The list of deals on the crumpled piece of paper was impressive: Vodacom (R11-billion), Distell (R9-billion), a gas-to-power project in the Eastern Cape (R13-billion).
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This document was Lawrence Mulaudzi’s deal pipeline, and was slipped to amaBhungane by a source in 2017. Newly-obtained SMSes and WhatsApp messages now show that Mulaudzi confidently expected the Public Investment Corporation (PIC) to fund much of his acquisition trail.
But who was Mulaudzi? And how had a relatively unknown businessman and soccer club owner from Limpopo gained an inside track with Africa’s largest pension fund administrator and its chief executive, Dan Matjila?
The secret to Mulaudzi’s success may be hidden in messages that he exchanged with senior executives at the PIC and his business partners.
Although the messages are incomplete and cover just a six-month period between November 2016 and May 2017, they show how Mulaudzi co-opted and curried favour with key decision-makers at the PIC, including:
- Matjila, who asked Mulaudzi to “help” by buying a table at an ANC gala dinner;
- Paul Magula, the former head of risk management at the PIC, whose front company received shares – apparent kickbacks – in Mulaudzi’s PIC-funded deals;
- Sipho Mseleku, a businessman close to Matjila and who referred to the PIC boss as “our brother in Tshwane”; and
- Sibusisiwe Zulu, a PIC board member who later became Mulaudzi’s romantic partner.
Mulaudzi declined to answer questions about his relationship with Matjila or Magula, but in a written response told us: “Since 2016 after the conclusion of our transactions with PIC, Kilimanjaro Capital was subjected to various offensive, unfounded allegations that intended to create a narrative that we as a company did not act ethically and properly in our dealings with the PIC…”
He blamed this on a former partner whom he accuses of “trying to destroy me. I am aware that there was a fake ‘dossier’ which had been compiled and distributed to various stakeholders and journalists… I therefore refuse to deal with what is clearly an ongoing onslaught which has disgustingly been created by a bitter individual.”
Instead he requested that we investigate the “source, authenticity, validity, legitimacy and legality” of the messages.
AmaBhungane has done so, and has found nothing to suggest that the messages are fake. We have looked for inconsistencies – testing dates, phone numbers, addresses, bank account numbers, photographs and details of business deals – and have found none in the more than 200 messages.
In addition to this, many of the same messages were submitted as evidence to the Mpati Commission by UDM leader Bantu Holomisa who, for years, pushed for an investigation into allegations of corruption at the PIC.
- Click on the evidence docket to access the submissions to the Mpati Commission used to investigate this story.
“We think it would be wise to inquire … why it seems so easy for Mr Mulaudzi to gain access to PIC funding,” Holomisa told the commission in March. Referring to one of the messages, he said it “seems to reinforce … the idea that Lawrence Mulaudzi had a hotline with the PIC management”.
The player: Lawrence Mulaudzi [sidebarContentSingleImage target=modal url=https://amabhungane.org/wp-content/uploads/2019/05/1-Mulaudzi.jpg][/sidebarContentSingleImage]
Mulaudzi first emerged on the PIC’s radar in May 2015 when he and his partners at Kilimanjaro Capital were looking for funding to buy shares in Tosaco, the empowerment arm of French oil company Total.
The R1.8-billion loan they got raised eyebrows from the beginning because the deal it funded included a R122.4-million stake for Sizwe Shezi, a close ally of former president Jacob Zuma and chairman of the Jacob Zuma RDP education trust.
Stranger still, the PIC’s chief executive Dan Matjila allegedly intervened at the 11th hour to force Kilimanjaro to partner with a rival bidder: businessman Sipho Mseleku.
This detail emerged in March this year, during Mulaudzi’s testimony at the Mpati Commission, which is tasked with investigating allegations of malfeasance at the PIC.
As Mulaudzi explained to the commission, if he had walked away from the ‘forced’ marriage with Mseleku, he and his business partners would have had to pay R38-million as a breakage fee.
“[I]t was very difficult for us as the directors of Kilimanjaro to accept the decision… But I had no option as, you know, we are in business. We had to say let’s share the cake of this transaction [with Mseleku]… let’s just sacrifice ’cause half a loaf is better than no bread,” Mulaudzi told the commission.
But if Mulaudzi felt all the things he claimed in his testimony – “disappointed”, “devastated”, “vindictive” – he did not show it.
Instead he agreed to join forces with Mseleku and together they returned to Matjila with new deals to fund.
