Читать книгу VBS - Dewald van Rensburg - Страница 12

When Robert Madzonga walked into Vele Investments in mid-2016, his first job was to put together a grand new project dubbed Vele Petroport. It was a planned merger of a fuel wholesaler called Mmampilo Petroleum and a trader called Belton Park Trading 134. The plan was then to buy another, larger company – Afric Oil – and create a serious integrated fuel supply group with a set of large clients, access to cut-price diesel and a proper distribution network.

Going into the fuel business seemed like a perfect fit for Vele for a very simple reason: VBS was already in the fuel business. There would be, as they say, extremely fortuitous synergies.

When VBS first set out to transform itself from a small-fry mutual bank in 2014, CEO Andile Ramavhunga had a great plan. To fund it, he turned to the bank’s 26 per cent shareholder, the PIC, which had lots of money to spend and skin in the game.

As the single largest asset manager on the continent, the state-owned corporation invests a portion of its vast resources in economic development, including small business support. While it wants a return on its investments, it is far more accommodating than a commercial bank would be if the investment bombed.

Fuel is big business and generally the preserve of big businesses. In South Africa, that usually means long-established and white-owned. Ramavhunga’s idea was to provide working capital to small, primarily black-owned fuel companies that would deliver diesel to huge state-owned clients like Transnet and Eskom. These small companies would not have the cash on hand to fill large orders. VBS would step into the breach to provide that cash. The bank would lend them money to buy the fuel, they would deliver it to the client and, when they got paid, they would repay VBS with a fee on top.

To provide this service, VBS needed more cash. It applied to the PIC for a R350 million revolving credit facility specifically intended for funding fuel contractors. A revolving facility is ‘revolving’ in the sense that the client (VBS) can draw down, for example, R100 million to use, pay it back and then use it again. It’s a little like a massive credit card for a corporation. It just comes with rules about what it should get used for, in this case fuel contract finance. VBS would earn interest and fees from the contractors and pay back the PIC with interest. Ultimately, VBS was helping the PIC fulfil its mandate to promote small black-owned businesses. This plan gelled with a new government policy to move away from the established major fuel distributors. It was a good strategy all round.

As luck would have it, the PIC facility was approved in July 2015, just as Matodzi came in as a director of VBS and then chair. It is probably not a coincidence that Matodzi immediately set up a company called Vele Petroport. It didn’t seem to do much at first except demonstrate the man’s foresight.

The deal between VBS and the PIC was to have a paper trail and clear line of accountability. Companies would come to VBS with signed supply agreements they had with, for example, Eskom proving their contracts and would indicate the amount of money they needed to fulfil them. VBS would collate these applications and the PIC would release the money once it received this documentation.

That was not how it played out. When the PIC fuel facility was approved, VBS immediately made the first drawdown of R100 million. The forensic investigation commissioned by the PIC in 2019 couldn’t work out how that money had actually been used.1 The system of accountability had been completely abandoned. There were sometimes no contracts on file to justify payouts or the payouts were completely at odds with the terms and conditions of the facility. The investigators could not figure out to whom that first R100 million was destined because no one at the PIC could produce any paperwork around it.

The PIC fuel facility became the first known site of outright fraud at VBS. Where paperwork did exist, it was not necessarily real.

VBS would inflate apparently real deals with existing fuel companies through secret amendments to justify larger drawdowns from the PIC. The key person here was Tshepiso Mcwazzer, VBS’s business development manager. After VBS crashed, she told investigators for Advocate Terry Motau that she personally faked agreements and even copied and pasted client signatures. She said that basically all the contracts were faked, sometimes long after the fact. Some deals from 2015 were amended in late 2017 as one of several means of drawing money into VBS that had developed by that time.2 The result was a mix of fake and real fuel finance and a generally impossible-to-follow paper trail.

‘I don’t [know] if those companies were real companies. But, you know, we … relied mainly on management,’ the PIC’s Khaya Zonke told the Mpati Commission of Inquiry. ‘We did not have a reason to second guess what they were telling us because we did not have any experience of, you know, wrongdoing and so forth. Our relationship with the company was okay, so when they provided us with the list we believed those companies were in existence and the amounts that were reflected in the report were actually the amounts that were advanced to these companies. That was our belief.’3

VBS treasurer Phophi Mukhodobwane would later testify that he really didn’t know how much of the fuel contract business was real.4 He joined VBS late in 2016 after much of the fuel contract finance had already been done. He knew at least some of the beneficiaries were suspicious.

