BUSINESS MAVERICK 168
Dark cloud of R100m pension fund deal lingers over new Finance Minister Enoch Godongwana’s head
An inquiry concluded there was no malicious intent on his part, but still – millions in union pension money was lost.
First published in the Daily Maverick 168 weekly newspaper.
Incoming Finance Minister Enoch Godongwana has a R100-million cloud hovering over his head, one he hasn’t been able to shake for over a decade and it has grown more conspicuous overnight after his elevation to the country’s top economic job in a late-night Cabinet change-up by President Cyril Ramaphosa on 5 August.
In 2012, Godongwana quit his job as Deputy Minister of Economic Development. More than 20,000 clothing workers, belonging to the South African Clothing and Textile Workers’ Union (Sactwu), risked losing a big chunk of their pensions after it entered into a R100-million agreement with Canyon Springs Investments, a company 50% owned by Godongwana and his wife Thandiwe through a trust.
Canyon took at least R120-million from the Sactwu pension pot and loaned it to an investment vehicle controlled by former Sactwu trade unionist Richard Kawie, whom Godongwana has admitted was a friend of his, with the hope of making a profit that would partly be pumped back into the pension fund, but that was never to be. The investment vehicle collapsed, and Kawie was subsequently arrested by the Hawks. Kawie denied the charges.
A liquidation inquiry paid for by the union after the money evaporated, as reported by the Mail & Guardian, found that Godongwana and his wife “were party to the carrying on of the business of the company, either fraudulently or at least recklessly”.
It was reported, then, that between 2007 and 2009, Godongwana had received salary payments from Canyon Springs, ostensibly the proceeds of the bad deal, amounting to about R1.5-million. Godongwana reportedly told the inquiry that he had entered the business [Canyon] in “good faith” and had not known it was a scheme. According to the inquiry, the union provident fund had been misled into putting money in an investment vehicle ultimately controlled by Canyon. The inquiry report notes that Godongwana admitted that in hindsight he had not properly exercised his fiduciary duties as a director.
Sactwu Secretary General Andre Kriel told DM168 that Godongwana had fully cooperated with the investigation into the matter, which was concluded in 2017.
“In January 2017 we reached a written settlement agreement with him. He has fully honoured the terms of the settlement. In particular, he has paid back the total amount which we had claimed from him, with interest,” Kriel said.
Kriel said he did not believe that Godongwana had intentionally siphoned any money out of the workers’ pension fund.
“During the 417 Inquiry into Canyon Springs and based on its outcomes, our legal council concluded that there was no malicious intent by him. It became clear that there were others who were the main drivers of the corruption,” Kriel said. The matter raised eyebrows in the immediate aftermath of Godongwana’s appointment, with South Africans wary of another scandal-tinged leader taking office following Health Minister Zweli Mkhize’s seemingly forced resignation triggered by the Digital Vibes affair, one in a litany of graft allegations against government officials.
A former colleague of Godongwana’s, who asked not to be named, said he was a capable politician, and that his trade union, academic training as an economist, and government background put him in a good position to deal with the economic crisis.
“The pension fund stuff could be seen as bad judgement and not corruption, in that he probably did not expect the businesses to go broke. But still,” the person said.
Now as finance minister, Godongwana will have to earn the trust of the public at a time when Covid-19 has deepened unemployment and inequality, eating away at the roots of the uneasy detente between government and the majority of society that remains mired in poverty.
“It’s hard to say if he’ll be a good finance minister,” said Xhanti Payi, an economist and director at Nascence Advisory. “He has enormous experience in policy analysis and policy making. Also, I’ve seen him interact with investors, including my own clients, and he inspires a lot of confidence.” DM168
This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.
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and, here we go…
… again.
If he had been employed in the financial services sector, I am confident that this would have resulted in debarment. So now he manages the finances of the nation and effectively controls our economy. Is there any rational reason that the required standards in respect of competence, integrity and accountability are significantly higher in the private sector (where the amounts of money are far smaller) than in the public sector? A person providing a couple with retirement advice is held to higher standards of integrity, competence and accountability than the minister of finance. The comparable impact of them “getting it wrong” is significantly different.
The only requirement is to be a loyal anc member. The rest is definitely not important. It does count in your favour if you have some corrupt shadow hanging over you.
Where did he find the R100 million to pay it back though?