Within a year, the PIC had approved two loans of R1.4-billlion and R400-million to allow another of Mulaudzi’s companies, Kefolile, to acquire shares in JSE-listed Ascendis Health and consumer goods company Bounty Brands respectively. Mseleku was cut into the R1.4-billion deal.
But by 2017, they had even more ambitious deals in their sights: acquiring R11-billion of the PIC’s stake in Vodacom and R9-billion of its stake in Distell.
In a WhatsApp message to Matjila for New Years’ in 2017, Mulaudzi told the PIC boss: “I thank you very much for making me to be who I am… You’re my hero.”
The religious leader: Sipho Mseleku[sidebarContentSingleImage target=modal url=https://amabhungane.org/wp-content/uploads/2019/05/2-Mseleku-2.jpg][/sidebarContentSingleImage]
If Mulaudzi had found the key to unlocking the PIC, his new business partner may have had something to do with it.
Although few people had heard of Mseleku before he testified at the commission on Monday, he has featured in at least five PIC-funded deals.
Matjila’s alleged intervention had made Mseleku’s family trust the biggest beneficiary of the Tosaco deal with roughly R440-million in shares.
But Mseleku insisted to the commission that the PIC boss had not forced the commercial marriage: “This was a mutual business decision, by myself and Mr Mulaudzi … that we took without external influence.”
The leaked messages suggest that Mseleku held regular meetings with a senior decision-maker at the PIC, whom he referred to as “the brother” and “our brother in Tshwane”, to discuss the duo’s deals.
For example, on 8 December 2016, Mseleku sent Mulaudzi a message saying: “[J]ust to remind you to send me the information to discuss with our brother in Tshwane”; then later that month: “I met with the brother yesterday and I wanted to update you on Project Spirit [Distell] and others”; and on 26 January 2017: “I need to have a Term Sheet for my meeting with the brother. I am preparing a file now for him for all our projects…”
All evidence suggests that “the brother” and “our brother in Tshwane” was Matjila who, as both PIC chief executive and chief investment officer, held significant sway over which deals received funding.
Mseleku did not dispute sending the messages or holding meetings with Matjila. In a written response he told us: “[A]s a sign of respect and in the spirit of ubuntu I refer to … Dr Matjila and many other male colleagues that I interact with as ‘my brother’… The reason I took more than one project when I met with Dr Matjila is that I wanted to capitalise on the limited time that I had meeting him in his busy schedule.”
The PIC has also always stressed that Matjila alone could not greenlight any deals: “[T]he PIC has established investment processes … the relevant committees – not the Chief Executive Officer – make investment decisions, in line with the client mandate and within their delegated authority,” head of corporate affairs Deon Botha told us last year.
Mseleku pointed out that the PIC rejected several funding applications he brought, including Vodacom and Distell.
He also denied that he had privileged access to the PIC boss: “It is my understanding that Dr Matjila gave many business people, both black and white, the opportunity of a meeting and as a result, no one had exclusivity to meeting him… Mr Mulaudzi as a businessman has had his own dealings with the PIC even before I met him,” he told us.
But at least one message, from February 2017, suggests that Mulaudzi’s access was way more limited: “Evening Doc, you I have not seen you this year? Would you mind if I pop in just to say hello. Please brother,” Mulaudzi pleaded. Matjila said he would let him know.
But for Mulaudzi, a new entrant into the PIC’s inner circle, Matjila’s help would seemingly come with strings attached.
Our brother in Tshwane: Dan Matjila
“Hi Broer, can you help?” Matjila asked Mulaudzi, two days after receiving his obsequious New Year’s message.
Pasted below, in the same WhatsApp, was a message seemingly from the ANC’s then-treasurer general Zweli Mkhize, requesting sponsorship for the ANC’s 105th birthday gala dinner, scheduled to take place in Sandton a few days later on 7 January 2017.
[sidebarContentSingleImage target=modal url=https://amabhungane.org/wp-content/uploads/2019/05/Matjila-fixed.jpg][/sidebarContentSingleImage]
The PIC has repeatedly been accused of funding deals that would benefit those close to the ANC: In 2014, for instance, the PIC paid R3-billion to buy a 30% stake in Erin Energy, an oil company controlled by Nigerian businessman Kase Lawal, a Zuma ally and funder (read more about the PIC’s politically-tainted deals here).
But for the CEO of the PIC to actively solicit donations for the ANC from his clients was going one step further.
