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Agrizzi and Smith's key relationship in Bosasa fraud sc...

South Africa

STATE CAPTURE

Agrizzi and Smith’s key relationship in Bosasa fraud scandal unfolds in court papers

Vincent Smith (former ANC MP) and Angelo Agrizzi (former Bosasa chief operations officer) appear before the Palm Ridge Magistrates’ Court on 14 October 2020. (Photo: Gallo Images / OJ Koloti)

Cash ‘gratifications’, university fee payments and the gift of a VW Polo for a daughter are mentioned in court papers as being among bribes allegedly made in return for Bosasa being awarded valuable tenders.

The story of an alleged corrupt relationship between former Bosasa logistics company chief operating officer (COO)-turned-whistle-blower Angelo Agrizzi and ANC parliamentarian Vincent Smith is unfolding in court papers.

The businessman and the politician are seen as key players in the state’s case relating to a multimillion-rand fraud scandal that involved many prominent political figures.

Agrizzi’s sensational and self-incriminating testimony before the Zondo inquiry into State Capture lifted the lid on the enormity of the alleged fraud, with Bosasa said to have illegally funnelled vast sums of taxpayer money.

The scale of the claimed corruption can be judged by the Zondo Commission of Inquiry devoting the entire third instalment of its report to Bosasa, a company that was owned by the politically connected Watson family.

Among those implicated at the receiving end, and handsomely benefiting from the illicit dealings, were former president Jacob Zuma and Smith.

Giving evidence at the State Capture inquiry in 2019, Agrizzi told the commission how the late CEO of Bosasa, Gavin Watson, made a R300,000 payment to Zuma at his Nkandla residence.

The commission also heard claims from Agrizzi that Watson was concerned at the time that Zuma wasn’t receiving monthly payments to the Jacob Zuma Foundation through former SA Airways chair Dudu Myeni.

Also implicated in the state’s case is Andries van Tonder, former chief financial officer of Bosasa; Linda Morris Mti, former national commissioner for the Department of Correctional Services (DCS); and Patrick Gillingham, another former employee of the DCS.

The alleged corrupt relationship between Smith and Agrizzi relates, inter alia, to a R1.8-billion DCS tender fraud case involving Bosasa Operations (Pty) Ltd and the people mentioned above, and, in the second instance, to a bribe Smith is alleged to have received from Agrizzi.

Agrizzi told the Zondo commission that Smith received a R100,000 monthly payment to influence parliamentary decisions as a member of the portfolio committee on justice and correctional services.

He said Smith was expected to make sure that Bosasa was awarded DCS tenders.

It also emerged during the inquiry that Bosasa allegedly paid R600,000 for Smith’s daughter’s overseas university fees.

Smith has vehemently denied these claims and maintains he received a loan from Agrizzi to pay for his daughter’s fees.

The current court process was preceded by a probe by the Special Investigating Unit (SIU). Following SIU recommendations, further investigations were conducted by the Hawks, helping the National Prosecuting Authority to complete an indictment and a summary of facts, thus allowing the matter to go to trial.

However, for trial purposes, the Specialised Commercial Crimes Court in Palm Ridge granted an application in July 2021 for the separation of the trials of Agrizzi and Smith, meaning that various matters will be heard separately.

Smith and Agrizzi both face corruption and fraud charges, while Smith faces additional charges of money laundering and tax evasion for alleged payments made to his company, Euroblitz 48 (Pty) Ltd, of which he was the sole director and sole shareholder.

The Bosasa case of alleged corruption and cash “gratifications”, in the Smith indictment, reads:

  • In] or about October 2014, employees of Bosasa, allegedly acting on the instructions of Agrizzi and or the late Gavin Watson, erected and installed a Full Electric Fence and Full Internet Protocol based system to the value of R200,000 at the house of Smith.
  • On 14 July 2015, Jacques Riaan van Zyl, an employee of Bosasa, purportedly acting on the instructions of Agrizzi, deposited an amount of R276,667.90 into the FNB account of Euroblitz 48 (Pty) Ltd, for the benefit of Smith.
  • On 5 August 2016, Agrizzi is alleged to have instructed Christo van Wyk to effect a payment into the account of Euroblitz 48 (Pty) Ltd. On 6 August 2016 an amount of R395,076 is alleged to have been paid into the account of Euroblitz 48 (Pty) Ltd.

