Fraud suspect gave ANC R3,6-million

Businessman Gaston Savoi, who is accused of bribing government officials for tender awards worth more than R86m, donated about R3,6m to the ANC.

Embattled Uruguayan businessman Gaston Savoi, who is accused of bribing government officials for tender awards worth more than R86-million, donated about R3,6-million to the ANC in six separate payments.

Savoi also confirmed this week a web of political connections and BEE partners whom he used to market his water purifiers and oxygen generators to the government.

His networking, he said pivoted around Rafique Bagus, once Alec Erwin’s right-hand man and “the man” in trade and industry circles.

According to Savoi Bagus ultimately handpicked Savoi’s equity partners, who included Bagus himself and a virtual who’s who of influential ANC and government figures.

Bagus has denied Savoi’s claims.

Since 2005 Savoi’s company, Intaka, has sold water purifiers and on-site oxygen generators worth hundreds of millions of rands to various tiers of government in provinces throughout South Africa.

Wide investigation

In one of South Africa’s most far-reaching corruption probes Savoi was arrested three times last year and charged, with 16 politicians, businessmen, officials and lawyers, who now crowd the docks of courts in Kimberley and Pietermaritzburg. The charges against them include fraud, money-laundering and racketeering. The accused include John Block, the Northern Cape ANC chairperson and finance minister, and Sipho Shabalala, the former head of KwaZulu-Natal’s treasury and the state-owned

Ithala Bank.

In Cape Town this week the Mail & Guardian interviewed Savoi, who has rarely spoken publicly since being arrested in August, as he and his lawyers were preparing to fight a state application to have his bail rescinded.

Savoi is out on R200 000 bail but state prosecutors claim that he has moved money out of the country in breach of his bail conditions. The application will be heard in Pietermaritzburg on Friday.

“Interest of democracy”

Savoi said that the ANC donations were made “in the interest of democracy”. They involved six payments, including R1-million paid to a Durban law firm in 2007, at the request of Tshabalala, then provincial treasury boss. The state alleges this payment was a kickback related to the sale of 20 water purification plants to the province, but in court papers Savoi denies any wrongdoing.

He was adamant this week that the other ANC payments, made in about 2007 and 2008, were not kickbacks and were unrelated to contracts. “We made donations to the ANC in the ordinary course of business, as I imagine all listed companies do. But no [individual] benefited.”

In all cases, he said, the donations were requested by high-profile ANC members close to his business dealings.

Mathews Phosa, the ANC party secretary, denied knowledge such requests. “I don’t know the man except what I read in your paper. I’ve never received a cent from him,” Phosa said this week. Asked if the ANC would repay the money if it confirmed receiving it, he said: “I don’t think we should answer hypothetical questions.”

Savoi said he had not supported other parties, although Patricia de Lille, the Independent Democrats leader, had asked for money once. “They were one very small party and I did not trust that they could go far,” he said. As for other opposition parties, he said: “[The ANC] was the only party that asked for [a donation].”

Savoi’s lawyers insisted that donations to the ruling party were made legally.

Tender tango

However, the businessman’s close ties to the ANC and the direct involvement of ANC members in his business highlights the tango among business, politicians and the state — and how this distorts BEE principles.

Savoi first arrived in South Africa in late 2000 from South America, where he had extensive business interests, mainly in Brazil.

He first bought into the Mantis collection of hotels and resorts, which included Steenberg Estate and Shamwari Lodge in the Eastern Cape, where he hosted sessions of former president Thabo Mbeki’s International Investment Council.

Erwin confirmed that he had met Savoi at one of these elite indabas and said he had played an uneventful round of golf with the Uruguayan, although he was not sure when that was. He was trade and industry minister until the 2004 April elections, after which he became public enterprises minister. “Dr Savoi was told that, in order to do business in South Africa, you need to have BEE partners, and these partners were identified and introduced to him via Bagus, ultimately,” George van Niekerk, Savoi’s lawyer, said this week.

Savoi said he was under the impression that Bagus did this while acting as an assistant to Erwin in his capacity as trade and industry minister, although Bagus said he became Erwin’s assistant only at a later date — in August 2004 — in the ministry of public enterprises.

Connected network

Savoi set up subsidiary companies in partnership with:

  • Block;
  • Sipho Gcabashe, the KwaZulu-Natal ANC secretary;
  • Faizal Motlekar, an influential businessman who is believed to be close to senior ANC leaders, including Gauteng premier Nomvula Mokonyane;
  • Manana Nhlanhla, the former chairperson of both Ithala Bank and state agency Trade and Investment KwaZulu-Natal;
  • Rustum Mohamed, who had known Bagus since they both worked for Western Cape agency Wesgro, and who later joined the Eastern Cape Development Corporation; and
  • Cape businessman Ron Chetty.

