Ahmed Bhorat, widely known in his rather specialised trade as “Bullshit Bertie”, wanted to cut a deal.

He could provide information in relation to a major ongoing investigation the central bank had internally dubbed Project X-Ray. This investigation, which we reported on previously, revolved around a dizzying scheme to simultaneously launder money abroad through 26 different entities, mostly fly-by-night companies seemingly created for the operation.

Bhorat himself had been identified as a 27^th exit point for this scheme, which sent roughly R700-million, mostly to Hong Kong, between late 2016 and mid-2017.

To be fair, Bhorat was in a bind.

A R46-million tax bill had forced him into insolvency, the latest setback in a career spanning back to the 1990s. He was previously convicted on a plea deal for creating fake import documents.

A first report by the trustees of his insolvent estate noted that Bhorat “has not co-operated with the Trustee’s requests for books and records relating to his affairs and alleges that no such information exists”.

Bhorat also “contravened numerous provisions of the Insolvency Act, namely…Concealing or destroying books or assets…Concealment of liabilities or pretext to existence of assets…Failure to keep proper records [and] Failure to give information or to deliver assets, books etc.”

And to make things worse, the trustees soon found themselves fighting the South African Reserve Bank (SARB), which wanted to seize the money in Bhorat’s accounts for exchange control violations. The trustees wanted to put this money into the insolvent estate to pay creditors, mainly the South African Revenue Service (SARS).

In court papers the trustees later noted that Bhorat “has proven himself to be a habitual perjurer who trims his sails to the wind in whichever way suits him best”.

An inquiry was held by the trustees between 2018 and 2020, during which, judging by transcripts, Bhorat presented himself as a somewhat bumbling businessman down on his luck, unable to account for some R201-million he had paid abroad for a bizarre array of goods – allegedly always on someone else’s behalf.

But then Bhorat had a change of heart and abruptly confessed that everything he had said up until then was, as his nickname suggests, bullshit.

The real story, Bhorat confessed in an affidavit provided to the SARB, was that he assiduously fabricated paperwork for all the money he sent abroad under the guise of advance payments for imports.

He also had an inside man at SARS who helped him with this, although the affidavit did not identify this individual.

In order to piece this story together, AmaBhungane has obtained the full record of the investigation into Bhorat’s affairs, a separate SARB investigation implicating Bhorat and data on a range of offshore entities.

The scheme run by Bhorat was already complex in its own right, but as we will see, it slotted into a vast laundering machine, small parts of which we encountered in previous instalments of this series.

Bhorat’s bullshit factory

Between September 2016 and June 2017 “Bullshit Bertie” operated two accounts at what was then the SA Bank of Athens (later Grobank and then Access Bank). The extent of the bank’s knowledge of the scheme is something we deal with below.

This was not his first rodeo, Bhorat having entered into the aforementioned plea deal with SARS back in 2003 and then in 2015 finding himself at the receiving end of the R45-million tax assessment.

The Bank of Athens accounts functioned as a pitstop between a group of obscure South African depositors on one end and a number of Hong Kong – and to a lesser extent Turkish –  recipients on the other: a classic pooling exercise in the vocabulary of money laundering.

According to Bhorat, he would receive the payments from the obscure entities (discussed below) in the mornings, alongside text messages instructing him where to send them. His job was to fabricate paperwork to make it seem that he was making payments for imports, often of rice.

He would ostensibly be importing goods under the trading name R&R Traders and Brokers.

We have copies of 178 of these invoices, which Bhorat churned out at a rate of one every two days.

The “imports” included bicycles, cameras, building materials, rolling door motors, protective clothing, leather jackets, lighting fixtures, shoes and rice – lots of rice.

Contacted by phone, Bhorat told us that he believed at the time that the money really was for the import of goods, but that the scheme involved under-declaring the value of goods to dodge customs duties.

This is much the same as what he was doing when he first got in trouble with the authorities more than two decades ago.

He also repeated the claim that he has no idea where the payments actually came from and knows nothing about where the money went because he was simply given the details in order to execute payments in return for a commission.

Despite his many years of experience, however, Bhorat was not always perfect at this job.

Sometimes the same company would, incongruously, be providing many of these disparate goods and sometimes different companies would invoice for the same item on the same day. In some cases, successive invoices from a company would unaccountably have slightly different letterheads.

Besides, Bhorat insists, he was just a pawn.

The “main guy” sending instructions was one Fawz Yousuf who, along with his partner Ridwaan Loonat, were set up with Bhorat by a family member, he claimed.

“I never knew anything…I know I didn’t do the right thing [but] I never knew Fawz and I only knew Loonat a little because we’re from the same West Rand township.”

The fuel traders

Yousuf and Loonat appear to have been intermediaries themselves, but it is not clear whether their own money was mixed with the other funds they allegedly arranged for Bhorat to expatriate.

What is known is that Yousuf and Loonat are involved in the regional fuel trading industry through their Finergy group of companies, with operations in South Africa, Mozambique, Zambia, the DRC, Tanzania and Malawi.

They are also purportedly the founder and CEO respectively of a supposed Saudi-Arabian linked joint venture named KBI-Finergy, although documents setting out the leadership and structure of KBI-Finergy were removed from the internet following amaBhungane’s inquiries.

Meanwhile KBI, which is based in the United Arab Emirates, not so long ago hosted a delegation from South Africa’s state-owned oil and gas company PetroSA.

Although it is not clear that the meeting included representatives from Finergy, PetroSA confirmed to us that the meeting was with “KBI-Finergy” and that the parties had been introduced by Nako Energy.

Attempts to seek clarity from Finergy, KBI and Nako were unsuccessful.

Closer to home, Finergy was a central element in a corruption scandal in Malawi involving Newton Kambala, the country’s former energy minister, and Chris Chaima Banda, an advisor to the president. It was alleged that they had meddled in the awarding of a fuel supply contract by the National Oil Company of Malawi in order to ensure that Finergy won.

In Bhorat’s version, Yousuf and Loonat also sent millions of rands offshore illicitly while he earned a commission of 60 South African cents per dollar for greasing the wheels.

Despite initially acknowledging messages and providing an email address for us to send questions to, Yousuf never responded to questions.

Loonat was untraceable and amaBhungane understands he is living in Dubai.

According to the transcription of a “without prejudice” meeting with the trustees of his estate, Bhorat explained the setup:

“I created the pro-forma invoices. I created pro-forma invoices and I was paying them [offshore companies] via pro-forma invoices, ok.”

He claimed that the details of the offshore recipients and the amounts that needed to be paid would be sent by Loonat.

“Nah they would just text it to me. This Ridwaan and they would text me, they would just send a text message.”

The use of fake pro-forma invoices is a ubiquitous practice in the illicit financial system. These invoices are given to banks alongside orders for foreign currency and according to South African exchange control rules, the “importer” has four months to prove whether anything was in fact imported.

A key compliance gap opens up if Bank staff willfully or negligently fail to follow up on this.

At Bank of Athens things appear to have been particularly dire. At the Bhorat inquiry the bank’s surveillance manager Janine Cassidy testified that the bank’s system was entirely manual at the time, with bank employees essentially having to remember who owed the bank paperwork.

SA Bank of Athens (now Access Bank) only instituted an automated follow-up system around 2018.

Bhorat was “one of the reasons” this was done, Cassidy said.

“So it was more human intervention at that time and obviously [it] wasn’t working correctly.”

While there is no evidence of the bank knowingly participating in Bhorat’s scheme, Cassidy’s testimony suggests that there were, at the least, some shortcomings in its oversight.            

Even if the bank had followed up, however, there were fake documents waiting to justify transactions. When needed, fake import documents would be created by the offshore beneficiaries, Bhorat told the trustees.

“So, they manufactured the bill of entry, the arrival notification, the invoice, they created everything [and] sent it to me.”

“Go to the shipping lines, those container numbers don’t exist.”

What does exist, however, is a window onto the vast international system used by a variety of South Africans to illegally move money offshore.

Across the sea

Hong Kong’s role in global money laundering is legendary.

An internal report produced by HSBC in 2017 to establish the global bank’s exposure to Gupta-related money laundering revealed the staggering scale of the wider Hong Kong networks.

A subset of 60 (out of 203) entities with HSBC accounts that channelled Gupta money were multi-purpose laundering fronts that together received a staggering $4.2-billion from different sources. The Gupta contribution was a fraction of a percent.

As a measure of how complex this system is, HSBC established that these 60 entities had made onwards payments to 5 576 different bank accounts for their various clients. This is from a small group of companies from only one bank.

Bhorat’s operation, an even less significant drop in this ocean, was nonetheless already complex and clearly overlapped with other operations in South Africa.

AmaBhungane has comprehensive records for the transactions through which he expatriated money for, he claims, Yousuf and Loonat.

Money came in from a few dozen domestic sources (which we will get to) and flew out to a total of 62 different offshore entities. While the majority were in Hong Kong, at least two were in Türkiye.

And while Bhorat’s invoices were fake these companies were real, at least in the sense that they were registered and had bank accounts. And, like the ones HSBC had looked at, they tended to have more than one client.

As in our previous instalments, the data we have on Bhorat shows how the same Hong Kong entities served several South African clients at once, including in the large-scale laundering system surrounding the Gupta brothers, but also in other cases, acting as a kind of index.

Among the 62 offshore entities Bhorat sent money to, at least nine were also channels for South Africans who in some way or another helped launder the proceeds of state capture, as identified in a report produced by Shadow World researcher Paul Holden for the Zondo Commission.

Notable entities included Success Stand Limited, Honourway Garment and Shun Shi Limited, which were also identified in the HSBC report mentioned earlier as part of a laundry system related to the Guptas.

Companies belonging to local Ashok Rajwani – which facilitated the offshore dissipation of funds for a 2% commission (touched on in a previous instalment) – also feature.

Perhaps more important than where the money went, however, is where it came from

Feeders

A wide array of individuals and obscure companies paid money to Bhorat for on-payment abroad (allegedly via instructions from Loonat and Yousuf). Some payments were very telling.

First off, there were 61 cash deposits totalling over R22-million.

One small but significant apparent user of the scheme was Amir Sabir, then the head of investments and treasury at the notorious Habib Overseas Bank – a bank implicated in several money-laundering schemes that was recently liquidated.

We made contact with Sabir, but he failed to respond to questions.

Another source of funds was Mohamed Bamath, another veteran of the illicit financial sector who has a long history with Bhorat. Specifically, Bamath was the mastermind behind the 1990s scheme that saw Bhorat accept a plea deal. Bamath himself pleaded guilty to 81 tax-related counts. Bhorat seemingly surreptitiously moved around R20-million out of the country for his old colleague.

We were not able to reach Bamath.

A number of other implicated individuals went to ground after initially agreeing to receive questions.

Other entities feeding Bhorat’s accounts were largely obscure companies with hard-to-find directors.

Weaknesses in the system

The doubts expressed over the state of SA Bank of Athens’s checks and balances raise the question that has run through this series: the potential complicity of the “legitimate” financial sector in operations directed from the underground.

The alleged outright collaboration of certain former Sasfin employees with suspected money launderers has made Sasfin a particularly infamous case.

However, our evidence suggests that most South African banks, in particular smaller banks, have perhaps unwittingly been a conduit for illicit offshore capital flows.

The now-liquidated Habib Overseas Bank is a glaring example, canvassed in our previous reporting, but in our investigations we have also found large-scale operations embedded at other banks.

Part of the problem is the extremely lax policing of the two main points where bad actors could be caught.

These points are one: the original onboarding of clients who clearly are not legitimate businesses and cannot justify having often hundreds of millions of rands to send abroad and two: the actual paperwork for sending the money offshore (like the invoices mentioned above).

An internal report produced by Nedbank’s Group Financial Crime and Forensic Services division (at the SARB’s behest) illustrates the kinds of weaknesses that may exist even at major financial institutions. The report was included in court documents in the SARB’s battle with the trustees of Bhorat’s estate.

Up until 2018, the bank’s Global Payments Operations “environment” essentially involved six people, each with a portfolio of specific clients apportioned alphabetically. Employee A would, for instance, deal with all the clients whose names start with the letters A through F.

Rather than considering the damage that may be done to the country, this department functioned on the basis of what “the financial impact the staff members’ actions might have had on Nedbank”.

When it comes to “financial impact”, the earning of fees on trading hundreds of millions of rands for dubious clients does not make a case for extreme vigilance.

“In the case of the six individuals managing advanced payments there was consequentially very little oversight,” Nedbank concedes in its report.

While clients enjoy having one point of contact, this system “also created the risk that a staff member forms such a close relationship with a client that transactions and related supporting documents are not considered with the required vigilance”.

In a case flagged by the SARB this is seemingly precisely what happened, with the relevant employee rubber-stamping dodgy paperwork in order to expatriate over R100-million for one of their assigned clients.

This employee was disciplined and “removed from the position,” while Nedbank said that it had instituted random checks on transactions and the rotation of who deals with which clients.

It stopped well short of admitting that anyone intentionally did anything wrong.

The post #TheLaundry: the bullshit artist, the fuel traders and the Hong Kong front army appeared first on AmaBhungane Centre for Investigative Journalism.

Facing a multi-billion rand damages claim from SARS for allegedly facilitating what appears to have been rampant money laundering, the bank first announced that it would remove itself from the Johannesburg Stock Exchange and then that it would simply stop being a bank altogether.

Meanwhile it still maintains that its woes stem from the proverbial bad apples – individual employees that need to be brought to book.

However, AmaBhungane has obtained years of records for Sasfin’s forex accounts at FNB and Nedbank – places where it pools clients’ funds before sending them abroad. We also have internal data on the bank’s clients.

Put together these documents, which stretch back a decade, show how Sasfin’s forex department ran amok as long ago as 2014.

This extends beyond cases and individuals already made public by SARS’ recent attempt to hold Sasfin accountable for its trades on behalf of dodgy clients (which we reported on previously).

If nothing else, Sasfin’s accounts show how brokers and staff courted clients that should, on the face of it, never have made it past even a cursory due diligence check.

This includes a number of interrelated companies implicated in money laundering for the network around the Gupta family.

It also includes a byzantine mesh of entities tied to Takela Group – the government housing contractor we recently exposed for seemingly moonlighting in the local money laundering scene.

In general, strange transactional behaviour and fly-by-night account holders abound and have done so for all the years we have sight of.

Sasfin, in response to all our questions around what follows, told us the following:

“Sasfin has taken significant and decisive action whenever we have become aware of financial crime, including the exiting of our foreign exchange business. We have been transparent and collaborative with the authorities and regulators. Sasfin maintains a zero tolerance of financial crime and has laid criminal charges against all parties implicated in our investigations. We are unable to comment on allegations involving former clients or employees.”

Recap

As we reported before, in December last year SARS dragged Sasfin to court with two potentially life-threatening claims of R2.9-billion and R1.97-billion respectively.

The bank’s entire annual income last year was R1.3-billion.

The first claim related entirely to Gold Leaf Tobacco Corporation (GLTC), owned by Zimbabwean mogul Simon Rudland and partner Ebrahim Adamjee. SARS previously levelled a R4.5-billion tax assessment at the tobacco company. The damage claim against Sasfin is for money it allowed to be expatriated through GLTC’s account and which is now unavailable for helping settle that debt.

The second claim relates to 18 different entities that also collectively expatriated billions via Sasfin – undeclared income on which the bank, SARS reasons, owes corporate income tax and VAT.

Once again, the taxman is shifting the blame to Sasfin because its allegedly corrupt foreign exchange department made sure those taxes cannot get paid.

In both cases, Sasfin is implicated for its alleged negligence in allowing cash to be siphoned off overseas under false pretences.

The strategy of going after a bank that facilitated alleged tax evasion rather than the empty husks of front companies implicated in these schemes is a major departure and, if successful, could under the right conditions lead to a veritable bloodbath among financial institutions. It would not be confined to Sasfin.

The main thing, however, would be to show that the bank staff were knowingly complicit, or at least grossly negligent.

While SARS named 18 companies and also fingered four Sasfin employees, it has stopped well short of giving the full picture.

Now we can show you more, albeit with a caveat about how much further we can take things.

Most transactions through Sasfin’s accounts are anonymised, while others are only identified through account numbers, only some of which we could identify.

We also only have sight of two of the accounts where Sasfin daily pooled incoming payments before sending them abroad – those at FNB and Nedbank. We do not have details for Sasfin’s major account at ABSA, which we are told was its dominant platform for receiving payments.

We thus still have an only partial view and our figures for business done with dubious clients will therefore, in all cases, be a conservative minimum.

We can however show what some of the networks using Sasfin looked like.

The usual suspects

The elephant in the room is SALT Asset Management, the broker that facilitated Gold Leaf Tobacco Corporation’s billions in offshore payments (which we canvassed here).

According to the information we have obtained, SALT acted for an array of other Sasfin clients, including, but not limited to, some among the 18 mentioned in SARS’ case against the bank.

These include Ocean Twelve General Trading which, according to SARS, sent just shy of R2-billion offshore through Sasfin in just 18 months between 2013 and 2014.

Something that conceivably should have raised eyebrows is that Lone Eagle General Traders, another company registered on the same day with the same director, started doing the same thing soon afterwards –.

SALT had other clients that alert bank staff might have picked up on too, such as three companies with the same director – an otherwise untraceable woman named Sadaf Naidu. 

These were Zey Squared, SA Star Shine Dealers and Agilex General Trader. In the statements at our disposal we can see them make suspiciously rapid-fire payments – often several in a single day.

The nature of these companies appears to be anathema to any diligent Know Your Customer standard, as were the transaction patterns.

Other associated clients on the SARS list of Safsin clients include two amaBhungane has previously exposed: Actinic Holdings and a bogus clone of Putzmeister (of no affiliation to Putzmeister Concrete Pumps GmbH or its affiliated entities, including Putzmeister SA (Pty) Ltd) – both brainchildren of storied alleged money launderer Howard “Howie” Baker and Johannesburg attorney Saleem Ebrahim.

The bogus Putzmeister used an innovative scheme involving a fake debt turned into a real court order to expatriate millions (read here). It flogged this same R67-million court order at several banks besides Sasfin in order to also send a total of R160-million abroad.

It’s not much of a defence, but it’s worth pointing out how Sasfin was often part of a multi-bank strategy.

A report commissioned by the SARB from Gildenhuys Malatji Attorneys in 2020 and obtained by amaBhungane found that Actinic had in total expatriated up to R160-million, while Sasfin’s books separately show that only R51-million of that passed through the bank’s door.

As we previously revealed, Actinic also had accounts at Bidvest, Mercantile and Habib Overseas Bank – each of which potentially faces the kind of damages claim from SARS Sasfin is fighting off.

The state capture crowd

In Sasfin’s accounts and client book there are a number of names that cropped up in previous installments of this series, specifically clients of “shadow bank” RENS Kontant in Transito that were allegedly involved in laundering the proceeds of state capture.

More precisely, Sasfin’s FNB account received numerous payments from an entity named Zokubyte Trading totalling at least R62,8-million between late 2015 and early 2016.

As reported, Zokubyte itself received several million from the Gupta laundry network identified in evidence before the Zondo Commission, but also millions from RENS, which as we revealed, originated from physical cash pickups apparently organised by a Pretoria businessman.

