of the original agreement with the Elephant Consortium, stipulated that no trading may take place until May 2010.

“If the terms of our original agreement have been violated, I cannot comment,” Molefe said.

On Friday, when contacted for comment, Norman asked the Sunday Times to call him later in the day. However, all further attempts, including repeated messages, were unsuccessful.

Ngonyama who was attending the NEC meeting, refused to talk about the Telkom deal.

The deal has been fraught with controversy since the outset, when Ngcaba’s Lion group went up against Ngonyama’s Buffalo consortium.

Ngcaba had secured the backing of President Thabo Mbeki before Ngonyama.

But when the competition between the two groups heated up, ANC treasurer-general Mendi Msimang stepped in to keep the peace.

In a letter, dated September 29 2004, Msimang told James Khan, vice-president of US-based SBC Communications, a member of the Thintana consortium, which owned the 15% stake in the fixed-line phone operator, that the Telkom deal had been presented to Mbeki.

“In our meeting, which was attended by Mr Ngonyama, the President indicated that the government had already been approached for support by a group led by Mr Andile Ngcaba. The President then expressed ... that the two consortia should co-operate,” Msimang wrote in the letter.

The Elephant consortium then secured the deal as a joint venture between the two groups.

Today the consortium comprises:

•The Leopard Group, comprising Gloria Serobe’s Wiphold, Blue Label Investments, local businessmen Barend Hendricks, Dali Mpofu, US businessman Jim Myers, former government adviser Rafique Bagus, and Clidet 532 and Clidet 531. Documents list “Smuts & Co” as another beneficiary;

•Other than Ngcaba, the other beneficiaries in the Lion group are not known; and

•A third, broad-based empowerment group, managed by the PIC.

Two weeks ago it emerged that some of these beneficiaries had instructed lawyers to unmask secret shareholders and investigate if anyone who participated in the R9-billion deal had cashed in their shares.

They had consulted their lawyers to conduct an assessment of the shares and shareholders, mainly held via trusts registered with the Master of the High Court in Pretoria.

The move was sparked by concerns that some beneficiaries had secretly sold or ceded a portion of the consortium’s Telkom shares to raise cash.

With acknowledgements to Simpiwe Piliso and Sunday Times.


BEE indeed!

But it's better if one is an ANC office bearer or benefactor.

R50 million profit in a year with no risk, no financial capital, just political capital.

It's no empowerment, it's fraud.