Bagus’s career and influence in the department of trade and industry is extensive. In the 1990s he was a manager at Wesgro. He then joined the department where he served as a deputy director general under Erwin and as chief executive of the departmental agency, Trade and Investment South Africa. By 2003, when he said he had met Savoi, Bagus was working privately but consulting for Trade and Investment KwaZulu-Natal.

Ministerial meetings

Savoi said Bagus initially set up tee-off times on the golf course at Steenberg for Savoi, Trevor Manuel and Erwin, then ministers of finance and trade and industry respectively. Later he engineered meetings in Pretoria with the two ministers and the then minerals and energy minister, Phumzile Mlambo-Ngcuka.

Discussions with the three ministers were above board, he said, focusing on the value his technology could bring to the country, namely overcoming serious water quality issues and expensive gas distribution networks: “They never mixed the balls. But anyway I cannot play golf while talking,” he said.

Bagus admitted that he had helped Savoi on the understanding that he would become an equity partner, but said he did this in his private capacity before joining Erwin in the public enterprises department.

But seven months later, while Bagus was still Erwin’s adviser, there was a flurry of activity, with Savoi setting up three Intaka subsidiaries in the Northern Cape, Western Cape and KwaZulu-Natal. Bagus, Block, Mohamed and Gcabashe were cut in as equity partners.

Bagus claimed to have declared his “interest” in Intaka before rejoining the government and said he saw no conflict of interest. Because Savoi was hoping to sell equipment to provincial hospitals, Bagus introduced him to Nhlanhla.

“Manana’s husband was a medical doctor and she was close to Sipho Shabalala and Ronald Green-Thompson [KwaZulu-Natal head of health] … They were the officials who were supposed to make it happen.”

This KwaZulu-Natal group did not make any sales, however, although Shabalala and Green-Thompson were involved in the procurement process, which was later investigated by the Scorpions and the Hawks and is now under the scrutiny of the KwaZulu-Natal High Court in Pietermaritzburg.

Rasool

Bagus also admitted to introducing Savoi to another politically connected businessman, Barend Hendricks, who put Savoi in touch with Block in the Northern Cape and Motlekar in Gauteng. And he introduced Savoi to then Western Cape premier Ebrahim Rasool, “who undertook to assist”, and Mahomed Vawda, department of water affairs’ director of water resource finance and pricing, resulting in the sale of a purifier to the Overstrand municipality.

Erwin was adamant this week that he was not involved in these arrangements. “Absolutely not — I had no role to play whatsoever. Any advice I gave was public information. I know Rafique would not have asked me to do anything unethical. I have no knowledge of what Rafique or anyone else did with him.”

Motlekar and Gcabashe said they could not remember who introduced them to Savoi. Chetty confirmed that he met Savoi through Mohamed at an ANC fundraiser.

Mohamed said he had spent 2003 and 2004 at the Eastern Cape Development Corporation, where he met Savoi through Shamwari. Though Bagus said he had met Savoi through Mohamed, Mohamed claimed to have no knowledge of Bagus’s involvement.

De Lille could not be reached for comment.

Savoi’s responding affidavit to the state’s application to rescind his bail was not ready at the time of going to press, but he was expected to deny the allegations.

Mlambo-Ngcuka confirmed meeting Savoi and discussing the technology, although she could not remember where or who arranged the meeting. Manuel could not be reached at short notice on Thursday.

It’s who you know

Alec Erwin

Trade and industry minister until 2004, and public enterprises minister thereafter, he met Savoi at an International Investment Council session hosted by Savoi in Tokai and they played a round of golf.

?

Rafique Bagus

Deputy director general in the trade and industry department and Trade and Investment SA chief under Alec Erwin until 2002, he met Savoi when he was consulting for government. In 2004 he became Erwin’s special adviser and soon afterwards became Savoi’s equity partner in KwaZulu-Natal.

Sipho Gcabashe

The ANC’s KwaZulu-Natal secretary was also cut in as Savoi’s equity partner in the province.

?

Manana Nhlanhla

Once the chair of Trade and Investment KZN, for which Bagus consulted, and former chair of Ithala bank. She was an Intaka shareholder in KwaZulu-Natal and reportedly close to the then provincial treasury head, Sipho Shabalala, and the head of provincial health, Ronald Green-Thompson.

?

John Block

Northern Cape ANC chair, he was Savoi’s equity partner there. Businessman Barend Hendricks introduced them, after Bagus’s referral. He also faces corruption charges.

?

Faizal Motlekar

A businessman regarded as close to Gauteng premier Nomvula Mokonyane, he was appointed as an Intaka co-director in that province. Motlekar also met Savoi through Barend Hendricks.

?

Rustum Mohamed

Involved with provincial development agencies in the Western and Eastern Cape, Mohamed and businessman Ron Chetty were Savoi’s equity partners in the Western Cape. Bagus said he met Savoi through Mohamed.

This article was produced by amaBhungane, investigators of the M&G Centre for Investigative Journalism, a non-profit initiative to enhance capacity for investigative journalism in the public interest. www.amabhungane.co.za.

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