Zokubyte in turn sent money to a number of accounts at Sasfin: one in its own name alongside others for entities named Varlozone, Coral General Traders and Ahlan Wasahlan Enterprises. Of these, Varlozone and Coral have previously been identified as channels for state capture funds.

These payments came thick and fast, as is shown in Sasfin’s account at FNB.

Networks

In our previous installment we revealed a complex scheme seemingly directed by a prolific government contractor who has been raking in housing tenders.

At Sasfin we found another network that appears to involve the same contractor, Takela Group, belonging to businessman Ke Tang.

Our questions to Ke Tang went unanswered.

The network we identified in Sasfin’s books consisted of at least 14 companies being “fed” by at least 15 external accounts – a setup that bristled with red flags.

These accounts consistently overlap: one external account would frequently pay money to, for example, five of the Sasfin clients, then another of the external accounts would also pay an overlapping seven clients and so on.

Here’s how it worked.

In our voluminous Sasfin data we first found several payments into an odd assortment of companies from an account belonging to one Jianying Huang, the sole director of a company named Mega King Holdings, which is a trade financing partner to Takela Group.

Amabhungane was unable to reach Huang for comment.

AmaBhungane traced all the Sasfin clients it could find receiving funds from the Huang account mentioned above. There were seven: Afrmart Importer and Exporter, Da Jun Trading, Lethabo Import And Export, Mimschach Marketing, Sun Rare Trading, Xing Qi Trading and Zero-Bits.

We found that all seven clients also, however, regularly received funds from other anonymous accounts, as well as from one account belonging to Takela.

Another identifiable account belonged to Sabona Freight Services, a company involved in the scheme we identified in our previous installment.

We then traced all the other entities with Sasfin accounts receiving money from these additional accounts to arrive at, on one hand, a list of “feeder” accounts and, on the other hand, a list of Sasfin clients being “fed”.

The spiderweb that emerges moved at the very least R576-million through Sasfin in the course of 2015, making it a possible precursor to the scheme we revealed previously.

This figure is likely very conservative due to the anonymisation of much of the Sasfin accounting, as well as amaBhungane not having full access to all relevant accounts.

Whatever justification there might be for this strange pattern of overlapping payments, there can be little excuse for the ‘clients’ involved not raising alarms.

Red alert

While Sasfin might argue that transactions were not flagged due to investigations into Takela and related entities not being well known or completed at the time, the nature of the clients – not to mention the strange pattern of payments – should arguably have raised eyebrows.

We spotted about R39-million flowing to Afrmart Importer and Exporter – a company that has as its sole director a domestic worker residing in Tembisa, as opposed to a seemingly random address in downtown Johannesburg given in company registration documents.

Sharing the same seemingly fake address was Smartburg Importer and Export, for which we could trace R49-million in payments. Its sole director seemingly lives in a RDP house in Ivory Park and has no employment history.

Incidentally, both of these companies seem to have been created by a shelf company vendor named Fact Corporation, which will crop up again. Both of these unlikely directors also have generic Factcorp email addresses consisting of their ID numbers.

We have tried and failed to track down Fact Corporation’s registered director and the company has itself since been deregistered.

Another group of five of the companies in the network were all registered by the same (now closed) accountancy firm in the East Johannesburg suburb of Bruma – NIQ Accounting and Training Services.

Two of these – Da Jun Trading Pty Ltd and Lethabo Import And Export Pty Ltd – had the same untraceable Chinese director, Jingwei Lin, and collectively moved R100-million through Sasfin.

Two more – Xing Qi Trading and Ming Yi Import And Export – also had an untraceable Chinese director, Ruling Duan, and collectively moved R124-million.

The last of the five, Sun Rare Trading, had Thai citizen Wilaiporn Tanaponvanit (again untraceable) as sole director and moved R46-million that we could find. Like many Sasfin clients, Sun Rare later had its Sasfin account seized and forfeited to the state.

It keeps going.

Great Option Trading, Real Sales Trading, Top Skill Trading and Red Maple Trading were also part of the network. Once again all of them have untraceable Chinese directors and we can see R77-million moving through their Sasfin accounts as part of the network.

Great Option and Top Skill also share a postal address.

If amaBhungane is able to spot this tangled mesh of dubious related entities it seems unlikely that banking professionals would not be able to – casting yet more doubt over the diligence or bona fides of the staff at Sasfin.

Not unique

AmaBhungane found another network at Sasfin similar to the one seemingly associated with Tang using the same methods.

This time we found two “feeder” accounts – one at FNB and one at Nedbank –pumping money into a group of at least 12 companies.

Foremost among the companies in this network is Pienkie Piengos, which received at least R94-million in its Sasfin account. This company was seemingly registered by the same accountants firm that registered companies comprising part of the Tang network.

Similarly interesting was M-Horse Trading and Projects, which received another R23.4-million and had an untraceable Malawian director but seemed to be coordinating with Pienkie, often receiving simultaneous payments from the same external account.

Tellingly, the third-party broker representing these two companies at Sasfin was Rand Bureau de Change – a company that in December 2015 had its license to deal in foreign currency withdrawn by the Reserve Bank. Pienkie Piengos’ activity at Sasfin stopped immediately.

The network fed by the same two accounts as Pienkie and M-Horse continued, however, with a number of other dubious Sasfin clients picking up the slack.

Ten more companies collectively received R83.3-million from the two feeder accounts.

Half of these companies were also linked to the same residential address in Carletonville, indicating a coordinated system.

It is worth mentioning that at least three of these companies also went on to have their bank accounts seized by the reserve bank for contravening exchange control rules.

The welcome wagon

At Sasfin, several staffers have been accused of actively facilitating the illegal expatriation of money, not least the erstwhile head of the forex desk Brandon Marshall.

AmaBhungane has obtained a Sasfin client file that not only lists all the bank’s clients but also attaches each one to a member of staff – or to an external broker.

One extremely conspicuous feature of this file is that the vast majority of suspect entities mentioned thus far had the same staffer listed next to their names – Pedzai Mvere.

Mvere told us that he was merely a sales representative and that “the clients entered the standard sales process facilitated by the bank.”

“For any inquiries related to the onboarding process and Know Your Customer (KYC) procedures, you will need to consult Sasfin’s onboarding department and compliance department to understand how the clients were integrated into their system…it is advisable to reach out to Sasfin’s payments department to obtain information on how these transactions were processed, settled, and categorized under the Balance of Payments (BOP).”

At least two things, however, point towards Mvere having had a more interesting role in the industry.

AmaBhungane has found an unexplained relationship between Mvere and a company named Transparency Business Solutions. Transparency was reportedly implicated in the complex money laundering exercise that dissipated funds stolen from the Namibian Small and Medium Enterprises Bank.

On 19 January 2015 Mvere received a payment of R100 000 from Transparency. In his written response to our questions he omitted a response to a question specifically about this.

Perhaps equally significant is that Mvere evidently worked closely with his boss Brandon Marshall, the disgraced head of Sasfin’s forex desk who was pointedly called out by SARS for allegedly assisting clients to “illegally export funds” from South Africa.

Marshall declined to comment.

Marshall and Mvere were both directors of a company named Global Foreign Exchange Financial Services. This was an offshoot of one of Sasfin’s major third-party brokers, Global Foreign Exchange.

Global Foreign Exchange is in turn owned by two very prominent South Africans – soccer boss Irvin Khoza and housing mogul Granny Seape.

Khoza told us via a spokesman that he is just a passive investor, while Seape ignored our questions.

Dodgy papers

Apart from failing – intentionally or not – to spot inherently suspicious clients with unlikely directors, addresses and bank balances, banks are also, in principle, meant to monitor suspicious transactions.

However, the Sasfin accounts are full of clearly unusual patterns that amaBhungane can spot but not identify due to the anonymisation of entries.

Here, paperwork is often the most glaring sign that something is wrong.

One constant in the various money laundering schemes we have canvassed is the large scale fabrication of invoices to justify payments for which there is no (legal) commercial rationale.

The Gold Leaf Tobacco case allegedly involved an epic campaign of forgery, producing dozens of supposed invoices for goods from Dubai as well as many other parts of the world. These invoices emulated the real invoices of legitimate suppliers of cigarette manufacturing goods.

One particularly notable “invoice factory” of this kind will be the focus of our next installment; we also showed in our previous installment how fake invoices were used on a large scale to justify the expatriation of money through a web of 26 fronts forming part of a single scheme.

Another Sasfin client, however, shows how sloppy paperwork should raise eyebrows and brings us to the question of who is actually responsible for catching the fakes.

That client is Professional Shipping, another company that eventually, in 2019, saw its Sasfin account seized by the SARB, but which nonetheless seems to be alive and well.

AmaBhungane has obtained documentation Professional Shipping submitted to Sasfin to make offshore payments – documents that a trained eye would have queried.

According to invoices given to Sasfin the company was importing large quantities of “hair pieces”, diapers, hardware, handbags and massage tables.

There is nothing wrong with having a diversified trading business but the invoices that Professional Shipping presented to Sasfin to justify offshore payments have several telltale signs of being forgeries.

There are, for instance, multiple invoices from the same supplier for similar goods on single days. Even fishier is the fact that the same companies sometimes have letterheads with conspicuously different lettering in terms of both size and font.

The invoice templates for ostensibly unrelated suppliers of wildly different goods were also strangely similar.

Professional Shipping did not respond to questions or follow-up messages.

Like many large forex clients, Professional Shipping was represented by a third party broker, in this case BeztForex, belonging to Jacobus “Koos” Bezuidenhout.

At Sasfin, BeztForex has represented big fish clients like remittance giant Hello Paisa (by far the largest user of the Sasfin forex accounts we have access to).

In response to our questions BeztForex told us:

“We confirm that during the period of our intermediary banking relationship, we conducted business in a proper and compliant manner, strictly adhering to the requirements of the Financial Sector Conduct Authority (FSCA), the Financial Intelligence Centre (FIC), the South African Reserve Bank (SARB), and our banking partner.”

“Please note that we are bound by the provisions of the Protection of Personal Information (POPI) Act, client confidentiality obligations, and the confidentiality terms outlined in our intermediary agreement with our banking partner. As such, we are unable to comment further on this matter.”

While the case of Sasfin is rife with egregious known and indicative examples of illicit money moving operations, this is hardly confined to any one bank.

As we will show in our next installment, even where there is arguably no corruption, South African banks’ checks and balances are often dramatically lacking.

Apology:

An earlier version of this article failed to make clear that the misuse of the Putzmeister name in the alleged laundry scheme was done without the knowledge or authorisation of Putzmeister SA (Pty) Ltd or Putzmeister Concrete Pumps GmbH and that neither Putzmeister, Putzmeister SA (Pty) Ltd nor any of its affiliated entities received any financial benefit as a result of the alleged conduct of previous employees.

In addition, after becoming aware of the alleged conduct, Putzmeister Concrete Pumps GmbH and Putzmeister SA (Pty) Ltd took all reasonable action to investigate the matter, to cooperate with all relevant authorities and has acted in accordance with all of its legal obligations, including those in terms of the Prevention and Combating of Corrupt Activities Act and the Financial Intelligence Centre Act.

The post #TheLaundry: Sasfin Bank’s snake pit appeared first on AmaBhungane Centre for Investigative Journalism.

The Special Investigating Unit (SIU) was later tasked with sifting through thousands of contracts to find irregular, unlawful or fraudulent deals. It found thousands, which it summarised in a doorstopper December 2021 final report to the President.

One case from the Eastern Cape human settlements department (ECHSD) was a R126-million deal for the provision of 1 800 temporary shelters for residents of dense, overcrowded informal settlements where the risk of infection was amplified.

More important for this story, however, is one of the companies winning a quarter of this ill-fated contract: a prolific government housing contractor named Takela Group.

It appears that housing projects are not Takela’s only, or even main line of business.

Evidence gathered by amaBhungane, as well as through an extensive Reserve Bank investigation, places the company and its owner, one Ke Tang, at the centre of more than one large-scale scheme to illegally move hundreds of millions of rands offshore.

As we will show, these schemes appear to use a profusion of custom-made front companies. In at least some cases these companies “belonged” to alleged victims of identity theft. Via these companies, money moved through a byzantine web of accounts before making it to China and Hong Kong using fake documents.

While not conclusive, the coincidence of a contractor winning millions of rands in government work while allegedly running what appear to be sophisticated money-laundering networks raises concerns about the ultimate fate of government expenditure, not least on questionable contracts.

In fact, Ke Tang has been fighting running battles with the Reserve Bank for years – including having bank accounts seized and forfeited to the state – all the while doing recurring business with various provincial governments.

Back in July 2015 the South African Reserve Bank (SARB) had already frozen the accounts of another of his companies, Cionko-T Logistics, in relation to R364-million unlawfully sent abroad between 2010 and 2013.

Ke Tang has been “the subject of various investigations” according to a 2020 international motivation for seizing Takela’s accounts from the SARB’s Financial Surveillance Department.

That, however, is just in relation to foreign exchange contraventions – moving money abroad illegally – and when it came to the aforementioned emergency Covid-19 tender, other kinds of red flags were raised in the SIU report.

The resulting contract for 1 800 shelters was split equally between four contractors, including Takela.

This was done through a deviation, not an open tender process, requested by the Eastern Cape chief director for Incremental Programs, Edmond Venn, on 25 March 2020 –

two days after the first Covid lockdown was announced by president Cyril Ramaphosa.

The four contractors in question had already been given contracts cumulatively worth R90-million in January that year, with Takela having taken home R26-million.

However, the SIU found that the “emergency” contract resulted in only 279 shelters, not the promised 1 800.  Furthermore, these 279 shelters were not even built to house people from dense informal settlements as advertised, but rather, notes the SIU, “built in villages where there are no informal settlements”.

The SIU was going to, according to its report, brief counsel to take the matter to court and get the contracts set aside. The basis on which it wanted to do this, however, was that an “incorrect price per temporary structure was used,” something on which the SIU did not elaborate.

When we contacted the SIU it told us, strangely, that it would not comment on ongoing investigations, this despite the fact that this case supposedly passed through the investigation phase in 2021.

Edmond Venn, who is now head of the ECHSD, told us that they are not aware of litigation, or of any ongoing investigation for that matter.

According to him the SIU made no adverse findings against the department given that it was a legitimate deviation under an emergency proclamation. Venn claimed that it had ultimately delivered value for money.

What is important, however, is that Takela had already had its accounts frozen by the SARB in 2017 but still managed to rake in government work. After a failed court bid to counter the freezing of its accounts, these were finally forfeited to the state in June 2020 – three months after scoring the emergency Covid-19 tender.

Perhaps more importantly, based on the very limited publicly available data on tender awards Takela has consistently gotten work from the provincial government long after forfeiting its accounts to the state. This is something any cursory due diligence would pick up given that a notice was published in the Government Gazette, as revealed by a simple Google search.

According to Venn, however, it would fall outside a bid adjudication committee’s terms of reference to look into a company tendering for work beyond what is prescribed by procurement rules.

“If you did that you would have people looking for things on people they just don’t like,” he said.

National Treasury told us that “from a procurement perspective, for as long as a company is not blacklisted or restricted, they may apply and be awarded government contracts.”

“It is the responsibility of the procuring department or organ of state to conduct due diligence on companies they do business with, and report such for blacklisting or restriction to the National Treasury should any irregularities be picked up.”

In many cases, this is like expecting criminals to report themselves, given that procuring entities or their managers are often implicated or colluding in the irregularities.

The SARB likewise seemingly expects other parties to take the initiative. It told us that while it shared information with law enforcement authorities on a “case-by-case” basis it also announces the forfeiture of perpetrators’ accounts in, as we mentioned above, the Government Gazette. This is “in the public domain,” it pointed out.

Which brings us back to the labyrinthine money-moving system Takela allegedly directed in parallel to its work for provincial and national government departments.

Project X-Ray

In 2017 the Reserve Bank stumbled upon a major network of interrelated companies that appear to have been involved in unlawfully channelling money offshore.   

It had been investigating offshore payments by only one node in the network – a company named Blue Jade Investments which was submitting fake paperwork to Mercantile Bank (now a part of Capitec) to justify offshore payments to a company named Fully Grace in Hong Kong.

As has been the case with the other companies mentioned below, the supposed director of Blue Jade told us they had never heard of the company and will report the apparent case of identity theft to the police.

We touched on Fully Grace, a service provider charging a 2% fee to dissipate funds abroad, in a previous instalment, where we found it helping to expatriate money for entities involved in laundering the proceeds of state capture.

It became apparent, however, that Blue Jade was just a piece of the puzzle. What ultimately emerged was a system of about 27 fronts that would receive millions of rands from a single source and immediately pay it offshore.

The source of the cash: another seemingly custom-made “pooling” hub named Kunzite Import and Export.

Moving further up the chain, it was found that all the money going into Kunzite came from six other companies that received “large cash deposits…from all over the country,” paying this money back and forth between each other and then ultimately to Kunzite.

One of these six companies was Ke Tang’s housing contractor, Takela Group.

However, despite all the complexity, the SARB believed it had found what appears to have been the proverbial smoking gun: the whole scheme was seemingly run from a single IP (internet) address tied to a specific ADSL line. That line was installed at the offices of Takela and registered in the name of Ke Tang.

The funders

While Tang seemingly held the reins, the true source of all the money was hidden behind another veil.

SARB research showed that much of it came through a company named Pay DNA Payment Solutions, which in turn told us they were just passing on payments for an apparent associate of Tang named Ye Liang.

According to Pay DNA owner Wayne Good, his company was a “collecting agent” for several businesses operated by Liang. The idea was to receive physical cash deposits into a single bank account belonging to Pay DNA at FNB to take advantage of a pre-existing relationship Pay DNA had with the bank in relation to another business. This yielded lower deposit fees than would be the case if Liang’s myriad deposits had been made straight into other accounts, claims Good.

When the SARB came for Tang’s accounts, he instituted a legal challenge to unblock them and, according to Good, tried to get Pay DNA to join in as a party.

“Pay DNA was however not in a position to support such applications as it did not have the required standing,” said Good. The money in the account belonged to Liang, hence Pay DNA had no real interest in whether it was forfeited or not.

Apart from communications around the ill-fated challenge to the SARB, Pay DNA had “no formal relationship with Takela or Mr. Tang.”

After Pay DNA received money on behalf of Liang and deposited it at FNB it was paid forward to a handful of Nedbank accounts and from there into the system Ke Tang allegedly controlled – or at least managed – from a computer at Takela’s offices.

Tang failed to respond to our questions or messages and could not be reached by phone.

The intermediaries

The 27-odd companies that received money from this scheme and immediately sent it abroad were a mixed bag, but we have found a few characters who seemingly played a large part in greasing the wheels.

Among these were formal forex agents duly registered with the Financial Service Conduct Authority (FSCA).

One of these is FX Paymaster which at the time was known as FX Pro International Payment Specialists – the creation of two veterans of Sasfin Bank’s increasingly notorious foreign currency trading department: Lyle Pretorius and Michael Steenkamp.

In response to our questions the pair’s lawyers said that their client “categorically denies all references and allegations of fraud contained in your letter insofar as they pertain to our client’s conduct.”

Among the companies channelling funds from Kunzite, six had ostensibly given mandates to FX Pro to trade foreign currency on their behalf.

One, Third Degree Animation, seems to have bristled with particularly blatant money laundering red flags.

The company supposedly granted FX Pro a mandate on 15 June 2016 – two days after it was registered.

