25 April 2024 | 04:11 AM

Zunaid Moti’s ‘inside man’ at Investec

Key Takeaways

  • Documents reveal that an Investec official received millions in secret loans from the Moti Group during make-or-break discussions with the bank.
  • When Investec found out the bank says it began an investigation but the official resigned before it was completed.
  • The official, who had been tasked with monitoring one of Moti’s companies on behalf of the bank, immediately took up a plum job with Moti.

There is an old cliché about banking: If you owe your bank a million it’s your problem. If you owe the bank a billion it becomes their problem.

Nearly a decade ago, after funding Zunaid Moti’s labyrinthine empire for several years, Investec found itself in precisely this invidious position, leaked documents from the #Motifiles show. A letter from Investec states as at June 2014 Moti owed the bank over R2-billion. “The level of exposure makes us extremely uncomfortable and urgent steps need to be taken to reduce it urgently,” the bank wrote to Moti on the 18th of that month.

By 2016 it was recorded that Investec was now exposed to Moti’s South African operations to the tune of R2,8-billion with an additional R592-million owed by Zimbabwean projects.

This escalating mountain of debt has twice forced Investec to drag Moti to the negotiating table to hash out complex restructuring plans. One of these took effect in 2016 and the other in 2019.

However, while the first restructuring of the astronomical Moti debt was being negotiated, the Moti group concluded a secret loan agreement that at best set up a glaring conflict of interest, and at worst  might have been viewed as an inducement.

Signed on 30 April 2015, the agreement provided one Jonathan Maurice Epstein with “bridging finance” of R2,5-million, to fund a social media start-up in which Epstein had an interest.

Epstein was no normal business partner – he was part of the Investec team meant to be pinning down a mega-debtor.

The compromising loan agreement and related documents form part of a massive leak from within the Moti Group which has sparked an intense legal and public relations fightback campaign by Moti, including criminal charges against the alleged whistle-blower and legal threats against amaBhungane and its partner in this investigation, US-based investigation and advocacy group The Sentry.

Moti denies any wrongdoing, claims the documents are “stolen” and told amaBhungane that while he not yet laid charges, he could “no longer in good conscience allow you to keep getting away with theft”. 

Read his full response here.

See here for amaBhungane’s expose on how Moti waded into Zimbabwe’s highly politicised economy and forged alliances with factions of the ruling Zanu-PF.

The documents show Epstein continuing to enjoy the Moti group’s financial support well into the negotiation of the second major debt restructuring as well – ultimately receiving more than R14-million in loans for the benefit of the start up during the remainder of his career at Investec.

Along the way the loans evolved into what was arguably a more acute conflict of interest as Epstein was assigned a specific oversight role at Moti’s Ferro Chrome Furnaces (FCF) operations on the bank’s behalf.

The long relationship between Investec and Moti was seemingly unaffected even after the bank discovered the loan and, according to a response to questions, launched an investigation.

Investec told us, “Jonathan Epstein was an independent contractor to Investec from 2014 to 2016, and a full-time employee from 2016 to 2018. We were not aware of the loan agreement with Waleed Investment Holdings, a part of the Moti Group. Once we became aware of the loan agreement, we immediately began an investigation into the matter. Mr Epstein ceased to be employed by Investec prior to the conclusion of the investigation.”

By his own account Epstein “formally resigned from Investec on 31 July 2018” when he jumped ship to take up a new job – with his benefactor Moti, starting the very next day, 1 August.

Epstein said although his departure was “abrupt” no objections were raised by the bank to his employment with Moti.

He told us, “At the time I joined Investec in 2014, I disclosed my interest in the development of a new social media app with other individuals.

Asked whether Investec was at any time made aware of him receiving financial benefits from the Moti Group while employed at the bank, Epstein replied, “I received no financial benefits from the Moti Group.”

He denied that the alleged financial relationship between himself and the Moti Group was intended to buy improper influence and leverage with the bank.

He told amaBhungane, “I was dedicated by the bank to the Moti Group account owing to its size and importance and it required monitoring which is what I was assigned to do. At no time did I have any authority or decision-making powers and I reported back to the bank on a virtually, daily basis.

“I was also subject to all the Bank’s and Moti Group normal confidentiality and non-disclosure policies.“

Epstein explained that he had mentioned to Moti that he was involved with others in a planned new social media app, then called Hubblez.

“I had been funding Hubblez up to that stage and commented to him that further seed capital was needed to progress the development. Mr Moti was interested in the concept, and we came to an agreement that he would provide a loan for this purpose. As a prudent businessman Mr Moti required security which I agreed to provide for the R 2,5m loan.”

In his response, Moti told us, “. Mr Epstein was employed by Investec as a relationship manager. As a matter of course, he reported to various committees and sub-committees within the bank structure, as well as the board of the bank. Mr Epstein, at least to my knowledge, as a low level employee within the bank never had the authority or ability to influence these negotiations in any way.”

