Colonel Dhanajaya Naidoo’s evidence at the State Capture Inquiry on Tuesday, 1 October 2019 was peppered with assertions that numerous Crime Intelligence (CI) contracts were irregular.

He testified about what CI slush funds allegedly bankrolled. The list includes, on his claims: a KwaZulu-Natal holiday camp for CI senior members, furniture purchased for properties allegedly owned by two CI seniors and rented as safe houses, and a dealership worth of cars, many of which were high-end models.

Come on, join the joyride

Naidoo alleges CI seniors, including a former CI head, CFO and even two ministers of police went on an effective joyride with state security funds. In one instance, Naidoo estimates CI spent in excess of R5-million on seven agents linked to the then-CI head, Lieutenant-General Richard Mdluli, in less than two years.

Naidoo has provided an insider’s intelligence on the shady world of CI operations. On his own version, he was closely involved in a number of alleged plots involving agents, cars and safe houses. He has cast these ventures in a very suspect light.

His version, if it is to be believed, depicts a world of skulduggery in which the secrecy afforded to CI operatives and their spending becomes an invisibility cloak for suspected fraud, corruption and money laundering.

However, when repeatedly pressed for details on CI policies that might inform his belief that these deals were nefarious, Naidoo was unable to provide relevant policies, protocols, or even statutes.

He has given details of agents’ allegedly wasteful overseas travel, well-connected operatives paid for doing no discernible work, fleets of cars bankrolled by a state security account, false claims for petty cash, and the leasing of senior CI members’ private properties as “safe houses” with the rent paid in cash and their true ownership allegedly concealed.

Among others named in his claims, Naidoo has implicated himself, current Minister of Police Bheki Cele, former Minister of Police Nathi Mthethwa, journalist Ranjeni Munusamy, former CI Chief Financial Officer (CFO) General Solly Lazarus and former CI head, Mdluli.

Naidoo has accused Lazarus of holding a fleet of vehicles, paid for by CI, which were reserved for use by Lazarus and those close to him, including Naidoo.

Keeping it in the family

He listed seven agents, denoted by numbers and not their names, whom he grouped as “relatives” of Mdluli. However, two of the seven have not been confirmed as Mdluli family members.

Naidoo testified that Mdluli attended a meeting with Lazarus and him in early 2010, during which he claims Mdluli provided a list of individuals he wanted hired at CI.

Naidoo alleges that after Mduli left the office, Lazarus referred to the list. “He wants to appoint his vrou and his queen,” Naidoo reports Lazarus said, in reference to Mdluli’s erstwhile wife and girlfriend.

If state funds are the ocean and those allocated for CI work form an estuary, Naidoo described several streams leading money out of the slush fund account into the control of those close to Mdluli.

He testified on his involvement in the establishment of a “front company” in the form of an internet café, with R75,000 spent on starting the business and a further R20,000 spent for four agents to undergo basic computer training.

Naidoo testified he was involved in handling the salaries and petrol payments for two of the seven so-called “Mdluli agents” whom he claimed “were very rarely at the office but were at home or shopping at the mall”.

While Naidoo arranged various benefits for these agents and acted as their handler, he claimed he did so on instruction from Lazarus.

“Operationally I don’t know what they did,” he said. “This was a parallel structure that was created basically for their employment, but they did nothing at that office.”

Evidence leader advocate Susan Wentzel asked, “Having dealt with the expenditure of the Mdluli agents – paying salaries, cellphones, hiring premises, setting up a front company, vehicles etc – how much do you believe during the period you were their handler was spent on these agents?”

“Chair, I believe it exceeded R5-million but obviously this is just an estimate. I can confirm if all the documents regarding these agents are shown to me,” replied Naidoo.

Naidoo’s estimates of the in excess of R5-million expenditure on CI agents close to Mdluli occurred between March 2010 and October 2011, a period of less than two years.

Landlord spy bosses

He also detailed how CI rented apartments reportedly owned by CI senior members as “safe houses” and paid the rent in cash.

“Nowhere in the records would you find General Mdluli’s name or [former Lieutenant-]General [Ray] Lalla’s name,” said Naidoo.

His evidence suggested John Appalsamy of Dias Trading was an alleged middleman or broker, who would take a cut and hand over cash paid by CI back to Naidoo for delivery to the apartments’ true owners.

He testified that Appalsamy’s company would invoice “Company X” for a combined R13,000 monthly, of which R8,500 was rent for a Gordon’s Bay apartment owned by Mdluli.

At the end of each month for about a year, says Naidoo, Appalsamy gave him R7,000 cash which Naidoo handed over to Mdluli.

“And you personally handled these transactions?” asked Deputy Chief Justice Raymond Zondo.

Naidoo replied, “That is correct, Chair.”

Justice Zondo asked Naidoo if there was “something wrong” with Lalla and Mdluli leasing their houses to CI via Dias Trading.

“In terms of the transparency, yes, I say there is something wrong because the true identity of the owners was not known,” replied Naidoo.

Cash is king

The evidence concerned two “safe houses” among a ballpark figure of 100 nationwide. Naidoo agreed the rent for these properties would either be paid by cheque or cash.

Justice Zondo asked, “So the mere fact that the rent is paid in cash wouldn’t on its own suggest anything irregular?”

Naidoo responded, “That process is in place, Chair, where cash can be paid. It is just my belief that it was done in this process so that these individuals were not exposed as the true owners.”

He testified that “on instructions from General Lazarus” he personally ordered furniture for both apartments and estimated the bill totalled R50,000 or R60,000.

In another case, Naidoo claims CI rented a “safe house” in the Boksburg security complex Clearwater Estate for Mdluli at R17,500 monthly.

Naidoo described the flat-screen TV and other trimmings typical of a fitted family home. He claimed groceries were covered by the slush fund. Once, when he dropped off Mdluli at the Clearwater Estate property, claimed Naidoo, two of the “Mdluli agents” and children were present.

Wednesday’s triple bill

Naidoo’s evidence offers a glut of damning claims about CI and the abuse of a state security account turned slush fund.

However, he was forced to concede that segments of his statement were based on anecdotes relayed by other CI agents. A few times on Tuesday, he forfeited these sections, conceding they constituted hearsay evidence.

Proceedings resume on Wednesday, 2 October 2019 at 9am.

Naidoo is expected to conclude his evidence, after which former Hawks head Lieutenant-General Yolisa Matakata is set to take the oath.

Former tax boss Tom Moyane intends to repeat his bid to cross-examine Public Enterprises Minister Pravin Gordhan. DM