The SARB had procured a copy of this alleged mandate agreement and an application by FX Pro to open a trading account for Third Degree at Mercantile bank.

However, when the sole director, one Jasper Simpande, was pursued by the SARB he deposed to an affidavit claiming that he had not only never heard of the company but had never met anyone called Lyle Pretorius, never heard of FX Pro and that the signature on the documents “bore no resemblance” to his real signature.

However, Simpande’s supposed company received and paid offshore over R20-million from Kunzite – transactions which would have in effect been carried out by Pretorius and Steenkamp.

Pretorius and Steenkamp’s lawyers told us, however, that the Simpande case was “addressed directly by our client with the SARB in the presence of Mr. Simpande. Since then, our client has not received any further feedback from SARB regarding this matter.”

Simpande told us that he was indeed summoned to the SARB at the same time as the “perpetrators” to verify whether he was really involved in the company, but that he never actually met them.

“Everything was left in the hands of the Reserve Bank,” he told us.

FX Pro, however, represented far more clients at Mercantile who were caught up in the scheme.

AmaBhungane presented the company with a list of its clients whose accounts had been blocked by the SARB in the course of the Project X-ray investigation. Some of these were part of the Kunzite network and others were not.

In response to our questions, FX Pro said that all clients that were not part of the network had rapidly had their accounts unblocked after nothing untoward was found.

With regards to the clients that were part of the network, however, FX Pro told us that “our client has not been informed of any issues beyond those raised in your correspondence.”

Which leaves the issues that were raised in our correspondence.

While it specifically claims that the issue around Jasper Simpande and Third Degree Animation was “addressed”, FX Pro does not say the same about other striking incidents.

This includes Pinnacle Pro Outsourcing Solutions, where the sole director, Bongani Fakude, allegedly granted FX Pro a mandate at Mercantile less than a week after the company was registered in July 2016. The signature on the mandate again bore no resemblance to the supposed director’s real signature, but FX Pro’s Steenkamp is expressly listed as his “intermediary” in documentation submitted to the bank.

According to the SARB “it is believed that Mr Fakude’s identity was used for purposes of registering this company and opening a bank account in its name without his consent.”

Documents show that it was FX Pro that opened the account in question.

FX Pro then apparently acted as an intermediary for payments of up to R31-million from Kunzite to Pinnacle Pro before the company had its account blocked and later forfeited to the state.

Fakude told us that he had at some point lost his ID document and has never heard of Pinnacle Pro.

The consequences for Fakude have, however, continued. He told us that when he recently tried to get a contract with Telkom, he was refused on the basis that “his” company had outstanding debt on three laptops it had bought from Telkom under contracts.

Another FX Pro client that formed part of the Kunzite network, Cassono Trading, also had its account blocked and later forfeited to the state after receiving and expatriating R15-million.

The listed director of Cassono could not be reached.

Another FX Pro client was a company named TMC Broker Consultants, which received and expatriated around R40-million. This company’s sole director was a petrol attendant who could not be reached.

Other entities for which FX Pro seemingly held a mandate and which made large offshore payments as part of the Ke Tang/Kunzite network are Pistorelo Trading (R27,5-million) and Vetsa Goods Dealer (R33,6-million). The directors of these entities could also not be reached.

The FX Pro lawyers told us, however, that “the names ‘Kunzite’ and ‘Ke Tang’ are not known to our client.”

“As intermediaries, our client does not have access to specific details, such as the precise source of funds or associated names. This information lies with the banks and SARB. Your reference to funds originating from a company called “Kunzite” is the first instance our client has been made aware of this.”

This suggests that at best, FX Pro did not know and did not believe it was obliged to know the origin of clients’ funds despite red flags potentially justifying at least a suspicious transaction report to the Financial Intelligence Centre (such as a petrol attendant trading millions in forex).

In response to questions the SARB told us that the intermediaries are in reality the responsibility of the FSCA, while the Reserve Bank concerns itself with the banks.

“Any entity registered as an intermediary/broker has to register with Financial Sector Conduct Authority. However, responsibility lies with the Authorised Dealer or Authorised Dealer with Limited Authority that makes any payment of foreign currency.”

This blithe response suggests that at the very least, there are huge, unaddressed gaps in our financial oversight architecture.

Kuda Foreign Exchange

An email exchange in the SARB documentation we have obtained flags another intermediary named Kuda Foreign Exchange which facilitated transactions for least four of the suspicious companies caught up in the Ke Tang network.

One of these clients is Depo Loot Trade and Invest, which sent R35,85-million abroad.

Document show that another, Useezo Investments, expatriated money using fake invoices ostensibly issued by a company in Hong Kong and moved over R13-million for the network.

Another Kuda client was Wiseup Trade and Invest, which moved around R44-million.

The financial director of Kuda, Gilbert Punt, told us that “based on our review, we are satisfied that we fulfilled our obligations in accordance with the regulatory framework applicable to us as a Foreign Exchange Intermediary during that period…None of the companies were flagged at the time, and we had no reason to doubt the authenticity of the documentation that was provided to us.”

Punt said that all the companies closed their accounts in 2017, around the time the SARB had come knocking.

Whatever the level of complicity or otherwise of the intermediaries allegedly used by Takela, however, the ultimate facilitators lie beyond South Africa’s shores.

Hong Kong

The road from Takela, the Eastern Cape housing contractor, ultimately leads to the awe-inspiring money laundering industry of Hong Kong – a global hub for illicit financial flows rivalling the notorious dirty money nexus of Dubai.

The 27 alleged fronts received around R700-million from Kunzite in the course of a few months and, according to the SARB, immediately paid everything they received offshore.

This involved many of the tricks of the trade we have already canvassed in previous instalments of this series. In particular, the fabrication of “imports” or payments to foreign service providers and the use of fake invoices to justify these large offshore payments.

We mentioned Fully Grace before. This Hong Kong company belonging to South African Ashok Rajwani, who confessed to the SARB that he charges a 2% commission to receive and further dissipate money expatriated from South Africa.

A number of the companies involved in the scheme allegedly controlled by Takela received remarkably similar invoices from this Hong Kong company – all for the same brands of cookware sets.

The invoices were likely created by someone on the South African side of the arrangement, not least because these invoices all look the same but have nothing in common with Fully Grace invoices other networks used to justify offshore payments.

It also appears that there was not a great deal of care taken in preparing these invoices, with the letterhead of one clearly being incorrect, possibly due to its creator accidentally hitting the Tab button on their computer.

These were nonetheless used to justify the export of millions of rands by, based on the invoices above, the aforementioned Useezo and Blue Jade Investments, as well as a company named Ironrite trading.

For now, the question remains: why would a successful contractor like Takela with an impressive line-up of government contracts seemingly simultaneously be running a massive system to allegedly illegally channel money offshore?

Not alone

The network flushed out by the SARB is not, however, the only place we have encountered Takela.

AmaBhungane has obtained extensive records for Sasfin Bank which have allowed us to analyse the beleaguered institution’s forex department.

Relevant here is a network that not only bears a striking resemblance to the one described above but also implicates some of the same characters.

This is not all we found at Sasfin.

For more on Takela’s apparent involvement in a complex scheme that took root there, as well as other gremlins hidden in the Sasfin books, watch out for our next instalment.

The post #TheLaundry: From government contracts to a laundry web appeared first on AmaBhungane Centre for Investigative Journalism.

Leaked documents from the Eswatini Financial Intelligence Unit (EFIU) reveal how, in late 2018, the kingdom’s authorities began secretly investigating suspicious payments amounting to tens of millions of rands between entities linked to two politically connected businessmen.

The investigation raised red flags regarding the relationship between Keenin Schofield, son-in-law to King Mswati III, and a Dubai-based businessman, Alistair Mathias, who claimed to be a close friend of the king.

Mathias was accused in a 2023 Al Jazeera documentary of being one of the architects behind a vast scheme to smuggle gold out of Zimbabwe, allegedly with the complicity of the Mnangagwa regime.

The leaks reveal how millions of rands emanating from a Johannesburg, South Africa company named AMFS moved rapidly through entities controlled by Schofield and Mathias before ultimately being transferred to Dubai.

This raised suspicions within Eswatini’s authorities that the pair “might be using the country as a conduit for smuggling illegally obtained Gold out of Africa through Eswatini to the United Arab Emirates under the guise of a company,” and that this was being done to “conceal the true source and purpose of the funds received and transferred,” according to a letter the EFIU wrote to the country’s tax authority.

Back in 2018, Swazi jeweller Keenin Schofield appeared to be an up-and-coming businessman. His company, Schofield & Co. Custom Jewelers, was making a name for itself selling high-end custom watches and jewellery to a slew of wealthy celebrities. One of his more eye-catching Instagram posts shows Schofield delivering a diamond-encrusted pendant to World Cup winning midfielder Paul Pogba.

Less publicised, however, is Schofield’s run-in with the law. In 2009, aged 20, he was arrested for smuggling, pled guilty in a Zimbabwean court for illegal possession of diamonds and was fined US$400.

Also less visible are Schofield’s links to the Swazi royal family. There is very little public information on his marriage to Princess Temtsimba, one of the king’s daughters, but he confirmed the marriage to amaBhungane and said that he and the princess have two children.

Schofield says he met Mathias at some point during 2018.

Mathias was not widely known until last year, when Al Jazeera aired its undercover exposé on the so-called “Gold Mafia” operating in Southern Africa. In secretly recorded interviews with journalists posing as crooked businessmen, Mathias claimed to be one of the kingpins using gold to move and ‘cleanse’ cash on behalf of Zimbabwean clients.

In the interviews, Mathias hinted at a larger operation on the continent, telling Al Jazeera’s undercover reporters that he “moves” gold worth between $70 million and $80 million each month through Ghana and southern Africa to Dubai.

Mathias later denied to Al Jazeera that he had ever laundered money or traded illegal gold. 

Putting the “Special” in Special Economic Zone

Schofield says that he and Mathias teamed up to build a large gold refinery in Eswatini’s newly created Special Economic Zone (SEZ), which was intended to be a major hub for commodity refining and trading. The SEZ was described as the “brainchild” of King Mswati III.

“I had met all the relevant stakeholders in Eswatini to get the licensing done … but I just wasn’t able to get it over the line in terms of raising enough capital,” Schofield told us.

That’s where Mathias came in. He would put up the money and was “leading” the project.

Schofield was to act as the local partner, by building relationships in Eswatini and introducing Mathias to “relevant people.”  His own company, Schofield & Co., would be one of the “agents” that would buy finished gold products like gold coins from the new refinery and sell them on.

But far from being a landmark investment in Eswatini, the millions of rands that flowed through the companies of the two businessmen yielded nothing tangible. Instead, all it did was raise suspicions at the EFIU and Eswatini Central Bank.

What is a Financial Intelligence Unit?

Every country that is part of the modern global financial system is required to establish a financial intelligence unit. These units are established to monitor the flow of money using information passed to them by the country’s commercial banks and other financial institutions.

The main purpose of these units is to detect money laundering, which is the act of attempting to hide the origin and source of funds derived from criminal activities. In other words, money laundering is about making dirty money look legitimate. While intelligence units can gather information from a variety of sources, including local and international law enforcement agencies, they cannot prosecute cases.

The business relationship between the two developed quickly. According to Schofield & Co’s FNB bank statements, which we obtained through the leaks, Schofield travelled to Dubai in June 2018.

Cash flows

Upon returning later that month, Schofield’s business account received three large cash deposits amounting to R840 000 on the same day. All three deposits were made with the same reference: “Watches & Jewellery”.   A few days later, Schofield & Co made a single payment of R740 000 to Mathias Holdings in Dubai.

Large cash deposits are particularly suspicious in the eyes of financial intelligence units, because cash is untraceable. Judging by the identical references used, the deposits appeared to be related, , underscored by the fact that when added up, these deposits amounted to a nice round number – exactly R840 000.

In money laundering parlance, the term “smurfing” is used to describe the practice of breaking a single transaction up into smaller transactions to avoid detection by authorities. Schofield’s company account had never before received cash deposits. Yet in one day, it received R840 000 via three separate transactions.

It seems that Schofield’s bankers at FNB immediately became suspicious. On 2 July, FNB’s in-house financial crime analyst sent an email to the EFIU containing Schofield & Co.’s company documents, which included earlier bank statements for the company. The EFIU had been alerted.

A similar sequence occurred a week later, on 11 July. Six cash deposits amounting to R1.68-million were made on the same day, at the same branch, to Schofield & Co’s account. This time each deposit came with a different reference, including “Rolex Presidential”, “Diamondstraponrolex” and “Diamond Setting.”

The next day, Schofield & Co. sent R1.54 million – almost all the money it had just received – to Mathias Holdings in Dubai.

In a matter of weeks, Schofield & Co. had received millions of rands, dwarfing all the money that had arrived in their bank account in the preceding nine months.

As soon as the money left for Dubai, the pattern repeated. On 13 July, six cash deposits amounting to R1.52 million, all with the reference “Stock Purchase”, were made on the same day before a single payment for over R2.5 million was sent overseas to Mathias Holdings after a delay of two weeks.

Alistair Mathias did not respond to requests for comment.

Schofield said that he did not recall the deposits when we raised them during our interview. He did not respond to subsequent follow up questions regarding the matter either.

There was a subsequent lull in the account for a couple of months before even larger amounts of money swept through it in November and December.

At the same time as cash was rolling into Schofield’s company account, seemingly destined for Dubai, the pair established a company named the Mint of Eswatini in which they were equal shareholders. This company immediately obtained a license to operate in the SEZ, which provided tax incentives.  Schofield told us that he thought this would be the vehicle that would achieve his dream of developing a gold refinery in the country.

Enter AMFS

In November, instead of cash deposits, money began arriving in the account of Schofield & Co. via international transfers from an obscure company in Johannesburg named AMFS. 

On 2 November, a single payment of nearly R6 million arrived with the reference “amfs”. On the same day, just over R5.3 million was wired to Mathias Holdings in Dubai. South Africa to Eswatini, Eswatini to Dubai. The money was moving faster than a jet.

“It’s never proof of anything, but I always think it’s a red flag when you have a company that receives and dissipates money immediately,” says Paul Holden, who assisted the Zondo Commission on state capture as an investigator. “Most legitimate companies hold on to some of their assets for reserves, they pay office costs. … They have all these extraneous expenses that reflect on their account, and you can tell an operating business’s account pretty quickly.”

Between the end of November and the middle of December, AMFS sent another ten transfers amounting to over R67 million to Schofield & Co. But this time, instead of going straight to Dubai, the money was transferred to the FNB account of the Mint of Eswatini, which then sent three international payments to Mathias Holdings in Dubai.

Despite the plans to build a refinery, which would entail significant costs in Eswatini, the millions arriving in the country were immediately sent to Dubai. Schofield claims that this was to pay for inventory like gold bars and coins.  The volumes represented an enormous increase in the turnover through the account of Schofield & Co, which earlier in the year – before Schofield had met Mathias – would receive hundreds of thousands of rands a month.

Schofield says Mathias alone controlled Mint of Eswatini’s bank accounts, even though Schofield was a 50% shareholder and a director of the company.

Schofield said he thought the cash coming from AMFS was Mathias’ money, used to purchase gold inventory: “We were receiving it [the money] and the idea was that that was part of the investment,” he told us.

Schofield alleges that Mathias sent money to Schofield & Co., which then passed the money to Mint of Eswatini based on invoices Mathias generated for gold bars and coins.

Mint, in turn, sent the money to Mathias Holdings in Dubai, ostensibly for the purchase of gold products. This suggests that Mathias was paying himself through Schofield & Co and Mint of Eswatini, something that would appear to be highly inefficient.

A Central Bank of Eswatini letter from September 2019 asked: “why doesn’t Schofield and Company Jewelers directly purchase the gold bars from Mathias Holding FZC?”.

Mint of Eswatini added no markup to the transactions, according to the letter; it was merely a conduit for the money and supposed gold bars and coins.

Its bank account was opened days before it started receiving payments from Schofield & Co and, in January 2019, after a brief flurry of activity when the money from Schofield & Co. began pouring in, this account went dormant. FNB would later freeze Mint of Eswatini’s accounts.

The insertion of Mint of Eswatini into the chain of transfers from South Africa to Dubai via Eswatini could have been, according to the analysis of the EFIU, part of a “layering” pattern.

According to a recognised definition of money laundering, “layering” refers to attempts to hide or obscure the source of illicit money (money generated from criminal activity) through a series of elaborate transactions across different countries and entities.

On 20 December 2018, the EFIU sent a “Suspicious Transaction Report” to the country’s Anti-Corruption Commission to encourage it to look into the matter and, if necessary, investigate further.

The report provided a summary of the payments made in November and December, raising suspicions over “the manner in which all these transactions are conducted, especially receipts of huge sums of money, which were immediately disposed-of to one of the Directors company in Dubai”.

The EFIU was of the opinion that Mint of Eswatini could be involved “in some sort of criminality bordering around corruption and money laundering.”

When we put all this to Schofield, pointing out that the transactions bore the signs of money laundering and that he may therefore have been party to a crime, he replied:

“Definitely, I mean I can’t sit here and deny things, that would be stupid of me,” he said.

He pointed out that he was young at the time (29) and that, with the benefit of experience, probably would have recognised what was going on.

“Now that we can sit down and discuss it and talk it through, we can highlight all the problems and all the things that I didn’t see. But at the time I wanted to open up a refinery. As I say, Alistair came across as a person who was well ahead of my understanding of how the business actually functions. And I was kinda going along his lead,” says Schofield.

In January 2019 the two parted ways, according to Schofield, and Mint of Eswatini’s refinery was never built.

We don’t know where the money went after being transferred to Mathias Holdings in Dubai.

Holden says the city is among the “jurisdictions around the world which make money laundering incredibly easy, which are basically not compliant with anti-money laundering provisions and where it’s almost impossible to see those authorities collaborating in tracking illicit financial flows”.

Despite his newfound fame due to the Gold Mafia exposé, Mathias was not interested in responding to our lengthy set of questions. However, the letters “AMFS” on Schofield & Co’s bank statements provided a clue about the origin of the funds going through Eswatini.

The Big League

AMFS Solutions was little known in 2018, but soon began to attract notoriety following accusations of money laundering. The business was under new ownership, having been bought by Johannesburg-based businessman Carlo Stickling, who had acquired it from AMFS’s previous owner, Kalandra Viljoen, in November 2017 (amaBhungane previously set out some of the allegations concerning AMFS here and here).

At almost the same time AMFS began transferring money to Schofield & Co., records show that two new directors were appointed – Mohamed Khan and the since-deceased Sohail Jiwani.

As amaBhungane has previously reported, these two have, over several years, allegedly aided a variety of illicit financial operations by facilitating the expatriation of funds. This occurred most famously through Sasfin Bank, where their company SALT Asset Management was a broker representing several large clients. This most notably included Zimbabwean mogul Simon Rudland and partner Ebrahim Adamjee’s Gold Leaf Tobacco Corporation.

Mohamed Khan was also introduced to the public in the Gold Mafia exposé, in which he was accused of being one of the major money launderers in South Africa.

Quite why Khan and his business associate were purported directors of AMFS for roughly two-and-a-half months before abruptly resigning at the start of February 2019 remains a mystery.

Khan did not respond to any of our emails.

When we messaged Stickling to engage, he told us that he could not help and then promptly blocked us.

