State Capture inquiry investigators have identified payments for luxury cars and property stemming from government funds for a tender meant to eradicate hazardous asbestos in the Free State.

The price of the asbestos project was grossly inflated and, worst of all, completely failed to remove asbestos from Free State communities. Inquiry chairperson, Deputy Chief Justice Raymond Zondo, reacted to the vast difference between the actual cost of the (deficient) audit and the final price tag. The public protector, advocate Busisiwe Mkhwebane, released findings from her probe into the fraud in May.

The asbestos survey conducted in the Free State merely assessed the presence of fibrous material in roofs, but the carcinogenic insulator can reach water pipes and other building features. While the Blackhead Diamond Hill joint venture won the tender, the actual work was sent down a tier of subcontractors, like a baton passed in a race. At each rung, there was a handsome cut of fat profit.

“The effect of all of this must be that the entity that did all the work, if it could do the work for the price that it charged, it must mean that a reasonable price for the work can’t be much higher than, more or less, what the entity charged,” said Zondo.

Public Protector confirms more than R200m squandered in Free State asbestos audit

The evidence leader replied, “The final subcontractor in the line bid to do the work at R21-million and on its version made a substantial profit on that score, and has not been paid.” 

He identified Igo Mpambani of Diamond Hill as, essentially, a fixer, who would “unlock” co-operation from Free State officials.

Turning his attention to those officials, Zondo mused, “On what basis did they believe that the price that they agreed to pay was reasonable when there were, as a matter of fact, entities that could do the job for far lower in terms of the price?” 

One probable motive: sheer self-interest.

Blessers and blessees 

CEO Edwin Sodi’s company Blackhead Consulting entered into a joint venture (JV) with Mpambani’s company Diamond Hill Trading. The JV scored a tender of over R200-million to run an asbestos audit in the Free State in 2014-2015.

Mpambani held a 50% stake in the JV and became involved in the pitch for the audit, even though he had no background in engineering, human settlements or asbestos auditing. In 2017 the businessman and reported “bagman” was gunned down in Sandton.

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Sodi claims a document entitled “Cost of Business Schedule” was generated by Mpambani on Sodi’s computer in Sodi’s office, but the Blackhead CEO denies knowledge of its contents.

The former Free State MEC for Economic Development, Mxolisi Dukwana, referred to the schedule during his State Capture inquiry evidence in 2019. He alleged it reflected kickbacks linked to the audit scam, with initials reflecting beneficiaries’ names. Dukwana’s bare claim was insufficient for the chair. Since then, investigators have been assessing the list of initials and other sources.

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Dukwana called the audit an “asbestos heist” and slammed the Free State’s former premier as a “blesser of many” in the province. Dukwana claimed, “This project was a brazen act of corruption executed by state officials in concert with the businesspersons at the behest of the premier of the Free State, Mr Magashule.” 

Former Free State MEC Dukwana ready to face Magashule in court

After Dukwana’s testimony in August 2019, Magashule threatened legal action, a threat which has, to date, come to nought.

An emerging money trail

On Tuesday 4 August, legal team head and evidence leader advocate Paul Pretorius reported that two Blackhead payments reached a car dealership in *Ballito. The discoveries were the fruits of investigations by the State Capture inquiry’s team.

Sodi, said Pretorius, paid the car dealer R600,000 at the time of the project. The transaction was “reflected on the recipient side” with the initials TZ. Pretorius reported that the then-director-general of the Free State Department of Human Settlements, Thabani Zulu, used the R600,000 as a deposit for a Range Rover.

Pretorius said it was “common cause” Sodi paid R600,000 to the dealer and Zulu then used the funds as a deposit for the Range Rover. However, the chair could expect to hear one “version or expectation” for the transaction to be detailed in future evidence.

That explanation is this: Zulu, said Pretorius, was involved in an entertainment lounge in Pietermaritzburg called TZ Lounge (note the initials). On Zulu’s version, the R600,000 covered a tab Sodi ran up at TZ Lounge for goods and services. 

“On the face of it, R600,000 is quite a large bill to run up at an entertainment venue,” remarked Pretorius.

