A director and advisers of failed mining company Aurora Empowerment Systems, including members of the controversial Bhana family, have resurfaced in an airline company that has cut a sweetheart deal with the state-run international airport in Polokwane.
The Mail & Guardian has learned that Thulani Ngubane and former Aurora associates Suleman and Faizel Bhana, and Tony Chammas are involved in the “day-to-day running” of low-cost airline Velvet Sky, which recently paid R37.35-million for a 29.6% stake in 1Time.
Aurora, the board members of which include President Jacob Zuma’s nephew, Khulubuse Zuma, and Nelson Mandela’s grandson, Zondwa Mandela, is at the centre of an inquiry into the collapse of liquidated mining company Pamodzi Gold. Aurora took over Pamodzi’s mines in Grootvlei on the East Rand and Orkney in North West until liquidators removed it as the preferred bidder earlier this year.
Aurora’s directors, the Bhanas, as well as Chammas, now face questions from the inquiry about allegations that tens of millions of rands made from gold sales were diverted into their private accounts while mine workers went unpaid and the mines’ assets were stripped.
Excalibur Aerospace bought Velvet Sky from engineering and steel giant Macdonald Holdings in July for an undisclosed amount.
Excalibur’s chief executive, lawyer Stephen Nthite, said the Bhanas, Chammas and Ngubane had been hired as “business growth consultants” on six-month-long performance-based contracts pending the outcome of the Pamodzi liquidation inquiry.
Nthite also confirmed that the lawyer representing the Aurora directors at the inquiry, Ahmed Amod, is a director and shareholder of Velvet Sky.
An insider at the company told the M&G that the Bhanas, Ngubane and Chammas were introduced to Velvet Sky staff as the company’s new shareholders at the beginning of July. At about the same time the master of the North Gauteng High Court in Pretoria ordered than an inquiry be held into the collapse of Pamodzi’s mines.
At the meeting, at the company’s head office in Durban, employees were allegedly told that Ngubane, Aurora’s former commercial director, would be a director.
Chammas was contacted at the Velvet Sky offices this week but declined to comment and Faizel Bhana’s personal assistant said he was “very busy” and could not speak.
The source told the M&G that the businessmen were not only involved in the company’s daily business operations, but were “especially involved on the finance side”.
Although their precise roles in Aurora are unclear, Faizel Bhana, who has described Khulubuse Zuma as a long-standing family friend, told the M&G last year that he was the chief strategist on mergers and acquisitions, whereas his father, Suleman, advised Aurora on its “funding structure”.
Both Bhanas were reportedly actively involved in the mines’ day-to-day operations before being “released from their duties” by Aurora in May last year.
Their contracts were allegedly terminated after the M&G reported that the family appeared to have received payments totalling just less than R1-million from Aurora, while its 5300 workers had not been paid.
The M&G disclosed that members of the Bhana family were fined R12-million after being convicted of insider trading relating to a liquidated company, Amlac, in 2000.
An M&G investigation last year revealed that Chammas was involved in a scam in which business assets were financed twice by different banks, using false invoices provided by a crooked supplier.
The scam led to the controversial collapse of a flower-exporting business, Intuitions Quality Flowers, with debts of more than R35-million in 2008.
Last year Chammas was described as “working for Aurora in the finance department”. Nthite denied that Chammas would occupy a similar position at Velvet Sky.
However, the anonymous source said Chammas was “busy restructuring the finance division and setting up accounting systems”.
Yaseen Theba, who is married to Faizel Bhana’s sister, Feroza, was responsible for designing Aurora’s website and also undertook printing work for the company.
He was allegedly paid more than R4-million between December 2009 and April the following year, according to an affidavit by one of the liquidators of the Aurora inquiry.
The liquidator said it was unclear what the payments were for. Theba testified at the inquiry that the cost of providing the services and materials was no more than R10 000 a month.
Despite their seamless transition from mining to aviation, trouble seems to be following the Aurora consultants into their new industry.
Competing domestic airline SA Airlink recently made a request through the Promotion of Access to Information Act for details of a confidential deal between Velvet Sky and Polokwane International Airport’s state-subsidised operator, Gateway Aviation Authority Limited, in which the airline was granted “certain concessions” as an incentive to operate from the airport.
Moneyweb reported in October that the “indications are that the Polokwane route was made possible by generous concessions on behalf of the Polokwane municipality that include the waiving of airport taxes and other charges”.
SA Airlink’s head of corporate services, De Villiers Engelbrecht, has said that although it is not unusual for airports or provincial governments to invite airlines to operate from their airports by offering subsidies, “state-owned business or public bodies — have to follow certain procedures for purposes of administrative fairness”.
Engelbrecht raised concerns that “government-subsidised competition” could distort “market equilibrium at the expense of the non-subsidised carrier”.
A Polokwane airport source told the M&G that Faizel Bhana had regular contact with senior Gateway staff and Velvet Sky was the recipient of government subsidies because of “political pressure” brought by the new airline on Gateway.
Gateway chairman Gaby Magomola has been quoted as conceding that there have been “some concessions relating to airport taxes, landing charges and passenger taxes to Velvet Sky … over a limited period and on a sliding-scale basis to allow Velvet ease of entry”.
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