Prior to when AMFS began sending money to Schofield in Eswatini, its accounts had already been temporarily frozen in connection with allegedly receiving money from the looting of Namibia’s SME Bank.

In a tale eerily similar to that of VBS, the scale of the alleged theft and fraud perpetrated by SME’s executives led to its collapse.

The liquidators alleged that a portion of the millions of dollars stolen from the bank was laundered through AMFS, which they bluntly labelled “a money laundering machine”. A report by the EFIU noted the bad publicity around AMFS at the time.

A closer look at AMFS’s bank statements shows two names popping up repeatedly in relation to payments into the account: Northern Spark and JR Technical.

Both have previously been identified by the South African Revenue Service (SARS)  as among the suppliers of gold in a massive alleged refund fraud perpetrated against SARS that ran to billions of rands. The SARS claims remain the subject of legal dispute.

It is unclear what to read into the appointment of Khan and Jiwani as directors of AMFS in this period. Bank statements continued to be directed to Stickling, who was reappointed as sole director shortly afterwards.

However, the fact that AMFS channelled money through Eswatini to Mathias in Dubai suggests that alleged money laundering networks in Southern Africa were more integrated than was initially thought.

Back to the present

Today, Eswatini’s SEZ lies largely dormant. The lots are filled with weeds and the wide roads are empty. The refinery was never built, and the only completed building on the vast property is a government office.

The paper trail in the leak does not shed light on where investigations by Eswatini authorities ended up. The last indication was in 2022, when the country’s Anti-Corruption Commission sent a progress report on investigations to the EFIU. Nearly four years after Mint of Eswatini was founded, Schofield and Mathias’s involvement in suspicious transactions was still listed as an “active investigation.” No further details were provided.

Schofield told us that Schofield & Co.’s company accounts with FNB were never frozen or closed, and that he never received a call from officials at the bank asking him about any of the transactions involving Mathias.

Mathias told Al Jazeera that he had never laundered money or traded in illegal gold. According to the staff at one upmarket hotel we spoke to, he still visits Eswatini often.

Neither Mathias nor his associate in Zimbabwe, Ewan MacMillan, have been prosecuted by Mnangagwa’s government following the airing of the Gold Mafia.

The Central Bank of Eswatini and EFIU did not respond to our specific questions. Instead, they said in a joint statement emailed to amaBhungane that “we cannot respond to questions on any information relating to confidential communications and operations other than to entities legally entitled to hold this information.”

The post #TheLaundry: How Eswatini became a transit hub for Southern Africa’s money laundering networks appeared first on AmaBhungane Centre for Investigative Journalism.

The Gupta family and the sprawling network of fixers that coalesced around them did South Africa one favour.

The work of laundering the proceeds of state capture has led to the exposure of vast swathes of the clandestine money-moving industry, generating leads that amaBhungane has now been able to follow to the door of many under-the-radar operators.

Among them is the cash-in-transit “shadow bank” we delved into in the previous instalment of our #Laundry series: RENS Kontant in Transito, run by mother-and-son team Christo and Jacoba “Kotie” Janse van Rensburg.

We’ve already seen how some alleged local and international crooks managed to move billions through its accounts, although RENS attorneys have assured us that the company “at no stage wilfully or knowingly engaged in any illegal or nefarious conduct”.

Nevertheless, hidden against the background of billions moving through RENS there are smaller payments, totalling just shy of R100-million, to a telling set of entities: companies identified in research submitted to the Zondo Commission by ShadowWorld researcher Paul Holden as conduits for money skimmed from a number of major government contracts.

And behind all these payments sits one large RENS client – a broker that according to RENS bank statements seemingly organised hundreds of millions of rands in cash pickups followed by electronic payments to a diverse range of nominated accounts.

A caveat is necessary up front: the companies that would have instructed RENS to move state capture money are known to have moved funds for other clients as well, whether legitimate or illegitimate. That means that the flows we have identified going through RENS may not necessarily be “Gupta money”.

However, circumstantial evidence, specifically the timing of payments, suggests that RENS may in fact also have been used for the state capture project, wittingly or unwittingly.

The trail does not stop there. Following the money brings us to the doors of other prolific South African operators in the underground financial services industry – and ultimately Hong Kong.

It all seemingly starts with a secretive Pretoria businessman.

Shell game

Its bank statements show RENS constantly making payments labelled “Airtime Connect” or, alternatively, “Tayfoor”.

Bank data shows how Tayfoor or “Airtime Connect” directed RENS to make payments totalling well over R2-billion between 2013 and 2018, which is where our data ends.

Our attempts to identify this steady RENS customer led us to Tayfoor Altamash, a Pretoria businessman who was at the time director of Alta Cash Management Services.

This identification derives from two independent sources, buttressed by the beneficiaries RENS paid on his behalf – which included related parties – as well as our efforts to track an email address assigned to “Airtime Connect” in RENS’s internal files.

Efforts by email, call and message to get Altamash to confirm or deny his involvement went unanswered.

The clients Altamash apparently directed payments to include a number of entities that have had run-ins with the authorities or have had their bank accounts seized by the Reserve Bank.

These clients also include flamboyant businessman Zunaid Moti, who received R102-million via four of his companies.

All of these payments coincided with what we previously reported as a giant money moving endeavour through various parallel channels, including suspicious loans to all of Moti’s property companies.

Moti told us that third parties used this RENS channel to carry out legitimate payments to him but that he had nothing to do with these arrangements.

“I confirm that these payments were made to the relevant companies by RENS on behalf of a third party based on proper agreements and contractual basis. The payments received were made by arm’s length contracting parties who used the services of RENS for such purpose. I had no control over the payment process.”

“I can confirm that at no time have I, or any Moti Group company, met with or concluded any transaction with RENS.”

“Further, I can confirm that I have never met or interacted with Tayfoor Altamash, and that neither I nor any Moti Group company have any involvement or relationship with him.”

Taken at face value, this would make Altamash simply a broker for other unknown players, including legitimate clients.

State capture

The first clue that something is seriously awry with this broker’s use of RENS’s services, however, is a burst of payments made back in January 2014 to an entity named Chivita Trading – around R29,9-million in total.

Those who closely followed the Zondo Commission will recognise this name.

Chivita was identified as one of many fronts used to dissipate millions of rands skimmed from state contracts. The commission’s final report tied Chivita to Salim Essa, often referred to as a Gupta “lieutenant”, who brokered huge so-called introduction fees for companies scoring large contracts with state-owned companies.

Chivita made roughly R140-million this way, principally by taking a cut of contracts between Transnet and notorious consultancy, Regiments.

This evidence was set out in an extensive study of the Gupta money laundering machinery prepared and submitted to the Zondo Commission by Holden, who also testified.

According to Holden, Chivita also had other sources of income.  Among them, we can now reveal, was RENS, which paid Chivita the aforementioned R29,9-million in January 2014.

This was right in the middle of the period in which Chivita was also receiving regular payments from Regiments.

These RENS payments followed conspicuously large and rounded physical cash deposits into one RENS account that would immediately get transferred to another RENS account before being paid out to Chivita under the reference “sett Tayfoor”.

Since the deposits in question were all physical cash, it is impossible to determine the ultimate source of the money, which is potentially the point of the exercise.

According to Holden, Chivita had been receiving large amounts of money from many unknown quarters long before the start of what he terms the “Gupta Enterprise” around 2013.

“I believe that the most reasonable inference to draw is that the Gupta Enterprise came to know or be aware of this money laundering organisation by at least May 2013, and began directing State Capture funds through this network. The Gupta Enterprise was thus piggybacking, as it were, on an existing criminal network.”

The payments we have found in the RENS records may very well represent other business carried out by the “existing criminal network”, but at the very least, the timing of payments raises questions about whether the cash-in-transit company may form part of the state capture story.

For one thing, Chivita was only a single node in a veritable thicket of coincidences.

Patterns

In fact, RENS made payments to a number of entities similarly implicated in state capture, always at the behest of Tayfoor/Airtime.

In addition to Chivita, these included Zokubyte Trading (R9,6-million), CMC Distributors (R14,5-million), Shazari Trading (R16,2-million), Birtusa Capital (R11,85-million), Schacob Commerce (R5,6-million), Coral General Traders (R4,5-million) and Samcom Technologies (R21,4-million). According to Zondo Commission evidence, each of these served the Gupta family and its associates in one way or another in evacuating the profits of state corruption.

Based on the above, the minimum amount we can trace paid from RENS to state capture-related money laundering entities is R92-million, although as we will show, the real figure could be higher.

To reiterate, while this does not definitively prove that the money we see leaving RENS to these entities can be linked to state capture, both the timing in relation to known state capture payments and the identities of the parties in question is suggestive of money flows researchers and investigators may have missed, and which could comprise additional channels for shifting misappropriated public funds.

Take Shazari, a company which Holden showed to be a pooling account for money from a variety of sources. Once pooled, part of this money made its way offshore and into the waiting arms of, among others, fronts in Hong Kong (more on that below).

The primary vehicle through which Shazari received state capture funds, at least in Holden’s analysis, was a company named Saamed Bullion, which was the pitstop for large amounts of cash derived from corrupt contracts – about R190-million that has been identified by Holden.

This money derived from portions of contracts between Regiments and its successor, Trillian Management Consulting, with Eskom and Transnet, as well as money from German software group SAP and SA Express contracts.

Saamed in turn paid about R23,5-million to Shazari, which ultimately sent money abroad to entities in Hong Kong.

Payments from RENS to Shazari conspicuously alternate with payments from Saamed Bullion to Shazari in a way that invites speculation that the two sets of payments are connected.

Specifically, these payments neatly alternate weekly with RENS payments to the same place. When we examine the ultimate destination of this money, which we will get to shortly, it becomes impossible to distinguish between the RENS money and the money known to originate from state capture profits.

But it is not just Shazari that shows this pattern.

Another conduit for state capture money laundering, according to Holden, was CMC Distributors, which likewise received cash from Saamed and paid it forward offshore. CMC was, however, also a multi-purpose “pool” for payments from all manner of sources.

Just as with Shazari, we now know that one of those sources was RENS, at the behest of Altamash. RENS was in fact the larger funder.

Similarly, another notable channel by which state capture funds left South Africa was Zokubyte, where RENS was again a funder alongside Saamed Bullion.

Our data shows that RENS paid R9,6-million to Zokubyte at the same time that Saamed was funding it.

Birtusa Capital was another entity identified by Holden as a conduit for state capture funds. It received just over R3-million derived from state contracts in April 2017, shortly after being registered.

In December of that year, however, Birtusa also received just shy of R12-million from RENS at Altamash’s behest. The fact that the timing does not overlap in this case makes it less reasonable to assume that this money also stemmed from the state capture project.

Samcom Technologies received a relatively paltry R365 000, at least that Holden could find, but it also received R21,4-million from RENS at roughly the same time in early 2017.

Lastly, Coral General Traders was exposed by journalists as yet another conduit for Gupta money, channelling payments at about the same time RENS sent money its way. Unfortunately we do not have dates for its receipt of the state capture money sent to it.

As we said at the outset, the fact that RENS (on Altamash’s instruction) made payments to the same entities used to launder state capture funds at the same time that they were receiving these state capture funds does not definitively prove that RENS’s payments can be linked to the theft of public funds, or that RENS had any direct knowledge in this regard.

The picture that emerges is of Altamash being, at minimum, another user of a network that state capturers also used, although potentially also playing a role in its functioning.

Saamed Bullion and beyond

We mentioned Saamed Bullion earlier – the company that funded all the same state capture-related entities RENS did.

Here there appears to be another link.

Saamed remained something of a mystery to the Zondo Commission. Its sole director, Sabbir Ahmed Ahmed, appears to have been a classic front – simultaneously a director of multiple money laundering entities used in the state capture enterprise. He could not be reached for comment.

Ahmed was also a director of one other company that never made it into the Zondo analysis: Savi Distributors.

Savi is, however, to be found in the books of RENS moving around R60-million to an array of customers who also got money from Altamash.

This reinforces the impression flagged by Holden in his state capture research that the Guptas and their entourage slotted into a larger pre-existing network of money laundering agents – in this case a network where Altamash – and potentially other clients of RENS – also played a role.

Onwards into the front factory

We have now seen how physical cash picked up by RENS was paid out to a set of entities who would later all be implicated in the laundering of state capture funds.

But what happens next?

The best clue comes from Shazari, the company that received the alternating payments from RENS and Saamed Bullion we described above.

Holden followed the subsequent money flow up to a point, and the rest of the story is filled in by two separate investigations conducted by the Reserve Bank, both of which have indicated the involvement of a number of prolific alleged underground financial operators.

First of all, who are the warm bodies behind Shazari Trading?

Company records show that it was put into voluntary liquidation a few months after all the 2016 payments we detailed above, at which time it had two directors.

Both seem to be victims of identity theft.

One of them is an employee at Rainbow Chickens we have not been able to reach. The other is Brian Sabelo Ngonyama, who expressed shock when contacted by amaBhungane.

It turns out that Ngonyama worked as a personal driver at the time of the payments. His boss was one Azhar Ansari, who has an accounting firm based in the Tudor Centre office park in Durban North.

Ansari, along with a colleague named Delores Perumal, were in fact directors of Shazari, but they resigned right before the payments started.

Be that as it may, when Shazari installed its new ‘front’ directors and received all the money we have described, it was paying it onwards to another paper-thin company named Blue Nightingale Trading 41, registered at the very same Tudor Centre. Both Ansari and Perumal were, at different times, its directors.

Blue Nightingale, however, was just another pitstop.

Back to the state capture trail

The next stop for the money from Shazari involves yet more related companies: Lionhead Trading and Seattle Grain Merchants. Perumal was a director of both and Seattle, at least, was also registered at the Tudor Centre.

We know quite a bit about these two companies thanks to a Reserve Bank report gathering dust in the annexures of the Holden report, as submitted to Zondo.

This 2019 report recounts a bizarre chain of events when the central bank’s financial surveillance department came across Lionhead and Seattle during an unrelated investigation. The two companies’ accounts at Bidvest were frozen on suspicion of them making offshore payments for fictitious imports.

It was, however, not Ansari or Perumal who emerged to challenge the decision.

Instead, the SARB was approached by attorney Azgar Ally Khan and an “alleged employee” of Lionhead, Patricia Madurai.

According to the SARB report, after a first meeting:

“Ms Madurai invited [SARB representative Piet] Delport during the above meeting for dinner when visiting Durban again. It appeared from the above meeting and also later during telephone conversations with Ms Madurai that she wanted to influence Mr Delport’s decision to block the funds…”

The two representatives were not great choices if the point was to create the impression of legitimacy.

Madurai was more recently, in 2020, saddled with an astonishing R106-million income tax judgement. This implies that she had undeclared income in the region of R400-million – the kind of astronomical tax assessment that often flows from holding individuals vicariously accountable for their companies handling massive amounts of money with no clear origin.

Attorney Khan also ran into trouble with authorities – his law firm, AAK Attorneys, had its own account blocked and subsequently seized by the SARB for an unrelated “scheme to illegally send funds out of the Republic”.

After these two failed to convince the SARB to release the Lionhead and Seattle accounts, an unidentified individual called up a completely uninvolved employee in the SARB economics department to ask when the money would be unfrozen.

Then, new lawyers appeared and for some reason directed entreaties to the then-director general of finance Dondo Mogajane, who has nothing to do with policing banks or foreign exchange payments.

Here things get yet more interesting.

Mr Dollars

In a letter to Mogajane dated 3 July 2017, one of the new lawyers, JF van Deventer, pleaded for the release of his clients’ funds. In his version, said clients were simply doing a job for two individuals who had approached them to “facilitate remittances”.

The two individuals they tried to finger instead? Rashid Patel and Yusuf Ismail.

These two are known business associates and the latter, Ismail, has landed in amaBhungane’s sights before. In the underground financial world he is better known as “Joe Dollars”, the less famous little brother of Mohamed “Mo Dollars” Ismail, another individual who has been on authorities’ radar for years.

The suggested involvement of Patel and Ismail potentially brings yet larger money-moving networks into the picture, illustrating how complicated the flow of funds through alleged components of South Africa’s underground financial system can get.

Irrespective of who really controlled Lionhead and Seattle, what happens next is important.

Mr. 2%

In a nondescript office building in central Hong Kong lies the registered office of a company that can sell you anything.

Fully Grace Limited, according to invoices used at banks to justify payments from South Africa to Hong Kong, sells rice, rolls of fabric, ready-made garments, bicycles, generators, pots, pans and “crypto-wallet” systems.

The business was set up in 2015 and had first-year sales of at least R128-million to the aforementioned Lionhead.

An equally versatile sister company run by the same people, from the same address, Fareast Success International, had sales of at least R56-million – also to Lionhead.

Yet another company seemingly also run by the same people, again from the same address, Baladewa Limited, received orders for at least R27-million – again from Lionhead.

All three are registered at the same Hong Kong address in the offices of a secretarial company named Multi-Chain that seems to perform double duty as a touring bus operator.

But there is a problem: there was, by all appearances, no rice, no clothes, no bicycles or generators or kitchenware or crypto wallets.

Additionally, at Fully Grace, invoices ostensibly from the same company were clearly not created by the same people, having wildly different designs. All they have in common is the bank account number.

This would indicate that they were actually concocted by South Africans seeking to make offshore payments.

In fact, all three Hong Kong companies are tied to a single South African: Durban businessman Ashok Rajwani, who is, alongside family members, shown to be a shareholder in Hong Kong company documents.

According to an internal SARB report from June 2020, the low-key Rajwani first landed in the central bank’s crosshairs in 2017 as part of an expansive investigation dubbed “Project X-Ray”.

The report by the SARB’s head of financial surveillance, Elijah Mazibuko, said Rajwani:

“conceded that he earned a fee of approximately 2 per cent for facilitating transfers to the account of Fully Grace by South African remitters…once the funds had been credited to the foreign bank accounts of Fully Grace, he would simply cause same to be transferred to any third party…”

Rajwani would, in other words, have earned a fee of 2% for expatriating the spoils of state capture, among other things. These would be the funds that potentially made their way through RENS to Shazari, then Lionhead and ultimately to Hong Kong.

Rajwani did not respond to a request to comment.

The Rajwani companies in Hong Kong received R211-million from Lionhead between June 2015 and July 2016.

They also received millions from other interesting quarters, which we’ll get to in a coming instalment of this series.

In reality, the money moving systems we’ve been looking at lead to two distinct additional sites of widespread abuse of fronts and fakery to get money out of the country: a tangled web surrounding a Johannesburg businessman named Ke Tang… and Sasfin Bank. More on that in our next instalment.

The post The #Laundry: Shadow banks, part three – How RENS Kontant fed state capture laundries appeared first on AmaBhungane Centre for Investigative Journalism.

Back in 2011, a bizarre fraud was committed in the UK when Dutch shipbuilding magnate Edward Heerema was swindled out of millions of pounds by a gang of con artists.

Although the story is complex, it boils down to this: The alleged mastermind, Polish-Canadian Marek Rejniak, convinced Heerema that he was an agent of the US Federal Reserve with access to a mysterious VIP trading platform belonging to the Vatican and called the House of Aragon.

Heerema and his staff were sufficiently impressed by Rejniak and his collaborators’ fake personas to put up GBP100-million in order to earn supposedly outlandish profits on this unlikely platform. GBP16-million of that disappeared before Heerema managed to extricate himself from his quixotic “investment”.