The PIC’s forensic report found that many of the companies that allegedly did fuel deals with VBS shared the same address. ‘The possibility that these companies were part of a syndicate or fronts for siphoning of funds can therefore not be excluded,’ stated forensic contractor Nexus. ‘Due to the limited information, it is impossible to determine how many fuel contracts were in fact entered into between VBS and SMMEs [small, medium and micro-enterprises].’5

On top of the apparent outright fraud around the PIC fuel facility within VBS, Matodzi had big plans for Vele Investments. Vele Petroport, which had been sitting idle since the PIC facility was approved, set its sights on the bigger, legitimate users of this resource.

Belton Park Trading 134 was an established fuel trader serving a variety of clients not limited to the public sector. It had got significant vehicle finance from VBS in late 2015 and early 2016 to buy fuel tankers and became a frequent user of the fuel facility.

Mmampilo Petroleum was a fuel business with ties to VBS and a valuable deal with Sasol for low-cost diesel. A long-established business, it is unclear how it got so entangled with VBS that it seemingly shared an address with the bank in the Metropolitan Office Park in Rivonia.6 More suspiciously, Mmampilo’s two owners, Vukani Nxumalo and Sibusiso Mavuso, were both granted bonds worth over R2 million by VBS on the same day in the early days of the PIC facility: 16 September 2015.

Afric Oil was a well-known fuel trader with an invaluable contract to supply Eskom’s emergency turbines with diesel – easily the biggest diesel contract in the country. Its link to VBS was an arrangement with Belton Park, one of its suppliers, whereby Afric Oil would directly repay the debt to VBS that Belton incurred under the fuel facility. It just made things easier than paying Belton and then having Belton pay VBS.

Robert Madzonga was on a mission to turn Vele Petroport into a major player in the fuel space and a worthy recipient of PIC cash via VBS. His job was to oversee the merger of Mmampilo, Belton Park and ultimately Afric Oil.

Belton, Mmampilo and Petroport started provisionally cooperating as a single entity through June to December 2016. Belton paid Petroport management fees and Petroport paid a salary to Madzonga, among others. The process of acquiring Afric Oil was on track, with the deal going all the way to the Competition Commission for approval.

Once Petroport was up and running, Vele Investments had its vehicle for tapping the PIC-funded VBS fuel facility. Even in this evidently legitimate form, the VBS fuel business was being used to Vele’s and Matodzi’s benefit. Bank records show that VBS was already accommodating Petroport with a massive overdraft to cover most of its expenses.

Another Vele finger in the pie was Hlomphanang Logistics, a trucking company co-owned by Vele and which apparently served as a subcontractor to Mmampilo. VBS extended millions in credit to Hlomphanang, which the company spent on real operational expenses.

Hlomphanang originally belonged to Mcmillan Matome Letsoalo, a member of a well-known and allegedly politically well-connected Limpopo business family. Vele acquired 75 per cent of the company somewhere along the line, and shared other business interests with Letsoalo. Not least was MML Food Services, a food distribution company that later quietly became a major conduit through which money left VBS for Matodzi’s benefit.

There were massive conflicts of interest in Matodzi being a shareholder of both VBS and Vele. At the very least it was extremely bad corporate governance. If the merger had gone ahead, Vele Petroport would have shouldered out the intended beneficiaries of the programme: a broad base of SMMEs.

It didn’t go ahead. The plans to merge were abandoned after six months. Despite receiving clearance from the Competition Commission, Afric Oil claims the deal failed because Vele never came up with the money. ‘We signed contracts, we did everything, they were going to pay the money and we just kept waiting and asking, where is the money, where is the money, and the money never came and the contract expired,’ Afric Oil’s then CEO, Tseke Nkadimeng, told me.7

According to Belton Park’s CEO, Julius Jooste, there were protracted negotiations with Vele as well as with Mmampilo. They fell apart due to what Jooste called irreconcilable differences with Mmampilo and lack of funding from Vele for the Afric Oil part of the plan.8

The conflicts of interest and alleged dodgy dealings between Matodzi’s Vele and VBS only got worse.

As mentioned previously, VBS CEO Andile Ramavhunga was already earning a modest sweetener of R50 000 a month from Matodzi’s Venmont Holdings. During the Petroport negotiations, Ramavhunga suddenly started getting another additional monthly payment, this time from Petroport. In July 2016, he received R95 000, but this quickly escalated to R300 000 per month. Overall, he got R1.6 million during the negotiation period, but admitted to SARB investigators that it was actually more, because he received earlier payments from accounts at other banks that weren’t reflected in the VBS statements on which the investigation was based.