I doubt he paid back the 100 mill, just the salary he got…
Exaclty, where did the funds come from to repay that money ?
I’m amazed and perplexed at the sudden massive wealth that so many who were “previously disadvantaged” have managed to accumulated in such a short timeframe. Its taken the developed world 1000 years or more to get to its current level of wealth, but somehow these guys have done it in two decades.
AA; (BB hahaha) BEE; Corruption; Zero Integrity; anc cadre; Deployment; …..
That’s the A,B,C,Zs of self enrichment right there.
At best, it’s bad judgement. Like when gave the keys to Zuma, a man who could not manage his personal finances. So he did to the country what he did to his own balance sheet.
We could be doing it again. The trouble is, he’s surrounded by legions of his comrades who have terrible judgement.
You don’t become the country with the highest unemployment in the world by accident.
Can the ANC ever make an appointment that is based on merit rather than politics and cadre deployment? Is there no one else for the this top financial job? This was an opportunity for the president to break the mould of cadre deployment at any cost and appoint someone without a hint of financial misjudgement in their past. Investors, local and international would have been encouraged and the president would have garnered support from outside the inward-looking circle of the NEC. Instead we now have the head of the country’s finances taking office ‘under a cloud’ of speculation. It appears that an irrational and stubborn focus on ANC ideology will be pursued at all costs – except that the man in the street will pay the cost long before politicos who have tidy offshore investments.
But, Jonathan, cr has stated unequivocally at the Zondo commission that cadre deployment is ANC policy, unashamedly, and will continue. He would never appoint a non-cadre…even if he’s tainted – we know that is a factor that would qualify him rather than disqualify him!
“were party to the carrying on of the business of the company, either fraudulently or at least recklessly” – that makes him eminently suitable to continue the fine job the ANC and its cadres are doing of destroying the country. You have to love the qualifications of these politicians!
The very least you can expect from the Finance Minister is good judgement.
He is ANC what else does one expect?
Enoch Godongwana and wife – Richard Kawie – Sam Buthelezi – Pinnacle Point – Passima Family Trust – Trilinear – Canyon Springs Investments – Leading Prospect – Ace Magashule – Street Spirit Trading – when you are ignorant and sleep with dogs you will get fleas.
Oh dear Cyril, you can’t possibly do anything in the interests of the country because you put your position in the ANC ahead of all the people in this country. I really hope that you wake up and treat this guy with the disrespect that he deserves and that he follows in the footsteps of the Weekend Special.
“He has enormous experience in policy analysis and policy making”….I guess you could say the same about the rest of this government as well. See where that’s got us.
Andre Kriel, who is also tainted in a deal with Independant Media exonerated the new minister. What does that say?
It raises concerns about regulation of union pension fund investment. SACTWU appears to be down R400m on these two investments.
We have a rat in charge of the state’s granary.
Same old same old- dark clouds again- will the ANC ever change its “cadre deployment” policy? Of course not , that would be tantamount to letting go of the cookie jar.
Oh dear. Another ‘corrupt’ cadre. Is there absolutely no-one in the ANC that hasn’t had his hand in the cookie jar?
..and so on…and so on..
Let’s accept that Godongwana did not steal pension funds. However, by his own admission he was careless. The SIU said he was reckless.
Is that the the best person for Finance Minister ?
I predict Finance scandals within 12 months.
Simon Nash gets a suspended sentence after a protracted investigation and character assassination for finding a loophole which allowed him to resuscitate and use a defunct pension scheme from a dead company over 100 yrs old…and this guy gets a slap on the wrist and a cabinet position when millions are missing from a current pension scheme under his watch? Go figure! It doesn’t add up or seem very fair, in my opinion! Unless I’m missing something????
Put simply, Simon Nash got away with Grand Pension Theft. He should have been locked up for a long time so that he has the time to think about the damage that he did to other people. As for this AH, we all know the repercussions for him.
He is an ardent supporter of fossil fuel & coal – see Mantashe’s big smile – and he only paid back R1.5m after a protracted 2 year battle in a civil suit brought against him. When asked about this he was markedly irritated and said: “I paid back the money, didn’t I!” Well done! The fact that that is an admission of guilt, more or less, is totally lost on him, of course. And he QUIT as deputy minister under this cloud – pretty unheard of in the ANC – so it must have been quite bad…But he does support cr – most importantly! Cheers to our new finance minister!