Rejniak’s colleagues were eventually caught, but the man himself disappeared.

Investigators hired by Heerema chased tips and rumours around the world. Hong Kong, Singapore, Indonesia and Mexico were some of the places Rejniak allegedly cropped up, armed with a half-dozen passports and permanently packed suitcases.

AmaBhungane can add one more stop on that itinerary – South Africa, where Rejniak quietly showed up in 2015 as the sole director of a company named Atrum Investments.

And here the story takes a turn that leads us straight into Johannesburg’s “shadow banks” – cash-in-transit companies that in practice can also be used as wholesale clearinghouses for illicit money flows, while seemingly asking very few questions.

Registered at a modest office park in Krugersdorp, Rejniak’s Atrum pumped roughly R400-million into the operating account of one such cash-in-transit company –  RENS Kontant in Transito – over a three-year period.

Additionally, the same people who set up Atrum for Rejniak created four more companies that likewise started pouring money into RENS – R3-billion of which we can see in our limited data – destined for cash delivery in Johannesburg and surrounds.

More on them below.

For a sense of scale, RENS handled at least R10-billion in the four years we have good data for, 2015 through to the beginning of 2019, and there is no reason to assume business has died off since then.

The takeaway is that RENS was effectively a nexus for questionable money flows, much like Asset Movement Financial services (AMFS), a rival cash-in-transit company we have dealt with extensively in this series.

The real question about these shadow banks, however, is: who needs to bank in the shadows?

Among those making use of RENS’ services were a number of entities implicated in spiriting away the spoils of state capture.

Others were allegedly major players in the illicit tobacco trade and yet others seemingly ran long-lived regional money-laundering networks, exchange control-dodging hawala schemes or, in one case, an alleged pyramid scheme.

In general, RENS served an astonishing variety of actors. In this it not only resembles AMFS but also other entities amaBhungane has investigated, and which we will deal with in due course.

What is particularly striking is how the clients of these large nexuses for money flows overlap. It is, we will show, a small world.

Before we dissect RENS’ clientele, however, some background is in order.

Christo and Kotie

RENS is run by mother-and-son team Christoffel and Jacoba “Kotie” Janse van Rensburg – the latter a former police officer and one-time board member of the Bond van Oud Polisiebeamptes, a social club for retired police officers.

RENS operates in an essentially identical way to AMFS, which we have reported on in a previous instalment of this series.  Millions of rands are received daily in the form of either cash pickups or electronic transfers that get mixed up and then paid out, again via a combination of cash deliveries and electronic transfers.

Their commission was, in the period for which we have data, in the range of 0,3 to 0,5% of the money moved.

And as with AMFS, much of the money, at least on paper, comes from the gold industry.

By their own admission, however, The Janse van Rensburgs take very little interest in where money actually comes from or where it goes.

In a commission of inquiry held in Johannesburg in 2019 in relation to the disastrous looting of the Namibian Small and Medium Enterprises Bank, the two were grilled about a relatively small payment that made its way through RENS. They were questioned by advocate Raymond Heathcote:

[TRANSLATED FROM AFRIKAANS]

HEATHCOTE: So you receive the money. You don‘t know why you are getting the money?

JACOBA: No, I don’t know what he needs the money for.

CHRISTO: I mean, these guys are in the gold industry. Their clients often pay cash so I mean most of these guys do cash deals or that kind of thing

…

JACOBA: No, we don’t ask. We do the transaction with the client. We also have other clients. I mean I can’t, you know, ask every single client what they are doing with their money.

HEATHCOTE: Ask no questions and hear no lies?

CHRISTO: yes, almost something like that

JACOBA: Exactly…but at least not [entirely] no questions

The younger Janse van Rensburg later tried to dismiss this as a humorous exchange but also, in court papers, denied that the Financial Intelligence Centre Act even applied to the business. This is not true, as the act’s prescription to report suspicious transactions applies to everyone.

From RENS’s records it is clear that it has serviced a small core of clients but that each of these would be arranging payments from many different sources and to many destinations. They are, in other words, essentially brokers acting as intermediaries between RENS and the ultimate users of its services.

In response to questions, RENS’ attorneys accused us of acting “as if you were part of the various incumbent structures of the State investigating the incidents, which is of course not the case”.

“Kindly note our client’s stated position that it was at no stage wilfully or knowingly engaged in any illegal or nefarious conduct.”

They further demanded that we divulge the source of our information and provide copies of our documentation.

Their full response is available here. 

Birds of a feather

We already touched on RENS in our previous instalment, showing how it received and paid onwards millions for better-known figures (including Howard “Howie” Baker) entangled in a massive money moving endeavour involving Aulion Global Trading, a Dubai-based company we introduced earlier in this series.

Altogether RENS paid R480-million to AMFS and other entities tied to Baker, essentially creating a double-layer of obfuscation between parties paying money and parties receiving money.

Of that, R83-million made its way to Saleem Ebrahim Attorneys, which in turn paid the money onwards to Prodigy Trading, a Hong Kong entity belonging to Baker.

Readers may recall that we previously exposed Ebrahim as the creator of a short-lived front company named Actinic Holdings, which likewise expatriated money for Baker.

(Ebrahim did not respond to our questions at the time, but in court papers SARS referenced his explanation that he denied wrongdoing and contended that he was merely acting on the instructions of his clients.)

We also showed how these payments were made at the behest of a RENS client named Baypass Logistics, which some references suggested had links to controversial Zimbabwean mogul Simon Rudland’s company Gold Leaf Tobacco Corporation, as well as, apparently, alleged tobacco smuggler Roy Muleya.

Our attempts to contact Muleya came to naught, while Rudland and Baker’s attorney denied any link and argued that the references to Gold Leaf in documentation and bank statements proved nothing at all.

Beyond AMFS, the recipients of the RENS money we can trace present an exotic mix of unlikely clients who appear to have little in common other than the need for moving improbably large sums of money.

The social entrepreneur

One more significant recipient of money from Baypass (via RENS) was a Sandton-based boutique “business development” consultancy named The Echelon Group, which received at least R161-million – the amount we can track for the period our banking data covers.

Importantly, The Echelon Group has also received smaller amounts from AMFS (as well as, more recently, several million rands from another Baker entity named Inracom, which we first reported on here).

It was, in other words, also, like many RENS clients, a client of the separate money-moving network around Baker.

The Echelon Group was founded by “social entrepreneur and philanthropist” Khanyisa Mothema and has, according to its website, counted among its clients the City of Joburg, the Industrial Development Corporation and the Development Bank of Southern Africa.

It has also “engaged various government departments in Zimbabwe on meeting their development funding goals”.

In Echelon’s bank statements we see the Baypass payments arrive, after which they mostly get distributed to a small set of beneficiaries identified by what appear to be initials.

We sent Mothema questions but received no response.

The dodgy accountant

Another consistent customer of RENS was controversial accountant Wolfram Landgrebe and his South African-Namibian firm WKH Landgrebe.

Landgrebe surfaced during the Commission of Inquiry into Allegations of State Capture (commonly known as the Zondo Commission) as an apparent channel for the dissipation of money from the infamous R2.65-billion PRASA contract that saw the country procure trains that were ill-suited for use on our rail network.

A first audit of money flowing from the tender was conducted by Ryan Sacks of Horwath Forensics and presented to the Zondo Commission in 2021.

With regards to Landgrebe, it was found that the small audit firm was paid R28-million by the winning bidder, Swifambo Rail Holdings, and also received indirect payments that had not been quantified at the time Sacks’ report was presented.

This total was raised to R30,5-million by a later audit commissioned by Swifambo’s liquidators. In addition, the liquidators found payments of R55-million to Landgrebe from another entity involved in the PRASA scandal, Auswell Mashaba Consulting Engineers.

This money was largely used to purchase property for Landgrebe’s client, the CEO and major shareholder of Swifambo Auswell Mashaba.

We can now shed light on some of Landgrebe’s wider operations.

Landgrebe’s firm paid over R130-million into RENS in the period our data covers. Before that it had also paid around R64-million into shadow bank AMFS, and before that it paid at least R44-million into Rustic Stone, AMFS’ predecessor.

Our interpretation of the accounts suggests that this money was destined for cash delivery to unknown recipients.

At both RENS and AMFS, Landgrebe was simply known as Wolf and records show that he earned a modest 0,05% commission on all the cash he sent RENS’ way.

According to a report by Open Secrets, Landgrebe was the subject of an investigation by the Independent Regulatory Board for Auditors. The board told us that this investigation is “ongoing”.

In response to our questions, WKH Landgrebe said that it does “not intend to respond to your interrogatories”.

Gys and Mauri

One major client in RENS’ books is Metal Enhancors, a refinery which, evidence suggests, has also been a major force behind the scenes of the local illicit financial system.

In our data we can see RENS make payments of over R620-million on Metal Enhancors’ behalf.

Seperately, as previously reported, Metal Enhancors was the source of an astonishing R2-billion sent to Inracom – yet another endeavour implicating Baker – illustrating how the clientele of companies like RENS and AMFS tend to use several conduits in parallel.

Back at RENS, Metal Enhancor’s recently deceased owner Gysbert Kriel was known as “Oom Gys”. We tracked down his widow, who professed complete ignorance of his business dealings.

According to RENS documents, the man in charge seems to have been one Mauri Swanepoel. Swanepoel seemingly also used RENS to channel millions into a company that liquidators have since described as a multi-million-rand pyramid scheme.

Layer upon layer

In May 2022 the Pretoria high court granted a liquidation order against Kadosh Finance.

According to an unopposed application by liquidators, Kadosh formed part of a complicated investment scheme run by Swanepoel.

It allegedly worked as follows:

Investors would be recruited to “lend” money to a first layer of conduit companies with promises of interest rates of up to 18%.

The “conduit” companies would then on-lend the money to Kadosh Finance, which would allegedly make enough profit from the purchase and exploitation of old platinum mine dumps to pay the conduits an astonishing 36% in interest.

According to liquidator Ralph Lutchman this arrangement “displays many of the hallmarks of a pyramid scheme” in that investors could only possibly recoup their money if yet more “lenders” came onboard.

This setup collapsed when Kadosh started missing repayments in 2019.

However, there was a lot going on behind the scenes that we can’t yet unpick.

Although payment references are somewhat inconsistent, we have determined that a minimum of R42-million was paid to Kadosh out of RENS while as much as R290-million was paid by Kadosh to RENS with the ultimate destination being unknown.

When liquidators convened an inquiry in terms of section 417 of the Companies Act, Swanepoel refused to appear.

He likewise did not respond to our questions.

All of the above, however, pales in comparison to the seemingly coordinated money-moving efforts of the companies we mentioned at the outset.

The mega-fronts

We earlier mentioned a company named Atrum, which had Polish fraudster Marek Rejniak as its initial sole director.

Atrum was one of five companies that were seemingly all set up by the same people and which collectively paid over R3-billion into RENS during the period covered by our data (which cuts off in early 2019), all for cash delivery.

In September 2015, not only Atrum but two of these brand new companies – Allmine Investments and Eventskiwido – started depositing millions with RENS on an almost daily basis.

Later they were joined by two more related companies: Femo Investments and Ceruphar Projects.

All five of the companies played musical chairs with a series of strange directors who amaBhungane have tried and failed to track down; some used Angolan, Zimbabwean and Congolese passports.

Rejniak was only a director at Atrum, but the companies are clearly connected.

For one thing, a seemingly random Johannesburg resident, Joao Camacho, suddenly appeared as a new director at all five companies in early 2017, with the previous directors simultaneously quitting. Camacho seems to have been a victim of identity theft.

Camacho’s wife says he had been robbed at gunpoint of, among other things, his ID shortly before the relevant period. His modest employment record at the time gives some credence to the explanation that he was an unwitting victim of identity theft. At least one other instance of likely identity theft took place, which means it is hard to confirm who is or is not a “real” director of these companies.

The situation at Atrum was particularly hard to follow. Rejniak’s successor Camacho was booted out and replaced first by Congolese citizen, Bwanachui Amisi and then by South African Eric Kasongo, about whom amaBhungane has not been able to learn much.

Finally, the cherry on the cake: much later, in 2021, Atrum, according to company records, passed into the hands of Ali Abdul Jabar Alseyed, a Ugandan citizen accused in that country’s media of gold smuggling and human trafficking.

The problem here is that Alseyed was long dead by then. He had reportedly been fatally shot in a Kampala hospital in 2019 by a member of his family whom he allowed to play with his own loaded gun.

Amazingly, apparently none of these companies littered with red flags had any difficulty getting bank accounts and transacting with millions of rands almost daily over the course of several years.

This is even more astonishing when considering that they were also registered at unlikely locations like a house in Roodepoort and a broken down old BnB in Germiston. These lowly premises and red-flag directors did not stop these companies from, as mentioned above, channelling several hundreds of millions of rands each into RENS.

Behind the scenes

AmaBhungane’s attempts to track down the common hand behind these companies led to a man named Muss Pascal. Both his cell number and another that appeared to be that of an employee were used in company registration documents as the contact details for the various untraceable directors.

This was confirmed by the shelf company vendor that originally registered the companies, who told us that “Muss Pascal presented himself to us as an agent authorised to facilitate the purchase and documentation” for at least three of the companies.

When contacted by amaBhungane, Pascal simply said “please leave me alone” before hanging up the phone.

This led deeper down the rabbit hole.

Pascal turns out to be the owner of yet another company we have encountered in our reporting on the region’s illicit financial system: Mirinc. We previously reported on a giant “hawala” that had been run through accounts at the defunct VBS Mutual Bank. Mirinc was one major channel through which this hawala was provided with cash.

Mirinc was previously known as Pinnacle Precious Metals Refinery.  It appears to be part of the shadowy “second-hand” gold ecosystem we have dealt with extensively in this series.

Information obtained by amaBhungane shows that when Atrum, Eventskwido, Allmine and Femo made their multi-million-rand payments to RENS, these were in fact done on behalf of what was then still called Pinnacle (Ceruphar apparently fell into different hands).

This is evidenced by internal records tabulating weekly volumes of business from major RENS clients where deliveries for “PPM” are broken up into separate amounts for the four apparent fronts.

Pascal did not, however, own Pinnacle at the relevant time.

The then-owner of Pinnacle, Ridwaan Adams, responded to our questions with a denial.

“To the best of my knowledge and recollection, “PPM” had no direct dealings with these companies. “PPM” would certainly not have made payments to these companies as there was no working relationship with them.”

He mentioned that he had bought Pinnacle in 2015 and sold it to Pascal in 2019 – dates matching the payments to RENS.

To further confuse matters, the payments being made to RENS by Atrum, Allmine, Eventskiwido and Femo were apparently all ordered by an entirely different character who we will return to in another instalment – a wildly prolific dealmaker named George Markides.

Returning to RENS’ client book, however, we find more major conduits for funds to deeply suspect beneficiaries.

In particular, a close look at the books seem to show that investigators and researchers may have missed at least one channel through which the profits of Gupta-led state capture made their way out of the country.

More on that in our next instalment.

The post The #Laundry: Shadow banks, part two – Christo and Kotie appeared first on AmaBhungane Centre for Investigative Journalism.

When recently retired Chief Justice Raymond Zondo presided over the sprawling Commission of Inquiry into Allegations of State Capture, a brief and easily overlooked appearance was made by one Kalandra Viljoen, nominal owner and manager of Asset Movement Financial Services (AMFS).

This “cash-in-transit” company, which did a suspiciously large amount of business simply making electronic payments between third parties, had been the conduit for about R4-million leached out of airline SA Express via a company named Koreneka.

R4-million was a drop in the ocean of state capture and, as we saw in previous instalments, equally insignificant in the world of AMFS.

Zondo was, however, moved to add a recommendation to his final report that the South African Reserve Bank (SARB) should look into the company.

“The question that needs to be answered is whether AMFS was providing general money laundering facilities to those who wished to have their proceeds converted to cash without the necessary checks required from the formal banking system,” he stated.

If only he knew.

For a sense of scale, the bank statements we have for AMFS reflect flows of roughly R33-billion through the company between its creation in early 2015 and early 2019. Much of that was the revenue of a small set of gold refineries which, as we saw in previous instalments, was at times destined for questionable recipients.

In particular, we have seen evidence suggesting that at least R5-billion of this consisted of payments to Krugerrand dealer African Medallion Group, seemingly originating in large part from the micro-refinery The Gold Kid, which used AMFS to make these payments (as described in Part Two).

Some of AMFS’s colossal flows also seemingly involved small once-off deals like the Koreneka one above.

Its bank statements are littered with incidents: for instance, what looks like R6-million received from fugitive pastor Shepard Bushiri in December 2017, which seems to have been destined for cash delivery.

Scattered throughout the books, as well as across extensive documents from both inside and outside AMFS, we have found what appear to be other huge clandestine operations.

After Krugerrand buying, the single largest coherent “project” that can be discerned is the channelling, between 2016 and 2019, of billions of rands to Aulion Global Trading in Dubai, as well as a few related entities in Dubai and Hong Kong, using several successive avenues wherein AMFS played a key role.

We can now reveal, based on the information available to us, that this “operation” involved over R5-billion leaving South Africa for Dubai under false pretences over the four years, although this is very likely an underestimation due to the limitations of our data.

Alongside AMFS, this story involves a wider cast of characters, byzantine financial arrangements and, our information suggests, at least a billion rands’ worth of non-existent gold “traded” between South Africa and Dubai.

Birth of the “gold lion”

Aulion Global Trading was registered in October 2015 by the owners of The Gold Kid –Andries Greyvensteyn and sanctioned money mover Howard “Howie” Baker’s notorious gold refinery.

AMFS was also set up in 2015, again with the involvement of Greyvensteyn, who recruited the aforementioned Kalandra Viljoen from another cash-in-transit company named Rustic Stone Trading 10, which operated in the gold sector.

She was to be the sole shareholder in AMFS, which operated out of The Gold Kid’s premises in Nigel.

The Gold Kid immediately became AMFS’s main client, even though the latter would go on to service a wider array of similar gold operations. Many of these operations have been investigated by SARS for alleged tax fraud.

The three companies – The Gold Kid, Aulion and AMFS – are inextricably bound together through the involvement of Greyvensteyn and Howie Baker.

And, as we will show, Aulion came to be central to an even larger network.

Both amaBhungane and other media publications have reported on parts of the Aulion gold network and its alleged receipt of the proceeds of alleged illicit cigarette sales by the Gold Leaf Tobacco Corporation, which is controlled by Simon Rudland and partner Ebrahim Adamjee.

 Gold Leaf has denied wrongdoing and is fighting a 2022 preservation order obtained by SARS against the company and its directors.

New evidence, however, gives significant insight into the true scale of the Aulion endeavour, including what went on behind the scenes and who else was involved.

Among other things, we can show how many other entities locally and abroad channelled funds to Aulion. For this, at least one other “shadow bank” in the mould of AMFS was used.

First, however, we will explore what looks like a daring scheme to position Aulion at one end of a colossal circular money laundering system involving the apparent faking of gold trading.

Johannesburg to Dubai and back

AmaBhungane has obtained no less than 5 378 emailed instructions sent by Howie Baker to AMFS’ Kalandra Viljoen between September 2015 and 2017, including instructions to pay the controversial Krugerrand dealer we reported on in [Part Two] of this series.