At the core of the DCS tender irregularities, the State argues, is an SIU investigation concluded in 2009, when Smith took over as chair of parliament’s portfolio committee on correctional services. Congress of the People member Dennis Bloem’s tenure as chair of the committee came to an end in May 2009 and his committee issued a Handover Report to the incoming committee chaired by Smith.

The report revealed that the DCS had not conducted a feasibility study on outsourcing but had, from 2004, awarded tenders totalling more than R1-billion to Bosasa Operations and its subsidiaries.

The Handover Report also found that, despite the committee raising concerns, the DSC went ahead and awarded the tenders to Bosasa. The rubber-stamping of the process was not communicated to the committee, which learnt of the contract being awarded through media reports.

“Smith was concerned about the SIU investigation into the DSC tender fraud and described the findings of the SIU as ‘horrific’,” another report points out.

Smith was allegedly present in committee meetings when it was stated that Bosasa was implicated in the SIU’s report and allegedly committed his portfolio committee to investigating further.

However, despite these red flags and a warning on 24 April 2013 that there should be no continuation of the Bosasa contracts –  which had been extended to the end of July 2013 – the contracts were further extended.

“When the portfolio committee on correctional services Handover Report for the period May 2009 to March 2014 was tabled on 13 March 2014 there was no mention of Bosasa or any of its subsidiaries,” the court indictment reads.

“Notwithstanding the SIU recommendations, the contracts between Bosasa and DCS continued until the last one was cancelled in February 2019 after the said company had notified the department of its intention to apply for voluntary liquidation.”

The money laundering charge Smith faces relates to the period 21 January 2013 to 26 February 2018.

During this time, Smith allegedly received or made 18 cash deposits totalling more than R1.4-million into the account of Euroblitz 48 (Pty) Ltd.

The charges of tax evasion against Smith relate to actions allegedly committed during the period 8 April 2011 to 11 July 2018.

Smith is alleged to have only declared and/or caused and/or allowed to be declared his income for the amount of more than R10-million, as received from parliament and from two retirement fund lump sum payments from Alexander Forbes and Liberty respectively for the 2010 to 2016 and the 2018 tax years.

Smith is also alleged to have failed to declare additional income amounts of more than R13-million and R5.2-million.

Papers also reveal that, during the period 3 March 2009 to 26 February 2017, Smith submitted a “zero return” declaration on behalf of Euroblitz 48 for the 2008 to 2016 tax years whereas, in truth and in fact, Euroblitz 48 received taxable income of R15-million.

The loss to the fiscus amounted to more than R4-million, according to the court papers. The state contends that Smith committed tax fraud in excess of R28-million in respect of the under-declarations and/or the zero returns filed.

The indictment about the R1.8-billion DSC tender irregularities relates to contravening the Public Management Act (PFMA), corruption, fraud and money laundering.The four tenders forming the subject of these criminal charges were awarded to Bosasa Operations (Pty) Ltd, Sondolo IT (Pty) Ltd and Phezulu Fencing (Pty) Ltd (all in the Bosasa Group of Companies) during the period when Mti was the commissioner and accounting officer of the DCS.

When the DCS tender fraud was allegedly committed, Agrizzi was employed by Bosasa, the state points out.

The state then contends that Agrizzi colluded with employees of, or people associated with, Bosasa Operations and its subsidiaries to draft or order the invitation to bid for tenders.

These companies allegedly had an advantage over other bidders and were  awarded the tenders as they had knowledge of the bid specifications before the said tenders were advertised.