Moti added, “The only reason why I employed Mr Epstein after he left Investec was that he had institutional knowledge on the group’s business. Mr Epstein had a business opportunity which he declared to Investec. Investec always acted in good faith and our interactions with them were always fair.”

As we shall see, the original loan was followed by a number of further credits up to April 2018 when Epstein’s total indebtedness to the Moti Group reached R16,92-million, including interest.

Epstein told amaBhungane that all the payments were invested in the app.

But first, back to how the partnership developed.

Hubblez

Handwritten notes from April 2015 contained in the leaked documents show that a “technology deal” between Moti and Epstein entailed Moti funding the banker who would in turn fund the development of an “ambient intelligence application” dubbed “Hubblez”, a creation of app developer Eben Greyling.

This coincided with one of the many debt restructuring negotiations between Investec and Moti, this time relating to a R550-million loan he originally obtained from the bank in 2012. The notes suggest the deal would see Moti and Epstein control the new venture through two trusts owning a special purpose company in Dubai.

Things moved briskly and on 28 April Epstein – using his personal email address – sent Moti staffers materials they needed to draft a contract: a copy of his passport, proof of residence and payment instructions for when he wants his loan paid.

Greyling, the developer, would get an initial R1-million but subsequent payments would go to a private equity firm Gerber Goldschmidt Group with a payment reference “JE/Hub/001” – Epstein’s initials and an abbreviation of the “Hubblez” project.

This does not indicate that Gerber Goldschmidt was doing anything wrong, merely that Epstein wanted his money sent there instead of, for instance, his own bank account. Epstein told us, “As I was not personally benefitting from any of the payments, I directed that the payments be made to a third party/ies. Hubblez was not incorporated at the time, as it was in its conceptual and development stages.”

Two days later the banker signed the agreement with Waleed Investment Holdings, one of the main holding companies in the Moti Group, capturing these instructions.

The arrangement with Moti by no means ended with a R2,5-million loan. As provided for in the agreement, the term and total value were repeatedly extended. Another document shows that, by early 2018, Epstein had received in total R14,4-million from the Moti Group while employed by Investec, a seemingly significant conflict of interest.

These payments stretched over the entirety of the negotiations and implementation of Investec’s group-wide debt restructuring with Moti – and also continued well into renewed negotiations around yet another round of debt restructuring that started in 2018 and culminating in 2019.

Epstein told us there was to his knowledge  “no [Investec] strategy regarding the Moti Group’s debts” that he might be suspected of disclosing to Moti after he swopped sides.

“I might add that I only attended one meeting with the Bank on the restructuring after I joined the Moti Group and requested thereafter to have no further involvement in this exercise.”

Epstein told us that his interest in the Hubblez app was declared to Investec. He seemingly just omitted to disclose later when it was being indirectly funded by Moti.

Secret share allocation?

An additional piece of evidence from the documents suggests that Epstein was seemingly penciled to receive a shareholding in African Chrome Fields (ACF), the Moti Group’s core operation in Zimbabwe.

A spreadsheet, which according to its metadata was authored by Moti finance boss Salim Bobat or someone using his computer, sets out the “unofficial” shareholding of a company called Paveridge. Paveridge in turns owned 50% of another company called Spincash.

Spincash in turn owned 30% of ACF at the time.

According to the spreadsheet a number of individuals had been “allocated”, but not issued, shareholdings.

In response to previous questions Moti called the spreadsheet a “discussion document” for a transaction that never went ahead.

Among these prospective shareholders are Moti himself and people from his inner circle – and Epstein who is allocated an effective indirect stake in ACF of 0,45%. This would have been worth around $1,8-million or well over R20-million at the time, based on a contemporaneous sale of ACF shares dealt with in our previous reporting on Moti.

Epstein said he had absolutely no knowledge of this supposed allocation.

Moti told us, “Once again I must protest your continued insistence on referring to “the leak”. The documents you use to fuel your narrative and assumptions were stolen and most likely forged.”

He added, “This stolen document was provided to you in Excel format and would probably have been updated to include reference to Mr Epstein after he started his employment with the Moti Group.”

However, assuming the document is genuine, this explanation makes little sense seeing as by the time Epstein joined the Moti Group the shareholding in ACF of Spincash had already been sold to another party, making this hypothetical allocation of shares a pointless exercise.

Double agent?

The admitted facts of Epstein’s financial relationship with the Moti Group seem especially problematic due to the role he was ultimately given in the 2016 debt restructuring agreement between Investec and its client.

Among the many agreements that collectively constituted the restructuring is a “management support agreement” that gave Investec the right to “nominate and appoint a representative to attend to and, on a full-time basis, co-manage the business, operations and affairs (including financial affairs) of FCF.”

FCF, meaning Ferrochrome Furnaces, was part of the Moti Group and central to its debt problems with Investec. The representative Investec seconded to FCF to be its eyes and ears: Jonathan Epstein.