Of specific interest here is a subset of 134 of these instructions, each of which direct AMFS’s Viljoen to make payments to a FNB account with the reference “Sasfin payment”.

In each of these cases, Veronica Schubach, then manager of The Gold Kid, was copied.

Coupled with evidence drawn from bank statements, this indicates that the money for “Sasfin payments”, at least on paper, came from Greyvensteyn’s refinery, The Gold Kid.

Let’s illustrate this by examining the transaction chain over the course of a single day. We begin with an email sent by Baker on 20 October 2016:

Tracing the ensuing bank statements clearly demonstrates how the “Sasfin payment” reached its actual intended beneficiary.

The trail starts with The Gold Kid, AMFS’s main client.

In The Gold Kid account, we see four outgoing payments for the day totalling just under R26-million. We then see these payments – recognizable due to matching reference numbers – arrive in AMFS’s account.

At AMFS, the requested amount of R17 450 673 is paid out to Sasfin, as directed in Baker’s email. Another payment of R9-million is also made; this does not concern us here but explains why a total of R26-million had originally been transferred.

Now we move to Sasfin itself, or rather its transaction account held at FNB – the account Baker gave in his email. At the time, Sasfin was not a transactional bank but instead held accounts at all the other major banks. Sasfin received clients’ money via these banks before paying it abroad.

At FNB we see the R17 450 673 payment from AMFS arriving and on the same day being paid forward to Sasfin’s account at Nedbank, mixed up with some other small amounts received on the day.

This payment just reflects Sasfin’s practice of settling outbound payments every day by pooling the amounts paid into different accounts in one place.

At Nedbank we again see this amount arriving and, later in the day, the exact amount requested by Baker gets paid offshore to Aulion with the reference “Gold Leaf Tobacco Corp” – Rudland and Adamjee’s cigarette company, suggesting either Gold Leaf was involved in the scheme or that the money was ultimately theirs.

In reply to amaBhungane’s questions, Gold Leaf’s lawyer Raees Saint denied this inference.

Saint argued that “at the core of your inquiry is the assumption that funds flowing through various entities must somehow be connected to our client by virtue of certain payment references. There exists no evidence to suggest that these transactions involve or are funded by our client and any assertion of this nature is nothing more than a flagrant lie. Reference codes in bank statements or proof of payments are not the criteria in determining the true origin, ownership or purpose of funds…”

Regardless, we can see examples of this transaction train repeated at least 134 times with various supplier references (including but not limited to Gold Leaf), with the total value adding up to R2.7-billion.

These transactions were justified by invoices for alleged imports generated by a broker named SALT Asset Management, which belonged to two associates of Baker and Greyvensteyn: Mohammed Khan and Soheil Jiwani.

Many of the invoices generated by SALT are obvious fakes; in some instances, banking details for Aulion are simply pasted onto legitimate invoices from other companies.

But this is not the end of the story.

Ghost gold

Sending money offshore under false pretences is one thing. These payments seemingly went much further, with at least a very significant portion of them entering a novel circular system which at first glance makes no sense at all.

Based on the evidence available, it appears that much of the money Baker ordered to be paid to Aulion via Sasfin was for gold that existed only on paper.

Let us return to the R17 450 673 payment we followed from The Gold Kid to Sasfin’s account at Nedbank, from where it was paid offshore.

In Aulion’s bank statements this amount arrives with the same reference used at Sasfin – Gold Leaf Tobacco Corporation.

Another large payment of just over R20-million arrived at the same time. We have also traced this payment back to Nedbank and a payment bearing Gold Leaf Tobacco Corporation as a reference, although we have no record of who owns the account that made this payment.

Here is where things get strange.

The Aulion account is quickly drained by outward payments, all marked “Gold Kid”, i.e., the very source of the money to begin with.

All these payments from Dubai back to South Africa are visible in one of the accounts held in South Africa by The Gold Kid.

And then the money is immediately paid onwards again.

We can trace these payments back to AMFS, where the money arrives just in time for another instruction from Baker to pay it to Sasfin in order to start the whole process over again.

And here is where the true nature of the scheme seems to lie: an entirely circular flow of money from The Gold Kid to Aulion and from Aulion back to The Gold Kid. The question is why engage in such a seemingly pointless exercise?

A major clue lies in the payment references Aulion used to pay money back to The Gold Kid. Each of these are given as “AL” followed by sequential numbers. In the excerpt from Aulion’s account above we saw payments marked AL67 through to AL69.

These are also used in the statements of The Gold Kid when it receives the money.

Scouring The Gold Kid’s statements reveals many more “AL” payments. commencing no later than January 2016, shortly after Aulion was created.

Looking at 2016 as a whole, we see at least R1.17-billion arrive in The Gold Kid’s account through these “AL” payments.

Fake gold for real VAT?

SARS has conducted a far-reaching audit of The Gold Kid’s business, as we reported in a previous instalment.

From the details of this audit, it seems that payments to Sasfin (and ultimately offshore to Aulion) were disguised as payments to South African suppliers of scrap gold. If our interpretation is correct, The Gold Kid was seemingly pretending to buy gold in addition to its real gold business.

This interpretation is supported by the fact that the VAT invoices The Gold Kid used when it allegedly paid its scrap gold suppliers in fact match payments made to Sasfin or other entities that do not appear to lead back to the ‘suppliers’.

For example, on the day the payments above were being chanelled to Aulion, The Gold Kid declared it was paying a supposed supplier called Bhekusifiso Scrap. This is reflected in so-called tax type reports it produced for SARS in which it show the supposed payments with the VAT supposedly paid.

Thus far we have seen no actual financial records of the claimed payments being made to The Gold Kid’s supposed scrap gold suppliers, although Greyvensteyn has vowed to produce this evidence at some point in an ongoing court battle with SARS, as we reported on in a previous instalment.

At the other end of the equation The Gold Kid’s documentation of sales perused by SARS showed it making sales to Aulion of about R1.1-billion – pretty much the same amount of money we saw going through the “rinse cycle” between South Africa and Dubai.

In other words, what we see is The Gold Kid allegedly sending money to Aulion under the guise of buying gold domestically.

This money then comes straight back to The Gold Kid while it declares, in the documentation perused by SARS, that it is exporting gold to Aulion.

The pattern suggests that not only the purchases of gold but also the sale of gold were, at least some of the time, fake. It seems that no gold ever really changed hands, certainly not in the quantities that would match the amounts of money involved.

The whole point, again, would be the claiming of VAT refunds for the fictitious exports (which are zero-rated for VAT), which would have been based on (again, allegedly fictitious) purchases of gold that would have come with VAT.

This is the basic system that was outlined in Part Two of this series. Essentially, this earlier iteration of the alleged scheme appears to operate by generating payments for gold that doesn’t exist.

This would have the same effect as the better-known version of the scheme which involves using tax-free gold like Krugerrands (also zero rated) disguised as “scrap” to generate bogus tax refunds, a practice which has cost the fiscus billions.

While the documents we have suggest that the system we described above was in full swing in 2016, it becomes harder to interpret the nature of payments made via Sasfin in 2017, not least because The Gold Kid switched banks from ABSA to Standard Bank and the “AL” references disappeared from its statements.

New systems, new partners

From 2017 through to 2019 the configuration of The Gold Kid, AMFS and Aulion started shifting, with Aulion, the Dubai company, obtaining mountains of funding through new channels and, as far as we can tell, spending a large amount of it on real gold.

Aulion did in fact buy gold while The Gold Kid did sell it. As we showed in a previous instalment, a lot of this was complicated by the introduction of Krugerrands into the system, but nonetheless, real gold sales took place.

The Gold Kid sold practically all its gold to Rappa Resources, one of few export-orientated refineries. Rappa denies any knowledge of whatever The Gold Kid may have been up to and no evidence we have suggests otherwise.

Aulion, in turn, made all its gold purchases from Rappa.

It was not the refinery’s major client, but its purchases were nonetheless significant.

Using the limited data at our disposal we have very roughly calculated the scale of Aulion’s purchases from Rappa.

While we estimate the figure to have almost reached the R1-billion mark in 2017, Rappa CEO Gary Bickerton told us that the real figure is “less than R1-billion”, albeit without volunteering how much less.

From our rough calculations, it can be seen that Aulion’s purchases from Rappa escalated massively in 2018 and 2019.

But how was Aulion – and by extension all this gold buying – being funded?

The payments being made to Aulion via Sasfin came to an abrupt end in July 2017 following an internal decision by the bank to terminate Gold Leaf as a customer.

Our documentation for this period contains gaps, but we can pick up the trail of “Project Aulion” again in early 2018 when major new characters began funnelling money to this Dubai company.

Beyond Sasfin

AmaBhungane previously revealed a massive laundering operation that emerged during 2018 and 2019 using the now-liquidated Habib Overseas Bank [link].

Early in 2018, an account was opened at Habib by a company named PKSA Finance. This company belonged to Mohammed Khan and partner Sohail Jiwani, the aforementioned associates of Baker who gained notoriety after Khan featured prominently in an Al Jazeera documentary on a regional “Gold Mafia” last year.

Over the course of 2018, PKSA received nearly R1.4-billion and paid most of it straight out again – almost entirely to Aulion.

At the same time, another entity associated with Khan, Ovenbird, opened an account at Habib. This account received R370-million in less than two months and again paid almost all of it out to Aulion.

In 2019 a new front named Actinic was created and, as we reported, opened several accounts at different banks, accounts from which it promptly began sending money to Aulion. From a SARS audit of one of Howie Baker’s companies we know that Actinic was also being funded by him.

Combined with the earlier operation through Sasfin, this brings payments to Aulion to the region of R4.5-billion over three years – this just from entities we know about.

As before, a lot of the money from these new entities came from AMFS and, by extension, The Gold Kid.

But a lot came from elsewhere.

One particularly notable source was another shadow bank in the mould of AMFS: cash-in-transit company RENS Kontant in Transito – the subject of a coming instalment. Also notable was another refinery named Metal Enhancors.

RENS leads us beyond gold to the door of alleged tobacco smugglers associated not only with Howie Baker but also the man widely considered to be the power behind the scenes –  cigarette mogul Simon Rudland.

Like AMFS, RENS was seemingly just the conduit.

The customer: Baypass

According to records we have obtained, including bank statements, payments coming from RENS were all done on behalf of a company named Baypass Logistics.

Baypass had also earlier, in 2017, channelled R324-million into AMFS. This money was, as far as we can establish, used for the purchase of Krugerrands at the behest of Howie Baker.

There is an immediate red flag hovering over this multi-million rand company: the sole director is an individual whose last known employment was at a bottle store and who is simultaneously the sole director of seven different “logistics” companies.

Our efforts to identify the true hand behind Baypass leads straight to the illicit tobacco sector, specifically the trade between Zimbabwe and South Africa.

In RENS’s internal client book, the contact person for Baypass is given as simply “JC”, with a Zimbabwean phone number that doesn’t work and an email address no one responds to.

We did however find a 2018 email between “JC” and a RENS employee:

Morning JC

Hope all is well. Can we URGENTLY get a response on this letter.

Kind Regards,

Attached to this email was a letter signed by RENS owner Christo Janse van Rensburg requesting that “JC” provide a formal letter on a Baypass letterhead listing the services RENS is supposed to render. This should include collecting cash and making electronic payments to Baypass clients, said Janse van Rensburg.

Crucially, however, the letter ends with a note:

“Just a friendly request can you please back date the letter to the 1st time we serviced Gold Leaf Tobacco Corporation on 1st July 2018.”

Readers will recall that Gold Leaf is the tobacco company owned by Rudland and partner Ebrahim Adamjee.

The evidence thus raises the possibility that Baypass, after already moving hundreds of millions for Rudland associate Baker, became Gold Leaf’s conduit for paying money to South African recipients via RENS.

Gold Leaf did not respond to questions about Baypass, but their lawyer’s comments about references to Gold Leaf by third parties not being evidence of his client’s involvement would apply here.

Baypass, however, also has another link to the tobacco sector.

The shelf company vendor who registered and then sold the Baypass registration provided us with an email address for the buyer – one identifiably belonging to a Roy Muleya.

This would appear to be the same Roy Muleya who made headlines in 2021 when SARS accused his company Verbena Freight and Logistics Management of owing an astonishing R19-billion in custom duties related to alleged tobacco smuggling from Zimbabwe.

It is possible that there are two individuals named “Roy Muleya” involved in large-scale illicit cross-border activities, but additional circumstantial evidence reinforces that the buyer of Baypass and the alleged tobacco smuggler are one and the same.

The SARS case against Muleya was heavily redacted in court, but mention was made of him using Verbena and seven other companies to, on paper, import tobacco. This happens to neatly fit the existence of the seven suspicious companies with the bottle store employee as their unlikely director.

The above suggests that Baypass was associated with Gold Leaf, which makes its larger list of apparent clients all the more interesting.

Watch out for our next instalment where we delve into this mysterious client of RENS, as well as the other damning clients hidden in its books.

The post The #Laundry: Shadow Banks, part one – phantom gold appeared first on AmaBhungane Centre for Investigative Journalism.

Now we see how SARS’ best efforts to kill this practice may have birthed an audacious new scam: fake mines that exploit a tipper truck-sized loophole in recent regulations. We examine one possible example of how this might work.

Once upon a time, Johannesburg was the world’s gold mining centre, dominating global production of the yellow metal. Nearly a century and a half after initial discoveries, the mines of the Witwatersrand produce less than 5% of the world’s gold and a significant part of the industry essentially consists of industrial-scale scavenging: reprocessing old mine dumps.

And it is becoming apparent that even some of this appears to be a lie.

In our previous report on the illicit trade, we showed how dubiously sourced gold, especially Krugerrands, has been disguised as scrap sold by second-hand gold dealers in order to feed refineries. This forms part of a colossal tax fraud scheme, with a fair amount of money laundering on the side.

The use of “in-house” pawn shops came to the fore in a case that reached the criminal prosecution stage in 2021, after a group of alleged illegal gold dealers were arrested following an initial case in 2019.

According to an affidavit by Hawks detective Steph Kotzee, the group bought up illegal gold and disguised it as second-hand scrap, which they sold between pawnshops and a refinery they controlled.

The gold, alleges Kotzee, came from illegal mining. As he notes, “evidence is that illegal gold buyers, who procure the unwrought gold from individuals that steal the product from active or derelict gold mines, are supplying unwrought gold to these 2nd hand goods dealers.”

Staying ahead of the South African Revenue Service

But old mines are also entering the picture in another important way, and SARS’ attempts to quash VAT fraud have prompted what appears to be an even more daring lie: the faking of entire mining operations to provide cover for the introduction of dirty gold into the legitimate system.

Since 2015 SARS has on three occasions made amendments to the VAT regime specifically targeting this fraud but has failed miserably to stem the tide.

The latest attempt to clamp down was the so-called domestic reverse charge introduced in 2022.

Under this system, the supplier of alleged “scrap” gold would be obligated to produce an invoice excluding the VAT, while the refinery buying the gold would instead be required to pay the applicable VAT directly to SARS on the supplier’s behalf.

In terms of the new regulatory scheme, invoice factories churning out VAT invoices would become useless because VAT invoices would no longer be a basis for claiming refunds.

But there was a gaping loophole: gold mines were excluded and were thus able to continue to reclaim “input VAT” on their gold production costs.

‘It’s a gold mine’

Voluminous bank statements and other documents in amaBhungane’s possession show how one such alleged operation operates, spending billions on highly suspect “suppliers” that on the face of it have all the hallmarks of companies that only exist on paper.

SARS is aware of the problem. In National Treasury’s budget review this year yet more changes to VAT rules were proposed in order to address the fact that “these schemes and malpractices have now shifted to the primary gold sector”.

The revenue service has, moreover, already raided some of these mining companies which, according to the taxman, are not mining companies at all.

For example, last year SARS took an interest in one seemingly extremely lucky mining dump processor named Upward Spiral 1471 – the current holder of the rights over the tailings of the historic East Rand Proprietary Mines, where operations started well over a century ago.

Things here seemingly do not add up though. Issues with Upward Spiral, if not definitive, show how extremely improbable mining operations have become a concern that has caught SARS’ attention.

Lucky strike

According to documentary information, Upward Spiral is managing to extract what is by industry standards a bizarrely high yield of gold from the old waste it is running through its plants.

This yield is supposedly 5 grams of gold per ton of material. Major mining companies with dump reprocessing operations struggle to achieve a tiny fraction of that.

By way of comparison, JSE-listed Harmony Gold gets at best 0,53 grams per ton and on average far less than that out of its tailings reprocessing operations. Its peer, Pan African Resources, manages to obtain around 1,3 grams per ton, while DRDGold extracts approximately 0,233 grams per ton.

In other words, Upward Spiral, a smallish operation with no extraordinary new technology, is seemingly consistently managing to process mining waste containing between 5 and 20 times the industry standard.

It is understood that this unusually high extraction yield from the processed material has attracted the attention of SARS and a look at the company’s books suggest there is every reason to be concerned.

Super-entrepreneurs

The biggest red flag is a bizarre warren of apparent fly-by-night companies purportedly providing mining-related services and mine dump material worth hundreds of millions of rands.

By amaBhungane’s calculations, between February 2022 and July 2023 Upward Spiral spent over R6-billion with a small core of suppliers.

One of these was Soft Metal Traders, to which Upward Spiral paid at least R880-million in this period. Several questions arise. For one thing, Soft Metal Traders’ sole director is apparently an employee – Esther Mokoena – whose phone number and address, as listed in company documents, actually belong to her employer, Francois du Toit.

AmaBhungane has established that after SARS made enquiries in June last year, this “supplier” was hastily liquidated the month after.

AmaBhungane could not reach Mokoena by phone and Du Toit did not respond to emailed questions.

Notably, on the same day, another huge alleged supplier to Upward Spiral named Zonkeziwe Investments was similarly voluntarily liquidated. This company had received at least R1,1-billion from Upward Spiral before also abruptly going out of business when the taxman came around.

More curious is the fact that Zonkeziwe’s sole director, Mahomed Kaleed Mahomed, is also the director of a company named Leedo Investments. The week after Zonkeziwe closed down, Leedo took its place and started billing Upward Spiral millions.

In other words, one company was shut down and immediately replaced with another with the same director.

What is more, Mohamed is actually an employee of yet another Upward Spiral supplier named VPS Haulers, which likewise received hundreds of millions of rands from the mining company.

The likelihood of a single individual fulfilling all these roles is arguably low.

AmaBhungane approached Mohamed for comment but received no response.

Nonetheless, Upward Spiral’s books reveal another nearly identical case. A supplier named Dannies Investments was paid R62-million. Its director Dannie Speelman, however, had another company named Spacthes Investments that was also a supplier.

Spacthes was liquidated in December last year and Dannies shortly afterwards, in January this year.

AmaBhungane approached Speelman for comment but received no response.

And then there is Gregton Consultants, which did R170-million in business with Upward Spiral in the period we have data for. Its director, Antonio Csaszar, is also the director of three additional companies that were suppliers to Upward Spiral: Triple Cross Holdings, Siker Services and Osztag Solutions.

Csaszar became a director of all three of these companies in July last year following SARS’ letter and did another R180-million in business with Upward Spiral in less than a month.

AmaBhungane approached Csaszar for comment but received no response.

It keeps going.