Ramavhunga claimed he had a ‘verbal’ agreement with Petroport and that the payments were his ‘management fees’ for helping set up the new venture.9 Even if true, he was the boss of the bank that was funding the group he was ostensibly advising. His employment contract forbade him from doing this kind of side work. It was a rule he would break many more times.

According to the VBS CEO, he earned his fee because he had ‘brought the parties together’ in 2015. The parties in question were Vele, Mmampilo and Belton Park, he said. But then he backtracked, saying, ‘I never brought Vele into the transaction … I never spoke to Tshifhiwa about this transaction. It was only at a later stage that he came. What I did was to see an arbitrage opportunity between Belton and Mmampilo, where Belton were buying at a significantly lesser discount and Mmampilo were getting a higher discount. I just put the two together in terms of what they needed to do … I did not see anything wrong at the time because I thought I was creating value for the clients, which was outside of my responsibilities as the CEO of the bank.’10

More distressing is who else got money out of Petroport. They were often people with no discernible role in the fuel business, and no business being anywhere near it. Ramavhunga told investigators that his old friend from university (and later VBS manager), Tsumbo Matambela, also got on board and received Petroport payments. These are visible in bank statements. Another recipient was Paul Makhavhu, the ubiquitous representative and proxy for the Venda king, Toni Mphephu Ramabulana. Matodzi got paid too, as did Madzonga.

They all received similar amounts on the same day every month.11 It seems everyone was working on Petroport. Madzonga, the man actually appointed to run the show, made about R2 million from Petroport in the six months of the negotiations – but so did everyone else. When VBS crashed and investigators circled, Ramavhunga called up Belton Park’s Jooste to try to get him to confirm that he did in fact work on the deal and had earned his fees. Jooste was not cooperative. He wrote an email to Ramavhunga:

Hi Andile,

We worked closely with Robert Madzonga and Tshifhiwa Matodzi, we did meet with you occasionally and had a conference together to discuss all opportunities … We do not wish to get involved in current affairs of Vele, as this does not concern us, our transaction never proceeded.12

The rest of the email conversation was around how the Petroport deal collapsed, including Jooste’s claim that Belton Park was owed back the management fees it had paid to Petroport when the deal was being put together. According to Jooste, the fees he had paid were specifically tied to the amalgamated Petroport company. As the merger never happened, he was of the view that he was entitled to his money back.13

Mmampilo Petroleum’s role in both the outright fraud and the Petroport plan is often unclear. On paper, Mmampilo became the single largest beneficiary of the PIC facility. It was ostensibly given R100 million in early 2016 and another R20 million later on. Mmampilo’s Vukani Nxumalo told me it was never more than R5 million.14 Ramavhunga also told investigators that Mmampilo never got more than R5 million.

The figure of R100 million comes from an ‘addendum to the main agreement’ for R5 million between Mmampilo and VBS. The mysterious addendum specified that ‘the total revolving fuel facility’ was R100 million.15 There is no paper trail for who was to get the additional R95 million.

Belton Park also got up to R100 million to finance deliveries to Eskom in partnership with Afric Oil, but this seems to have been more or less legitimate.

A source close to the investigations that followed VBS’s demise described a tangled mess of Vele companies involved in the fuel business and receiving VBS funding. ‘We also heard that Vele had Mmampilo as a wholesaler,’ this source told me. ‘If you got funding, you had to get your diesel from them. So the PIC money goes to VBS and then to Vele.’16

Court records demonstrate how this worked. In early 2016, on paper at least, a company called Leruo Petroleum applied for and received a fuel facility from VBS for R70 million to fulfil orders from its client, PetroSA, the state-owned gas exploration and extraction company. In terms of the contract with VBS, the fuel would have to be bought from Mmampilo.17

As soon as Leruo got the facility, it paid R20 million to Mmampilo’s bank account, leaving it with a negative balance of that amount. One would assume that this was for the purchase of the fuel to be delivered to PetroSA. Yet Leruo’s bank statements show it never got paid for its alleged fuel purchase from Mmampilo and delivery to PetroSA. All it did was transfer money to Mmampilo and sit with a R20 million debt that accrued interest for the better part of two years. Much later on, when VBS was on the precipice, Vele, ostensibly a completely unrelated party, inexplicably settled most of Leruo’s debt to VBS, a clear indication that they were somehow linked.