This seems to be at odds with responses amaBhungane received from both Moti and Epstein where both portray Epstein as little more than an intermediary with no authority in the talks with the bank.

Epstein adds that, “It is pertinent to note that I never participated in the management of FCF as it ceased operations, as I recall, during 2016.”

Epstein explains his overnight shift from Investec to the Moti Group as follows, “Owing to my close working relationship with Mr Moti, I advised him immediately after I resigned from the Bank. We discussed whether I had future plans and agreed my employment with the Moti Group with responsibilities for other operations which had no relationship with the Bank.”

It is however hard to believe that the jump was not planned in advance.

A “trip record” from of a Moti Group visit to Zimbabwe between 31 July and Epstein’s appointment date reads that “Jonathan Epstein accompanied us on this trip as a new and official employee of the Moti Group”.

He was in other words seemingly already on a Moti Group field trip the day he resigned from Investec.

Moti, like Epstein, told us the Investec man’s employment with the Moti Group would not provide any “inside knowledge” from the bank’s side.

He said, “Mr Epstein did however possess significant institutional knowledge of ACF’s operations, which is why I was willing to employ him.”

Nonetheless, the leaked documents suggest that by October 2018 Epstein had helped produce a Moti counter-proposal to the settlement proposal put together by Investec when he was still working there. This is captured in a purported briefing document prepared for Moti during his incarceration in Germany in late 2018. This was dated 1 October.

Moti was however seemingly not entirely sold on Epstein’s loyalty.

The leaks suggest that while detained in Germany between late 2018 and early 2019 (on the basis of a dubious Russian “Red Notice” that was eventually dismissed) Moti sent constant instructions to his team in South Africa.

In one of several purported notes from prison Moti warns right-hand man Ashruf Kaka:

“Be wary of GB [Glyn Burger, Investec’s senior representative].  Don’t trust too much.  Keep JE [Epstein] in all meetings Bro.  Keep GB and JE apart.”

To which he added:

“Watch JE.  He did it to IBL [Investec Bank Limited]. He can do it to you.”

In response to questions Moti insisted that this and other missives from prison were forgeries.

“Some, if not all of these purported letters from prison were forged to drive your, or your “sources’”, narrative against me. This whole paragraph is baseless speculation and does not warrant a reply. I insist that you publish this reply.”

All is forgiven?

But what happened to the app Moti was funding – and the enormous debt Epstein had accumulated since 2015, now totalling R16,92-million (including interest)?

The leaked documents show payments to Epstein’s nominated account at Gerber Goldschmidt ceased on 12 April 2018 and in the same week a new term sheet was signed between Epstein and Balen Trust – the Moti family trust that owns Waleed Investment Holdings.

The document sets out how the deal had evolved since 2015. In return for the funding over the years Balen would now get 35% of the holding company of the app, now renamed Yizoot.

This holding company, Streamertail is “a company wholly owned by Greyling [the developer] in his personal capacity but also as nominee for JE [Epstein]”.

Epstein was bound as guarantor for the debt leaving him more or less at Moti’s mercy if Yizoot failed.

But then things took a turn.

One week after Epstein took the job at Moti Group a settlement agreement was signed seemingly absolving Epstein of repayment obligations and all the guarantees. In terms of this deal an otherwise unidentified trust called Red Pine Trust bought out the debt while Balen cancelled all Epstein’s personal liabilities.

Epstein himself claims to not know who the Red Pine Trust is.        

“Red Pine Trust purchased my debt and repaid the Moti Group, who released my guarantees. I do not know what happened to the loan account or my equity afterwards as I ceased to be involved at all with the app…I do not know who Red Pine Trust is. The purchase of the loan was facilitated by a third party acting on its behalf.”

Moti however told us Epstein “arranged for the debt to be purchased by someone else on terms discussed between him and Red Pine Trust. I do not recall who represented Red Pine Trust, but other than Balen Trust recovering its loan amount, the subsequently terms between Epstein and Red Pine Trust did not concern me.”

Greyling, the developer, told us he became ultimately liable for the R16,92-million that was now owed to Red Pine Trust.

He declined to disclose who sat behind the trust, telling us, “I would imagine the beneficiaries of the trust would wish to remain anonymous from the media. I can confirm that the trust is not related to Mr Epstein, Mr Moti or myself at all. They merely took over the liabilities and continued to fund the project until 2019 until it was closed down.”

The app itself seems to have met an untimely end.

“It is my understanding that Yizoot was eventually abandoned after mid 2018 sometime after I ceased to be involved,” said Epstein.

If you Google Yizoot the only trace of it is a set of dormant social media accounts last updated in November 2019. Greyling told us, “The project evolved into a fully developed AR platform which we were hoping to tokenize via the blockchain. Unfortunately, it became prohibitively expensive and we ran out of funds in 2019. The IP [Intellectual Property] was assigned to the Red Pine Trust in lieu of my liability.”

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