The inquiry’s investigators analysed another Blackhead transfer which, said Pretorius, was used to buy a property in which the head of the Free State Human Settlements Department lives. 

“An amount of R650,000 is paid via a trust to attorneys which is used to buy a property in which, according to the investigators, it is apparent Mr [Ntimotse] Mokhesi lives,” said Pretorius.

Mokhesi’s explanation: “He and Mr Sodi became friends and they decided to invest in a property and there’s an agreement which shows how the income from rentals is to be divided and what’s to happen to the property,” said Pretorius.

Yet, even this explanation raises a red flag: Mokhesi was the accounting officer for the Free State government’s asbestos audit of more than R200-million. For Mokhesi to enter into a private business venture with a JV recipient of the tender still constitutes a benefit.

Pretorius said, “And there are others too, Chair, that involve the payment of fees from this money at the request of the premier of the time, Mr Magashule.”

Pretorius cautioned: whether one received a benefit for oneself or on behalf of others, such as students receiving bursaries, it “falls foul” of legislation. 

“No doubt the law enforcement agencies will pay close attention to that in due course,” he said.

Reflecting further inquiry investigations into transactions, Pretorius raised a (so far) mystifying Blackhead transfer “used to buy a Maserati for a Mr Ntuli”, but the origin and purpose of that transaction “has not finally been established by investigators”.

The human cost

Pretorius discussed the grossly wasteful Free State project meant to eradicate asbestos in the Free State. He, in fairly depressing terms, emphasised the futility of the exercise (except for those who unduly benefited). 

“Hundreds of millions of rands have been spent on the project but the asbestos is still there,” he said.

“It’s a risk to life, it’s highly dangerous, causes a number of health conditions,” remarked Pretorius of the remaining asbestos. Later, he highlighted the executive’s constitutional duties in terms of the public’s housing, health and safety.

Two witnesses were set down to testify on Tuesday. John Matlakala, the supply chain management director for the Free State Department of Human Settlements, indicated via his lawyers he would not attend on Tuesday. Pretorius said Matlakala “claims he has reason not to appear this week” and he was not subpoenaed.

When proceedings resumed after the lunch adjournment, occupational hygienist Jacobus Roets provided expert testimony on asbestos. Further evidence on the asbestos audit will follow later this week.

A tiring judge

On Wednesday 5 August the presiding officer in the Gauteng High Court, Tintswalo Makhubele, is set to testify. On Monday 3 August she finally arrived at the inquiry, after Zondo compelled her to do so.

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On Friday 24 July, Makhubele failed to appear on account of a flat tyre the night before. Her then-lawyer reported that Makhubele was “not emotionally in a state to be able to attend or testify” on that day or the following day.

A poor week past, with a power week ahead (well, possibly)

To date, Makhubele has sought at least three postponements. She argued for the removal of evidence leader advocate Vas Soni SC, claiming he had belittled her in a meeting in early July. On Monday, she asked Zondo for even more time to prepare. Makhubele disputed any perception she was a difficult witness.

She told Zondo, “Don’t close my door and say, ‘This Makhubele is trying to delay the functions of the commission.’ ”

Gauteng Judge President Dunstan Mlambo cleared Makhubele’s schedule so that she was available to attend the inquiry this week. At one point during her Monday appearance, however, Makhubele suggested she would seek further leave from her High Court duties in order to prepare her evidence.

“I can’t concentrate,” she said. “Let me talk to JP Mlambo to get complete separation for some time. It’s getting on me, Chairperson. I can’t multitask.” 

While Zondo dismissed Makhubele’s application for a postponement on Monday, the day’s hearing was negligible. He was patient, almost to a fault. Makhubele must appear before the inquiry at 5pm on Wednesday. Her evidence is likely to run into the evening. DM

The day after the publication of this story, legal team head and evidence leader advocate Paul Pretorius SC made a correction. On Thursday 6 July 2020 he recorded the motor dealership, SMD Trading Group, is in Ballito and not Pietermaritzburg. The article has been amended.