The “gratification” allegedly derived from the DCS tender fraud includes:

  • Car rental, air tickets and accommodation paid for Mti between the period 6 May 2005 and 7 July 2015 amounting to R975,637.22. Agrizzi and Van Tonder allegedly indirectly or directly offered to give Mti these unauthorised gratifications.
  • Van Tonder allegedly paid the amount of R131,367.99 into the Standard Bank account of Glen Volkswagen of Glenvista towards the purchase of a motor vehicle – a VW Polo for Gillingham’s daughter.

From the papers, it is clear the state’s argument is that the actions of both Agrizzi and Smith amount to abuse of a position of authority, breaches of trust, and violations of a legal duty or a set of rules, and were designed to achieve an unjustified result.

In other words, they abused their positions to influence the awarding of tenders.

“As a Member of Parliament, Smith had a legal duty to disclose to the Registrar of Members’ interests all the registrable interests,” say the court papers.

“Parliament suffered actual or potential prejudice when Smith failed to disclose full information as to all gratifications received from Bosasa [and/or] Agrizzi [and/or] Watson and other entities.” 

What happens now

Sindisiwe Seboka, spokesperson for the National Prosecuting Authority Investigating Directorate, has indicated that the Smith case in the Johannesburg Specialised Commercial Crimes Court has been postponed to 5 July 2022.

This will allow the accused to study the docket, which Seboka said was voluminous, and to consult tax experts and legal counsel.

Smith may bring further applications to the court.

On Friday 1 April 2022, the Agrizzi matter was postponed in the Palm Ridge Specialised Crimes Court to 18 May 2022 – to determine a High Court trial date.

Agrizzi has not been in court since October 2020, due to ill health.

Following evidence presented to the Zondo State Capture inquiry and the SIU investigation, Agrizzi has been charged with offering gratification on behalf of Bosasa to Smith, in exchange for his influence as the then chairperson of Parliament’s oversight committee on correctional services.

This led to Bosasa landing contracts totalling just over R1-billion from DCS between 2004 and 2007. DM168

Who is Vincent Smith?

  • Vincent Smith was a member of the ANC and sworn in as a Member of Parliament from 14 June 1999 until 21 May 2019. In 2018 he stepped aside from chairing any portfolio committee. He remains an MP.
  • During his tenure, Smith also served on the Standing Committee of Public Accounts from 31 August 1999 to 2009 and again from 20 June 2014 to 2018;
  • He served on the Portfolio Committee on Correctional Services (PCCS) from 27 May 2009 to 2014 as Chairperson;
  • Served as a member of the Portfolio Committee on Justice and Correctional Services from 12 August 2014 to 2019. He was elected as chairperson of this committee on 29 August 2019;
  • He was chairperson of the standing committee on the Auditor-General from 8 February 2007 to 2009 and again from 20 June 2014 to 2019;
  • He is director of Euroblitz 48 (Pty) Ltd, and also the donor and a beneficiary as well as a trustee of the Vincent G Smith Family Trust. He was also director of Umyezo Property Holdings (Pty) Ltd and IIima Lesizwe Investments (Pty) Ltd.

Who is Angelo Agrizzi?

  • He is a businessman and former Chief Operating Officer in the Bosasa Group.
  • He was employed by Bosasa from 1999 to 2017.
  • Bosasa Operations is a privately owned company duly incorporated in terms of the Company Act 61 of 1973 as amended. The late Gavin Watson bought Bosasa in 2000. It was first registered in 1981 as Emafini (Pty) Ltd and over the years the name changed to Meritum Hostels (Pty) Ltd and then Dyambu Operations (Pty) Ltd and renamed Bosasa after it acquired the catering tender for Kloof Gold Mine.
  • Agrizzi testified to the Zondo Commission that the company was involved in corrupt activities during the presidency of Jacob Zuma.
  • In June 2021 at the State Capture inquiry he admitted that he was a racist and later during his testimony said “I’m no longer a racist.”
  • He testified at the inquiry that the Guptas were not alone and named former president Jacob Zuma as one of the alleged beneficiaries of the Bosasa scheme.
  • Agrizzi also revealed at the State Capture Inquiry that Bosasa allegedly blew about R6-million a month on bribes to various officials at companies with which Bosasa was doing business. 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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