Yet another questionable provider is M Cubed Corporate Services, a small bookkeeping firm that seemingly moonlights as a provider of what it describes on invoices as “waste”.

M Cubed made sales to Upward Spiral of at least R730-million in the period covered by our data but, as in the other cases we described, was liquidated in April this year.

M Cubed also had SARS knocking on the door and was asked to explain who its suppliers were. The answer once again led to entities following a clear pattern: the same individual billing millions through different entities and then abruptly liquidating or deregistering those entities.

According to M Cubed owner Nonhlanhla Mazibuko, the company’s main suppliers were companies named Ciaracap and Jayvee1221 Projects.

Ciaracap is, however, also a direct supplier to Upward Spiral, receiving payments of around R200-million in 2022.

As for Jayvee1221, the company’s sole director is Eric Jay-Lee Ngcobo, but the contact person is one Leandri Valla, the director of VPS Haulers,the supplier we mentioned earlier that employs Mohamed.

To reiterate, M Cubed itself was voluntarily liquidated in April this year.

Owner Mazibuko was afforded a comprehensive opportunity to respond to the above. While she did provide a response denying the allegations in broad terms, she demanded that this not be published.

What emerges is that a group of related individuals simultaneously ran several ostensibly separate companies that were being paid hundreds of millions by Upward Spiral on a monthly basis. This appears to function like a system of revolving chairs, with companies that bill millions continuously being shut down only for others to take their place. If there is a simple explanation for these practices, none of the parties involved were prepared to provide that to amaBhungane.

Absent an innocent explanation, these companies appear tailor made to serve as a new incarnation of the far more modest “pawnshop” invoice factories of old and the circumstances give grounds to suspect that they simply provide the pretext of real mining expenses.

However, the owner of Upward Spiral, Dumisane Mazibuko, responded in writing that his company is “frequently audited by relevant agencies in the country and as at the date of this letter, we are not aware of any unresolved areas of noncompliance”.

“Upward Spiral is unable to provide any comments on the business activities and or status of its suppliers,” he added.

If it does emerge that a case against Upward Spiral has been made around claims for VAT payments, then it would seem to represent a significant loss to the South African fiscus, even taking into account the relatively high value of the commodity in question.

As we explain above, there are hundreds of millions changing hands in these transactions.

Value chains

On the other side of the equation, Upward Spiral’s Mazibuko has also invested in the rest of the value chain by acquiring a stake in one of Upward Spiral’s main clients, SA Precious Metals.

 This refinery’s director, Dion Smit, told amaBhungane that this stake is “less than 10%”.

“SA Precious Metals has a very robust compliance process and all of our Suppliers are routinely assessed. We do not trade with any Suppliers that do not pass our strict compliance criteria,” he told us.

Whether or not this is true, it certainly does not hold for the major industry players we delved into previously and definitely not for the gargantuan gold-based money laundering system we will reveal next in Part Four.

The post The #:Laundry, City of Gold, part three – How “fake” mines allegedly feed the illicit gold machine appeared first on AmaBhungane Centre for Investigative Journalism.

Frank Sadiqi might have spent some R19-billion buying Krugerrands, but where did all that money actually come from?

SARS has accused him of supplying coins in bulk to the illicit gold supply chain so that they could be illegally smelted as part of a colossal VAT scam. But who made up the rest of that chain?

AmaBhungane can’t access the whole history of Sadiqi’s African Medallion Group, but the voluminous bank statements we do have for him and related parties show that practically all his income, at least up to late 2018, arrived directly or indirectly from one place: Asset Movement Financial Services.

Later known as AMFS Solutions, this notorious “cash-in-transit” company was created by gold trader Andries Greyvenstein and was linked to alleged money launderer Howie Baker. AmaBhungane has previously reported on Baker’s links to Zimbabwean tobacco mogul Simon Rudland and on the company’s operations (here, here and here).

Readers will recall that Baker was, from 2019 onwards, also the owner of Rappa Resources – the gold export refinery targeted by the South African Revenue Service (SARS) to try to recover proceeds of what SARS claims was a multi-billion rand gold VAT scam (as we canvassed in Part One).

South African lawyer Raees Saint, who represents Baker, did not reply to our request for comment but previously told amaBhungane that his clients will not tolerate any insinuation of illegal conduct.

To recap, the basic idea behind the VAT scheme is smelting down VAT-free Krugerrands (which is illegal) and passing them off as “scrap” gold (which does carry VAT) in order to claim refunds adding up to billions of rands.

For now, it is important to understand that AMFS has been accused, not least by SARS, of effectively being an unregistered bank that just moved money from one place to another, with most of its business allegedly directed personally by Baker through daily email instructions. The Zondo Commission of Inquiry recommended that AMFS be investigated by the Hawks.

As mentioned, Krugerrand harvester AMG got most of its money from AMFS.

Lots of money.  In the first year of existence of Sadiqi’s Krugerrand business – late 2017 to late 2018 – we can trace a total of R5-billion paid to the coin dealer from AMFS.

A close analysis of the books for this period, however, shows that the money we can trace going to AMG via AMFS came largely from just one place: micro-refinery The Gold Kid.

One would think that The Gold Kid, as a refinery, could have no business with a Krugerrand dealer, directly or indirectly, given that the smelting of Krugerrands is illegal. However, as the bank statements show, it appears that The Gold Kid was dealing with AMG at an industrial level through AMFS, as we will see.

Until its demise at the end of 2018 The Gold Kid was owned by Greyvensteyn, while Baker was at different times also a shareholder and an employee, using a company email address in emails we have copies of.

Gold Kid’s income in turn also came from pretty much one place: the aforementioned Rappa Resources, to which Gold Kid sold 8 662kg of gold in the period covered by our bank statements.
A high-level summary of Gold Kid’s income and expenses from 2016 through to the end of 2018, which has been filed in court by SARS, suggests that 90% of sales were to Rappa.

In 2019, Baker and company finally took control of Rappa as well, in a R1-billion deal.

Rappa’s CEO Gary Bickerton told us, however, that Baker first approached them with a takeover plan as early as 2015, just as AMFS was founded.

Perhaps tellingly, Bickerton claims that Simon Rudland – the man believed by some to be the force behind Baker – was at the meeting.

Rappa has been locked in a legal battle with SARS for several years about VAT refunds that have been withheld. A separate preservation order SARS obtained against Baker in 2022 means that the taxman’s curator now technically owns the refinery it is doing battle with.

“Mr Baker was simply a shareholder of Rappa and was never involved in the operation, management or transactions of Rappa. Mr Baker is no longer a shareholder of Rappa and no longer has a relationship with the company,” says Bickerton.

“We place it on record that Rappa pays VAT on all its purchases reflected in tax invoices and claims VAT input credits completely in line with provisions of the VAT Act.”

“Rappa is aware of payments to Gold Kid for supplies made to Rappa but cannot comment on what Gold Kid did with payments received from Rappa. Rappa has never dealt with the cash-in-transit group AMFS.”

[read Rappa’s full response here].

As we show next, however, The Gold Kid used a large proportion of its receipts from Rappa to buy Krugerrands.

Route One: From The Gold Kid to AMG

Greyvensteyn’s lawyers, in response to questions, were adamant that The Gold Kid never bought Krugerrands from Sadiqi’s African Medallion.

As we will show, the evidence points decidedly in the opposite direction.

This suspicion is strengthened by SARS’ own figures, which show it has attempted to claw back from The Gold Kid around R1-billion in allegedly invalid tax claims for the 2016-2020 period.

The Gold Kid, as we’ll see, claimed it bought gold not as Krugerrands from Sadiqi, but as thousands of small jewellery and scrap gold purchases for which it could claim input tax. 

In response to questions about the apparent Krugerrand purchases it made, The Gold Kid succinctly told us that it “denies having done so” and that as a consequence there “is no need to answer” additional questions.

It did, however, give more extensive answers in affidavits filed in an ongoing court battle with SARS, about which more below.

But here is why The Gold Kid’s story does not add up.

Refinery to Refinery

AmaBhungane is in possession of a trove of internal emails from AMFS, as well as bank statements for nearly all involved parties.

First of all, these seem to show that The Gold Kid’s vociferous denial that it ever did business with African Medallion rings spectacularly hollow.

AmaBhungane’s analysis of these documents appears to show that the opposite is true, on a massive scale. A SARS letter of findings filed in court shows that the taxman arrived at a similar conclusion.  

On 20 September 2017, around the time African Medallion got a license from Rand Refinery to sell Krugerrands, Howie Baker sent an email to AMFS’ nominal owner and administrator Kalandra Viljoen, affectionately known as Lallie.

Baker copied in Lize Muller, The Gold Kid’s finance manager.

The email reads:

Dear Lallie,
Please can you do this transfer:
African Medallion (Pty) Ltd
FNB
Branch: 204809
Account:XXXXXX11 58
Ref: Asset Management
Amount: 5,850,000
Thanks very much.

It just so happens that on the previous evening The Gold Kid had made two payments equaling exactly R5 850 000 into AMFS’ bank account using matching reference numbers.

As soon as Baker’s email came in, AMFS paid forward the combined R5 850 000.

Bank statements for African Medallion show this amount arriving with the reference “Asset Management”, as directed in Baker’s email.

Immediately afterwards, African Medallion received another R1-million from another party and then paid R6 874 000 to Gold Reef City Mint, another Krugerrand dealer.

The chain of payments can be seen here:

If we return to the R5 850 000, The Gold Kid’s internal records show that there was an apparent attempt to hide these transactions from SARS.

Evidence shows that The Gold Kid claimed it made payment of two invoices to a supplier named Jewellery Dynasty totalling R6,25-million. These used the invoice references JG81 and JG82 – the same invoice references used for the payments that actually went to African Medallion, for which we have seen no invoices.

There are also no payments to Jewellery Dynasty to be found in either The Gold Kid or AMFS’ bank accounts. This indicates that Jewellery Dynasty was most likely one of many “invoice factories” used by The Gold Kid, as we explain below.

Taking into account what we’ve described above, it seems clear that The Gold Kid was doing business with African Medallion despite its denials and attempting to hide the fact.

Another transaction reinforces this point and adds another layer of apparent subterfuge.

On 28 September 2017 Baker sent one of his emails to Viljoen at AMFS:

Dear Lallie,
Please can you do these transfers:
African Medallion (Pty) Ltd
FNB
Branch: 204809
Account: XXXXXX1158
Ref: Asset Management
Amount: 9,000,000

Ian Frank Properties
FNB
Account: XXXXXX7120
Amount: 9,000,000
Thanks very much.

On the same day he sent two more missives adding two additional payments for African Medallion – another R9-million and then R647 411,34, also for African Medallion.

This set off a slightly more complicated chain of transactions, and the evidence suggests that the payment to Ian Frank Properties, a company owned by Sadiqi, was in reality also meant for African Medallion.

The trail went as follows:

On the day of the email The Gold Kid’s account shows six outgoing payments totalling R25 720 000.

At AMFS these payments can be seen arriving with the same reference codes. AMFS then duly makes the four payments Baker had requested.

Bank statements for African Medallion shows its three direct payments totalling R18 647 411,34 arriving.

In addition, bank statements for Ian Frank Properties also show its R9-million arriving. It, however, immediately makes a payment of R8 834 050. The recipient: also African Medallion.

Other Sadiqi companies, notably one named Hamilton Lifestyle, also appear to have functioned as conduits in this way.

So now all four payments ordered by Baker are sitting with African Medallion (minus a small amount retained by Ian Frank Properties).

As soon as all this money was consolidated in the account of African Medallion, the company made a payment of R24 636 307 to Rand Refinery with the reference “KR” – quite likely an abbreviation for Krugerrand.

There is thus an immediate and unbroken chain of payments from The Gold Kid to Rand Refinery, the ultimate source of South Africa’s Krugerrands, via African Medallion.

Once again, this makes The Gold Kid’s denials implausible.

There are countless examples like these in the statements. In every case the chain of transactions is preceded by an email from Baker. And in every case, he copies in a representative from The Gold Kid – either Greyvensteyn’s sister Veronica, who was effectively the CEO, or finance manager Lize Muller.

Two of the Baker emails serve to bring Andries Grevensteyn himself more clearly into view.

On 20 November 2017, Baker emailed Viljoen asking for a R5-million payment to African Medallion. Viljoen however responded that The Gold Kid only had a balance of R4-million at AMFS that day – an amount statements confirm Greyvensteyn’s refinery paying over to AMFS the same day.

Baker responds that “Andries” (in context a clear reference to Greyvensteyn) had told him to “expect 5” but tells Viljoen to go ahead with the smaller amount as suggested.

This then follows the same path described for the other transactions above.

On another occasion, Baker ordered R4 050 000 for each of Sadiqi’s other companies Ian Frank Properties and Hamilton Lifestyle.

Kalandra Viljoen, however, sends him a panicked email making reference to a conversation with “A” – she was worried she had accidentally used another client’s money to carry out Baker’s orders:

Dear Howie, A spoke to me this morning about 25 coming in, so far R14 430 000 has come in. Can you confirm it is yours. (If not, then I will pooop my pants as I just spent some of it on these payments). I will actually cry!!

For what it is worth, Baker assured her that it was in fact The Gold Kid’s money.

This incident, however, shows how AMFS functioned as a fairly chaotic hawala system – a system that simply inserts a third party into a transaction in an apparent attempt to obscure the source of funds.

This is reinforced by the fact that not one of the many payments to African Medallion, or really most clients of AMFS, actually involved any physical cash at all – perhaps somewhat strange for a “cash-in-transit” company.

After its initial denial that it had had dealings with African Medallion, amaBhungane confronted The Gold Kid with a number of documented chains of payments like those above, to which they chose not to respond.

The refinery’s lawyers also threatened to pursue amaBhungane for being in “criminal” possession of its private information.

Millions to billions

The emails only cover the first few months of the relationship between The Gold Kid and African Medallion, but already add up to orders of over R250-million directly to African Medallion and R400-million indirectly through Ian Frank Properties. As noted, the pattern of payments via AMFS continued for a long time afterwards, adding up to R5-billion in late 2018, where we lose the trail.

We have matching payments, but no emails.

We cannot say unequivocally that all or most of this R5-billion came from The Gold Kid beyond the fact that our data shows a similar pattern.

African Medallion ultimately sold R19-billion in Krugerrands in the course of its operations between 2017 and 2021, but we don’t know how much of the balance came from AMFS either.

Smoke and mirrors

While bank statements seemingly betray the nature of Gold Kid’s relationship with African Medallion, Greyvensteyn’s company’s books tell an entirely different “official” story.

An audit and subsequent letter of findings by SARS into Gold Kid last year alleged the use of large-scale invoice factories to provide cover for, among other things, its indirect payments to AMG.

An invoice factory is a company with no real business set up to provide tax invoices for transactions that actually involve completely different people. These invoices are key to the VAT tax scam because they are what gets submitted to SARS to maintain the fiction that VAT has been paid on, for instance, tax-free Krugerrands.

In submissions to SARS, Gold Kid claimed to have very few suppliers, suppliers it paid just over R10-billion for gold from 2016 onwards. One allegedly major supplier was Bhekusifiso Scrap, from which Gold Kid supposedly bought R2-billion of that gold.

The problem is that the actual payments to Bhekusifiso SARS could find amount to a grand total of 1,47% of the stated figure. Gold Kid’s bank statements are littered with small payments in the tens of thousands to this supposedly huge supplier.

Additionally, records for Howie Baker himself show that he personally paid R750 000 to Bhekusifiso in September 2014 for a “share subscription”. This belies the claim that Bhekusifiso is independent.

The same applies to other supposed major gold suppliers on The Gold Kid’s books. One of them, Encantador, was supposedly paid R1.22-billion for gold. According to SARS, however, it actually received about 0,15% of this figure.

Another is Jewellery Dynasty, which supposedly sold The Gold Kid gold worth R1,87-billion. It was actually paid 0,65% of that, says SARS.

Taken as a whole, Gold Kid’s supposed supplier payments bear no resemblance to its real expenditure at all.

Almost all payments actually went to AMFS (which appears twice in the list above because it changed its name under new ownership during the period) and, as we have seen, a very large proportion of that was destined for AMG, which does not appear on the “official” list of suppliers at all.

In response to questions, The Gold Kid provided an explanation for the discrepancies: the payments to the “suppliers” were in fact made via AMFS. What is more, The Gold Kid claims that these suppliers would have been giving AMFS instructions as to where to pay their money, so The Gold Kid really has no hand in it.

This seems not only disingenuous but also logically impossible.

Disingenuous because the payments to, among others, African Medallion were made on the express instruction of Baker (with The Gold Kid’s representatives copied), not on the instruction of the supposed suppliers.

Logically impossible because the scale of payments to African Medallion and other more damning recipients (which we will get to) have to be seen in the context of the grand total of R10-billion in payments The Gold Kid made in the relevant period – 2016 through 2020.

Even if the alleged suppliers were making instructions to AMFS that we do not have sight of, these could never be as large as claimed simply because more than half of The Gold Kid’s outward payments are already accounted for by Baker’s instructions.

Confronted with this observation The Gold Kid still chose silence.

It has, however, mounted a far more vociferous defence in an ongoing court battle with SARS stemming from the taxman obtaining a provisional preservation order against Greyvensteyn in his personal capacity in February last year.

Battle royale

SARS’s claim against Greyvensteyn is roughly R1-billion, with the express threat of adding a 200% penalty to bring the total to R3-billion.

The technical basis of SARS’s claim is that the suppliers that supposedly sold The Gold Kid its gold never actually supplied it and were in fact never paid, which means that VAT was also never paid as claimed.

The main evidence SARS is using relates to the kinds of payments to entities like African Medallion we saw above, which coincide with alleged payments to the suppliers Gold Kid claims to have, but for which there is no record.

“If regard is had to the detailed letter of audit findings and the analysis of Gold Kid’s bank statements it reflects, in certain instances, that Gold Kid only paid a fraction of the invoice amount to its suppliers,” said SARS.

Greyvensteyn has not responded to any of this in great detail, but in an affidavit called SARS’ findings a “half-baked conspiracy theory” and the conclusions it has drawn about The Gold Kid buying massive amounts of Krugerrands “simply a theoretical conclusion”.

He claims that, on the contrary, “Gold Kid has meticulously recorded all transactions in its administrative systems, and I will in due course deal extensively with these recordals and demonstrate that every single transaction took place.”

“When in due course I deal with the substantive issues with regards to the letter of audit findings, assessment and the present application, I will provide extensive documentary evidence of the trades.”

At the same time, however, Greyvensteyn has promised to take the legal battle down a path that will possibly delay the need to present this alleged ironclad evidence for years.

First, he launched an interlocutory application to put SARS’ case against him on ice, saying he wants to challenge the constitutionality of the parts of the Tax Administration Act SARS is using to hold him liable for The Gold Kid’s tax debt.

This challenge was drawn up in May last year, but it is unclear if it ever got filed. Meanwhile SARS’ case to lay claim to all of Greyvensteyn’s assets has been repeatedly postponed, most recently last month.

It is, however, not SARS and The Gold Kid’s first rodeo. The taxman tried to hold the refinery accountable for allegedly fake gold purchases in the past but could not muster the evidence it needed. Following two different commissions of inquiry and several investigative audits of industry role-players, SARS claims that “this time around it is able to do so”.