In 2019, the VBS liquidator interviewed Leruo’s CEO, Ofentse Mothoagae, who made a startling admission: he had been paid R300 000 to go along with the whole thing. The fuel purchase was fictitious. It is still unclear if the PetroSA order for fuel was even real to begin with.18 On Mmampilo’s side, Nxumalo pleads ignorance of the R20 million his company, according to VBS bank statements, received from Leruo. He said that Mmampilo had bank accounts at VBS that ‘we didn’t control’.19

Belton Park’s Jooste similarly denies that his company had an account at VBS other than the vehicle finance one. ‘Because they got my information with [the Petroport deal] they literally took my information, opened a fake account and then withdrew the money,’ he told me.20 Jooste told me he couldn’t elaborate because he is working with the National Prosecuting Authority (NPA) and the SARB to pursue the matter.

Accounting for the amount of money siphoned off the PIC fuel facility (as opposed to what was legitimately lost) has been nearly impossible. And it’s not for lack of trying. The Motau investigation, the separate forensic investigation commissioned by the PIC and the Mpati Commission all took a look.

The PIC has to shoulder much of the blame for what looks like mind-bogglingly lax monitoring. Investigators were faced with completely irreconcilable records of where the money went – legitimately or illegitimately. There is basically no way to know who actually got the money.

There were seven drawdowns in total, amounting to R484 million – the full R350 million plus the re-use of amounts VBS had paid back on its revolving credit facility. The drawdowns were approved with visibly untrustworthy documentation, and in some cases no documentation at all. The PIC records also bore no resemblance whatsoever to VBS’s own, questionable internal records – basically an Excel spreadsheet listing seventeen fuel companies and their supposed debts. There may have been twenty or seventeen or fourteen beneficiaries, depending on which set of documents you believe.

The PIC paid out money but only sporadically got repaid, which should have been a red flag. ‘Our analysis … reflects that drawdowns were approved and paid without any or minor performance in terms of repayments in return for the drawdowns,’ the Nexus report noted.21 The investigators’ analysis of PIC reports also showed that an initial quarterly evaluation done in March 2014 was repeatedly ‘copied and pasted’ in subsequent reports. ‘This action is evidence of an ineffective and probably non-existent Risk assessment function,’ the investigators noted.22

Later PIC reports gushed about VBS turning a profit despite the profit being far smaller than anticipated. No red flags were raised when the 2016 annual financial statements came in late. And in early 2017, when VBS received a letter of demand from the PIC because it had fallen behind on its repayments, no real consequences followed.

When VBS crashed, the PIC lost R374.7 million – the entire facility and the interest on it. That is on top of the R108 million it lost buying VBS shares, making the PIC the largest loser in the whole affair.

Investigations revealed that the fuel facility was compromised from the very beginning with the help of the two PIC representatives on the VBS board, Ernest Nesane and Paul Magula, who both happened to work on the deal. Magula had joined the board in 2015.

The final contract with the PIC was mysteriously changed at the last minute to significantly reduce the PIC’s protection against VBS failing to repay. A clause 3.5 was added, which read: ‘The facility shall be ring-fenced for its Purpose as defined in this Agreement as such shall be subordinated against other Borrower creditors.’23

The ring-fencing part was fine – it meant that VBS could not legally, at least on paper, use the money for anything but the fuel finance business. The problem was the second part, the subordination of the debt owed to the PIC. This meant that the PIC would stand at the back of the queue if the bank went belly up.

Evidence given at the Mpati Commission highlighted how no one seemed to know how the contract got amended. It was, however, clear who did it: Nesane. As head of legal at the PIC, he had last sight of the agreement. Boitumelo Leroke, the PIC’s legal advisor, testified that she had called up the law firm that the PIC had used to draft the agreement to find out what had happened: ‘I had to call Madhlopa Incorporated … I asked them for an explanation as to who exactly from the PIC instructed them … So their response was 3.5, yes it’s there and it came later on after an instruction from Mr Ernest Nesane.’24

The law firm provided the email in which Nesane had instructed them to insert the damaging subordination clause. It was dated 7 April 2015 and read:

Dear Thenga, as per our discussion this morning and the proposals from Andile below we have discussed internally and you are instructed to make the changes as discussed in the facility agreement to add the following clause in the agreement, add clause 3.5 and send back the revised agreement … If we can finalise this without delay, kind regards Ernest Nesane Executive Head Legal.25

‘Andile’ is Andile Ramavhunga, CEO of VBS. On the face of it, the client (VBS) was dictating what protection the lender (the PIC) should have for a R350 million fuel facility. There is nothing wrong with a client telling you what they would like. Secretly giving them what they want when no one else seemingly knows about it is another thing entirely. No one at the PIC seems to have been aware of the internal discussions Nesane said had taken place.