While the evidence above seems to show that The Gold Kid was a major force in the illegal introduction of Krugerrands into the gold supply chain, following the money up the chain takes things much further.

The evidence suggests that lot of the money being spent to buy gold and make other huge transfers out of The Gold Kid’s accounts didn’t come from gold sales at all.

Round and around

Instead, and as we will show later in this series, the Gold Kid was seemingly both the source and destination of billions flowing through what looks like a sprawling money laundering network that carried out at least two tasks:

One was providing The Gold Kid with cash to buy gold which it could sell as part of the VAT scam.

The other was the laundering of funds for a variety of parties, not least Baker and his presumed boss, Simon Rudland.

One central node in all of this was a company in Dubai called Aulion Global Trading – another joint creation of Baker and Greyvensteyn which they registered in 2015 and which Baker liquidated in 2020.

While The Gold Kid and AMFS were key cogs in an epic machine built around Aulion, they were also far from alone, as we will see in Part Four of this series. In our next instalment, however, we first take a slight detour to the East Rand of Johannesburg to see how the VAT scam is allegedly evolving to evade the authorities’ best efforts to quash it.

The post The #Laundry: City of Gold, part two – A vertically integrated gold machine appeared first on AmaBhungane Centre for Investigative Journalism.

In April last year there was an escape attempt from Johannesburg Prison (aka Sun City).

It was a simple plot: a SAPS detective, since arrested, allegedly fabricated an investigation which, the detective claimed, necessitated the booking out of the would-be escapee. The plan was foiled due to prison officials being wise enough to call up the real investigating officer.

The alleged criminal seemingly attempting a jailbreak? Flamboyant Zimbabwean businessman, fugitive and pastor Frank Buyanga Sadiqi.

Sadiqi faces a long list of charges, starting with an extradition request from Zimbabwe for alleged kidnapping (for taking his son across a border without his mother’s consent).

After his November 2022 arrest at an upmarket hotel in Sandton, he was slapped with local charges of fraud and contravention of the Immigration Act.

Then, in February this year, he was charged with fraud and tax offences to the value of R55-million.

Our questions to his romantic partner, who has his power of attorney, went unanswered.

The reverend finds himself a long way from his previous life, where he pulled enough weight in his native Zimbabwe to warrant a seat between Cyril Ramaphosa and president Joseph Kabila from the DRC during Emmerson Mnangagwa’s 2018 inauguration.

But whatever else Sadiqi may be, he is foremost a purveyor of Krugerrands.

Lots of Krugerrands.

Krugerrands worth up to a staggering R19-billion that have, to a very large extent, our evidence suggests, been destined for illegal smelting into untraceable “scrap” alongside other kinds of illicit gold.

This conclusion is also supported by a SARS tax audit (filed in court proceedings) of a major customer that we deal with in Part Two.

Sadiqi’s dealings have been extensive. From 2017 onwards, he rapidly came to occupy what was allegedly a prominent role in Johannesburg’s booming illicit gold trade and the colossal tax scam that has powered it (which we first reported on here).

It is understood that SARS raided Sadiqi’s offices in October 2020, after a tax inquiry into the gold sector unearthed evidence that he was allegedly introducing Krugerrands into the supply chain.

What was known at the time was that SARS had allegedly seized Krugerrands worth some R600-million in the raid.

Now amaBhungane has collected volumes of financial data and other internal documentation from Sadiqi’s company – African Medallion Group (AMG) – and other major players in the trade, as well as SARS audits filed in court that, put together, provide a spectacular window into the world occupied by men like Sadiqi.

This world includes the refineries dotted along Johannesburg’s ageing gold fields, money-laundering fronts locally and abroad, and cash-in-transit companies effectively working as unregulated financial intermediaries.

Our investigation has also uncovered a new set of actors in the mix: small-scale gold mining companies that allegedly just provide cover for the introduction of illicit gold into the legitimate system – something we will return to later in this series.

But first, back to Sadiqi and the special place he and others like him have occupied at one end of the illicit gold supply chain.

Money for nothing

It is worth recapping the by now notorious gold-based VAT scam that, according to SARS’ estimates filed in court, may have cost the state over R24-billion between 2012 and 2020.

The scam turns on the nature of Krugerrands being technically legal currency but also high purity gold.

Because they are a currency, trading Krugerrands incurs no VAT. It is, however, illegal to smelt them.

This dual nature of Krugerrands led almost inevitably to the creation of a vast industry: illegally smelting coins and then claiming the smelted gold came from jewellery or other “scrap” gold which does incur VAT.

Once this is done, it is simply a matter of fabricating VAT invoices for this “scrap” before it is sold again.

From the perspective of the scammer, the profit can come simply from charging 15% more for gold than it cost them – that is, the prevailing rate of VAT. They make their money by sourcing gold (Krugerrands not subject to VAT) that they then sell on at a price which includes VAT. This makes VAT their ‘profit’.

From SARS’ perspective the damage really gets done when the gold eventually gets exported, since exports of gold carry no VAT.

This means that any exporting refinery that claims VAT, real or not, can claim back that VAT as a refund.

It might not even be the exporter that is scamming the taxman. They may very well have unsuspectingly paid fraudulent VAT to a supplier who smelted Krugerrands without their knowledge.

For the fiscus, this makes no difference – VAT-free gold is entering the system somewhere and leading to fraudulent refunds irrespective of who profits.

This scam works just as well for other sources of gold that carry no VAT but which can be disguised as gold that does carry VAT: illegally mined or smuggled metal in particular, which we will get to later.

In such cases, a 15% profit margin is summoned into existence out of nowhere, although in reality this is paid for by the state.

On gold sales, this 15% represents a gargantuan mark-up (typical margins on gold trading are at best around 2,5%), rendering VAT fraud a huge threat in light of the sheer scale of the sector’s dealings.

In 2019, for instance, the major exporting refinery that features in this story – Rappa Resources – purchased gold worth R52-billion, mostly from a core of four suppliers themselves accused by SARS of participating in such schemes.

Although it is unrealistic and unfair to assume that all of this gold was tainted by illegality, it theoretically represents R7,8-billion in pure profit in a single year, although, as explained above, it would not necessarily be Rappa raking in the cash as opposed to its suppliers.

Zooming out, within the illicit gold trade there are in reality two schemes afoot: the tax fraud just described, but also a formidable, interrelated money laundering service. Essentially anyone with dirty money can buy gold and run it through the system. And the refineries churn so much money that it is easy to mix fake income with real gold sales. We’ll examine this gold-laundering business more closely in later installments of The #Laundry.

The take-off

When looking at data provided to AmaB by the South African Reserve Bank, it appears that the Krugerrands VAT scam dramatically turbocharged demand for the coins, especially since 2015 when the players in this story entered the picture.

The correlation between exports of gold by two major refineries and the sale of Krugerrands is unmistakable:

In fact, while few South Africans realise it, for a period Krugerrands came to completely dominate the gold market, with production and sale of new coins rocketing from about 8% of the volume of gold coming out of the country’s mines in 2015 to a mind-boggling 61% by 2019.

In other words, while gold production over the period was static or declining, the amount of gold being sold in the form of Krugerrands grew exponentially.

Where Krugerrands had in days past largely been an export product, domestic sales rose from less than four tons in the 2014 financial year to over 66 tons in 2019.

It was a free-for-all.

Refiners would even receive bars of gold with the coins still clearly visible.

However, while sources tell stories of fly-by-night traders literally showing up at refiners’ doors with bags of coins during this period, the trade rapidly came to be dominated by a few giants.

This dramatic supply trajectory was unexpectedly interrupted in March 2020, when the production of coins was completely suspended due to the Covid lockdown. Demand has essentially disappeared since then.

However, no one with insight into the industry could possibly have missed the astronomical surge that fed tons of gold into the domestic market – seemingly to a large extent through suspect intermediaries like Sadiqi.

Rand Refinery and the South African Reserve Bank

Two parties in particular would be hard-pressed to claim ignorance: Rand Refinery and the South African Reserve Bank (SARB).

Rand Refinery is both the country’s largest smelter of gold and the holder of an official monopoly on the sale of new Krugerrands. It is jointly owned by the major mining groups but operates independently.

Shockingly, its partner in the minting of Krugerrands is the SA Mint Company, a subsidiary of the SARB.

Their joint venture, Prestige Bullion, provides hundreds of millions of rands of income to the central bank every year – income that surged during the period of rocketing Krugerrand sales. The central bank’s dividends from the SA Mint reached R1,4-billion in the year before the Covid crash in Krugerrand demand.

The SARB is, moreover, the majority shareholder in Prestige and recently increased its shareholding from 60% to 80%.

The division of labour within Prestige is that the SA Mint produces the Krugerrands with gold sourced by Rand Refinery, after which Rand Refinery markets them.

This effectively makes the partnership of the SARB and Rand Refinery the source of the gold fueling the massive scam and means they are profiting from it, even if only indirectly.

In response to questions the central bank provided figures for Prestige Bullion’s total revenue for all products, saying that information on Krugerrands specifically would be “commercially sensitive”.

These figures, however, show a clear correlation between Krugerrand sales and Prestige’s income.

Asleep at the wheel?

Only a small number of authorised dealers can buy directly from Rand Refinery to introduce new coins into the market.

Among these was Sadiqi’s AMG, which was approved as a dealer in November 2017 after what Rand Refinery, in response to questions, defended as “comprehensive due diligence”

Rand Refinery kicked Sadiqi out again in 2021, but failed to answer our question about what triggered their change of heart after AMG had already managed to push through R19-billion worth of business.

They also declined to explain how this reflected on their “comprehensive due diligence”.

R19-billion is a lot of coins. In fact, that easily amounts to 20% of new Krugerrands sold in the period based on figures amaBhungane received from the SARB and which were also used by SARS in its research into the sector. And that’s only the trade Sadiqi’s company did.

But the rot goes further.

Rand Refinery also sold one of its own subsidiaries to Sadiqi at the same time he made it onto their list of dealers.

Another authorised dealer, The Cape Mint, was sold by Sadiqi in 2021 as his fortunes waned.

The buyer? The “brains” allegedly behind major regional gold-based money laundering activities, Alistair Mathias, who was outed by the influential Al Jazeera hidden camera documentary Gold Mafia last year.

Mathias, who is based in Dubai, boasted to Al Jazeera’s undercover journalist that “gold is cash. It’s better than any currency. As long as you’re in gold trading you can move money anywhere.”

When later confronted, he denied ever having laundered money or gold.

Mathias was also named in an International Consortium of Investigative Journalists exposé regarding his association with one of two phantom gold refineries channeling millions of dollars to Dubai through a Swazi special economic zone (SEZ).

Whatever the case, between 2021 and late 2023 Mathias was the proud owner, through The Cape Mint, of an authorised Krugerrand dealer, although we do not have transaction data for its activities.

Rand Refinery told us that “due diligence was conducted on Mr. Matthias at the time of his purchase of the Cape Mint, and Krugerrand buying volumes associated with the Cape Mint were closely monitored”.

“Under Mr. Matthias’ ownership, the volumes were never material enough to merit further action. Following a review, The Cape Mint was offboarded as a customer in 2023.”

As with Sadiqi, it is not clear why Mathias was “offboarded”, but he sold The Cape Mint immediately afterwards.

How were people like Sadiqi and Mathias able to pass probity checks on these high risk assets though?

The SARB passed the buck to Rand Refinery, saying that they were responsible for sales.

It did, however, admit that the increase in gold sales “was considered unusual, particularly from 2017”.

“Rand Refinery, as the selling party, informed, on numerous occasions, the relevant authorities of the trends and concerns about the potential risks of illicit uses of Krugerrands. The SA Mint and SARB also communicated information about the trends and risks to the relevant authorities.”

Rand Refinery in turn told us that to a large extent it piggybacks on the banks when vetting dealers:

“All funds received from domestic Krugerrands dealers are received from bank accounts held by the counterparty at large South African commercial banks, meaning that the funds received by Rand Refinery for all domestic sales of Krugerrands were already in the regulated and controlled South African banking system.”

In other words, if the money came through a bank it was regarded as ‘clean’. As we will see later though, using the “large commercial banks” is not even remotely a guarantee of probity.

Likewise, Rand Refinery claimed that after coins were sold to the authorised dealer there was really no way to monitor what happened to them.

“Rand Refinery does not have the tools to directly monitor what authorised dealers do with the coins after purchase; however, we ensure that all dealer volumes are fully reported to the relevant authorities on a regular basis.”

Rand Refinery added that the Krugerrand trading surge coincided with “extensive marketing efforts that significantly reinvigorated the brand’s recognition across key markets”.

But as we will see, the real “marketing” was done elsewhere.

In fact, we have detailed bank statements for AMG and related companies for a key period – late 2017 to late 2018 – that paints a detailed picture of how everything worked.

Smoke and mirrors

The first strange thing about Sadiqi’s AMG was that its primary client was, at least at an initial glance, itself.

Internal records obtained by amaBhungane show the overwhelming majority of onward sales being made to one of four companies: Hamilton Lifestyle, Cavendish Gold, Orchid Funeral Assurance and F10 International.

All four appear to be proxies for Sadiqi.

Hamilton had Sadiqi himself as sole director. Orchid and F10 International are both registered at Sadiqi’s (former) address in Sandton’s exclusive Michelangelo Tower.

Lastly, Cavendish has as director Sadiqi’s romantic partner Melinda Busi Dube who, for reasons unknown, legally changed her name to Melinda Hamilton in 2021, around the time things went South for AMG. (As an aside, Sadiqi also previously changed his name to adopt his current surname.)

But why the self-dealing?

Even though AMG technically sold its coins to itself – or at least to closely related entities –  these entities did not in fact pay for them. The transactions overwhelmingly appear to be fake and seemingly serve to obscure the real clients buying tons of gold from Sadiqi.

Despite the apparent internal transactions, following the money leads somewhere else entirely – deep into the heart of Johannesburg’s illicit gold trade and a number of familiar characters amaBhungane has encountered before.

Follow the trail with us in Part Two, coming soon.

The post The #Laundry: City of Gold, part one appeared first on AmaBhungane Centre for Investigative Journalism.

It is Covid lockdown and cigarette sales are banned. You manage to sneak huge volumes of cigarettes into the country nonetheless, or perhaps you keep manufacturing them here and pinkie-swear they are meant for export.

Either way, cigarettes are sold under the counter and the onerous “sin taxes” are conveniently forgotten. The result: literal boxes of cash you’d rather not declare to anyone.

What to do?

Consider the dizzying profusion of variants of this dilemma. You skimmed a few million off a tender. You managed to cook the books at your employer and “appropriated” a chunk of revenue. Perhaps you sell drugs or guns – or sell drugs and guns wholesale to the people who sell drugs and guns retail. Do you run a business forum cum protection racket or kidnapping ring?

Or maybe you just want to contribute to a cause abroad that involves unsavoury, sanctioned groups.

What you need is a banker you can trust.

South Africa is sometimes lauded for its large and sophisticated formal financial sector, a marker of economic development, at least for some.

But South Africa has an equally large and sophisticated illicit financial sector involving a menagerie of outright crooks and gangsters, as well as “legitimate” bankers and finance whizzes brandishing real registration numbers with the FSCA.

There is often very little reason to draw a line between the two worlds and in some cases they merge or collaborate with a nod and a wink.

AmaBhungane has embarked on a major series dealing specifically with money laundering, the organised crime enabling all other organised crime – although it sometimes occupies a legal grey zone that makes it difficult to prove which side of the law any specific case stands.

This is compounded by the fact that in South Africa there are few precedents where money laundering has been prosecuted as a standalone crime.  

But this nebulous industry is gaining long-overdue notoriety due to a small set of spectacular cases that have recently made headlines.

These involve tobacco baron Simon Rudland and his collaborators (see SARS statement here and amaBhungane reports here, here and here) as well as Sasfin Bank.To this must be added the spectacular evidence assembled by a damning Al Jazeera documentary series last year.

Rudland is fighting SARS in court and has issued broad denials to the Al Jazeera claims and other media reports.

The attention lavished on these instances creates the warped impression that they are somehow unusual. In reality, however, they are part of a much bigger enterprise.

Our money laundering project aims to pierce the secrecy and obfuscation that are central to this enterprise in its various incarnations.

Who collects the cigarette salesman’s boxes of cash and where do they go? How does money get from point A to point B, usually detouring through points C, D and E?

The “Gold Mafia”, as Al Jazeera has dubbed it, and its twin, the illicit tobacco industry, will feature, but amaBhungane will show that some of the actors in that world have far longer tentacles than is commonly known.

We have amassed data and records that show how tens of billions of rands have moved throughout the region over the years, seemingly dissipating the spoils of crime and corruption.

Our series will also navigate the impressive networks based on illicit flows to Hong Kong, a corner of the wider industry that has remarkably managed to keep out of the spotlight.

We will scour the ageing gold fields of Johannesburg where mining has made way for a gargantuan illicit trade in gold, facilitating tax fraud, smuggling, money laundering and even fake mining that provides cover for all the above.

Later in the series, we will reveal the inner workings – and clientele – of the cash-in-transit companies operating as “shadow banks” for all and sundry in the criminal economy.

This includes everyone from the usual suspects like the Gupta family network, through to the most obscure and unlikely channels for moving dirty money.

The rot in the formal banking system will feature prominently.

There are far too many skeletons in the closets of the institutions meant to keep the formal economy on the right path. AmaBhungane will show how they have happily housed laundry entities so obviously suspicious it beggars belief.

And no, it is not just Sasfin.

We will likewise look at the veritable industry that has arisen around the creation of front companies using hijacked identities.

We will name names and show how it is all done.

AmaBhungane has gathered extensive evidence from Reserve Bank and SARS investigation records filed in ordinary court, corporate records in South Africa, neighbouring countries and further afield, voluminous bank statements going back a decade or more and lesser-known testimony from some below-the-radar enquiries.

Valuable source documents have also lain largely ignored in the annexes to a 6000-page report produced for the Zondo Commission by researcher Paul Holden. Due to the limited scope of that investigation countless leads not involving the Guptas were never followed.

We have tried to address this tragic lack of follow-through and a number of things have become clear.

The characters in this line of business are endlessly adaptable. Authorities cotton on to one operation and before you know it the same people have set up something new.

Another painful truth we’ve learned is that the best investigations into this world are not instigated by the police but the taxman and the reserve bank. The consequences hardly ever extend beyond unpayable, hence almost theoretical, tax assessments, or the seizure of nearly empty bank accounts.

This has motivated us to ask whether anyone at South Africa’s banks conducts any due diligence on customers whatsoever. Is there even a nominal impediment to identity theft? Do we have any interest in criminal prosecution of complex financial crimes?

The stories in this series make it hard to answer ‘yes’ to any of these questions.

Meanwhile, billions leave South Africa unseen and untaxed – an invisible drain that not only serves criminals but effectively promotes crime because it means there are reasonable prospects of getting away with it.

If this is not bad enough, the presence of a well-oiled laundering system is a beacon for a wider international clientele – regional mafias and criminals from all corners of the earth – and it is clear that they are heeding the call.

So, while the money men do not pull the trigger or rig the tender, they are crucial enablers of those who do.

That is why we care – and why you should too.

Read The #Laundry: City of Gold, part one now.

The post The #Laundry:  the ‘shadow bankers’ powering organised crime appeared first on AmaBhungane Centre for Investigative Journalism.