The facility was ultimately signed off by then CEO of the PIC Dan Matjila on 23 June 2015 and by Ramavhunga on 30 June. Two weeks later, VBS requested the first R100 million for mystery beneficiaries and got it on 31 July. The rest is history.

The effect of the subordination clause was not just to strip the PIC of its protection. VBS needed something else. If the loan was subordinated then it could be used as so-called secondary capital for the bank. The SARB enforces a minimum level of capital adequacy on banks. This limits the amount of loans a bank can make. With the PIC facility subordinated, VBS had more capital and was free to make more loans. With the amended deal in hand, VBS did exactly that until the SARB cracked down in November 2015, telling VBS it couldn’t use the facility that way.

VBS then seemingly demonstrated its sway at the PIC again. In December, Ramavhunga wrote to Matjila asking that the facility be amended to make it unambiguously count as capital. Forensic investigators couldn’t find a response to this demand. Suspiciously, VBS reported a new R54 million in secondary capital soon afterwards.

Nesane has conspicuously avoided giving his version of events in public.

Alongside Nesane, the other PIC representative on the VBS board, Paul Magula, had a role to play in the set-up of the fuel facility. PIC project manager Brendah Mdluli, who worked on the facility from the original application in 2014, testified that Magula had largely driven the process of drawing up the deal. Throughout, Magula was ‘responsible for the collection and collation of information and all the interactions with VBS,’ Mdluli said.26

The application made its way through the PIC’s cumbersome internal processes, and during this time Magula was promoted to chief risk officer. ‘I was expecting that Mr Magula was going to continue with his role in finalising this transaction … but instead he went silent and did not respond to email requests for comments on the legal agreements that were sent through by the then legal representative, which was Mr Ernest Nesane,’ Mdluli told the Mpati Commission.27

Magula’s relaxed attitude to the risks associated with VBS can be inferred from how his predecessor as head of risk, Zulu Xaba, had taken a diametrically opposed view on the VBS fuel deal. A whole year before Magula took over the position of chief risk officer, Xaba weighed in on the proposal and issued a report unambiguously stating that ‘it is not advised to extend credit to the company’.28 Xaba’s report was not binding, but recommended that, should the deal proceed, it should involve less money.

‘You don’t anticipate that, you know, fraud will happen at the highest level from board and executive managements, so when you put these things together you want to prevent, you know, employees or junior staff from defrauding the company,’ said the PIC’s Zonke in 2019. ‘I mean, you don’t anticipate that your board of directors and your executive management will collude to defraud the company. So from our side, as the PIC, it was – it’s a difficult situation and I still don’t know how we could have done it differently.’29

After VBS crashed, bank statements for Petroport made it into the public domain and the most glaring reason for this lack of oversight was revealed. Both PIC representatives on the VBS board, Ernest Nesane and Paul Magula, along with VBS CEO Andile Ramavhunga, Petroport chair Robert Madzonga, the king’s advisor Paul Makhavhu, VBS manager Tsumbo Matambela and Tshifhiwa Matodzi, had a share in what Ramavhunga later called an estimated R1.25 million ‘pot’ of monthly payouts from Petroport.30

Despite its original ambitions, Vele Petroport ultimately became just a front for distributing patronage into a small VBS-PIC network. And despite Vele’s gross failure to actually build a fuel business, Matodzi still brags about his fantasy diesel empire years later. He told me that Petroport was up and running with significant revenues of around R2 billion by the time the first VBS rights issue was announced in December 2015 and executed in March 2016.31

In a glossy corporate presentation produced by Vele Investments in early 2018, Petroport is mooted as the beginnings of the group. In the presentation, its value is even higher than what Matodzi told me. According to the presentation, Petroport ‘grew organically to become a R3 billion a year business’.

Stranger still is that Matodzi insists that Vele already owned both Mmampilo and Belton Park by early 2016, which, according to everyone else involved, just isn’t true. It is really difficult to tell whether or not he actually believes his own version. Madman or genius, through the fuel scheme, Matodzi had set up patronage machinery that would underpin a whole new saga.