“We have bought a table accommodating ten delegates for R400 000,00 with Sakhumnotho,” Mulaudzi assured him. “We still have a seat if there’s someone who wishes to join us.”
“Thanks broer,” Matjila replied.
This was not the first time the PIC boss had called on Mulaudzi for a financial favour. Three months earlier, in October 2016, Matjila called Mulaudzi and asked him to pay off the R330 000 debt of a young entrepreneur, Pretty Louw.
Mulaudzi barely knew Louw and had no commercial interest in rescuing her struggling beauty therapy business. But because Matjila had asked, Mulaudzi agreed to transfer R300 000 to her attorneys.
“At no point did I regard this as a loan. This was based on the request made by Dr Matjila,” Mulaudzi told the commission. “[I]t was only natural for me to comply with his request, as I have been funded by the PIC in my business ventures.”
This kind of quid pro quo is what Matjila needs to explain when he testifies at the Mpathi commission. If the PIC makes investment decisions on merit – granting loans instead of favours – it would be hard to see why its CEO would feel emboldened to ask clients to hand over hundreds of thousands of rands to beneficiaries of his choice.
Matjila responded to our detailed questions via WhatsApp: “I have previously stated that I am committed to assisting the Mpathi [sic] Commission… This commitment therefore cant be an honest one if I am going to be giving piecemeal information to the media. Should you not wait for my testimony and give the public a holistic view of this matter in the interest of truth and respect for the facts[?]”
He added in a second message: “[Y]our insinuations are hopelessly far fetched… I feel this is simply an unnecessary witchhunt which I am really not interested in participating in.”
But Matjila has previously confirmed the validity of at least one of the messages, which Holomisa made public last year. The message, from 16 March 2017, was from Matjila to Mulaudzi:
“Broer, did you give the journalist the share certificate of Tosaco?” he asked.
“The journalist” appeared to be a reference to us – we had sent questions to the PIC about the Tosaco deal two days earlier.
“Afternoon Dr, We didn’t give them share certificates. We gave them share register only and that was last year,” Mulaudzi SMSed back.
Initially, the PIC told us to ask Mulaudzi “whether a supposedly private conversation was intercepted or monitored – legally or illegally”, then offered a second response:
“Dr Matjila did have the conversation with Mr Lawrence Malaudzi… This does not take away our earlier comment for the need to indicate how and for what purpose a transcript of the conversation was obtained, and whether a supposedly private conversation was intercepted or monitored – legally or illegally.”
But there was a secret buried in those share registers – a secret that would not make sense until the collapse of VBS Mutual Bank last year.
The front: Paul Magula[sidebarContentSingleImage target=modal url=https://amabhungane.org/wp-content/uploads/2019/05/6-Magula.jpg][/sidebarContentSingleImage]
When advocate Terry Motau was asked to investigate the finances of VBS Mutual Bank, the conclusion that he came to was that it was “corrupt and rotten to the core”.
By the time VBS collapsed in March 2018, the PIC had ploughed roughly R350-million of pensioners’ money into the bank. Questions were immediately asked about how two PIC representatives on the VBS board had failed to spot the fraud.
On page 28 of Motau’s “Great Bank Heist” report was the key piece of evidence: an obscure front company called Investar Connect Holdings.
According to Motau, Investar Connect Holding was one of two companies used to channel kickbacks to the PIC’s former head of risk management, Paul Magula: “Magula … eventually confessed, after putting up strenuous denials, that he had received unlawful payments, made to two companies which acted as his nominees, in a total amount in excess of R7.6 million in order to buy his silence.”
But Investar Connect Holdings was a name we had seen before in the share registers of Mulaudzi’s companies. These records show that in two of his PIC-funded deals – Tosaco and Kefolile Health – a small parcel of shares was given to Investar Connect Holdings. Together the shares were worth roughly R24-million.
When we first looked at the share registers in 2016, Investar did not raise any red flags. At the time, the company’s sole director was Lot Magosha, the group CFO of Mulaudzi’s company, Kilimanjaro. A well-placed source also described him as “Mulaudzi’s accountant”.
But once it became apparent that Magosha and Investar were also acting as Magula’s front, the logical conclusion was that Investar was intentionally cut into Mulaudzi’s PIC-funded deals to ensure he received favourable treatment at the PIC.
Mulaudzi, however, claimed to be in the dark about his accountant and CFO’s activities. “As far as [Kilimanjaro] is aware, there was no other party, outside of [Magosha], who stood to benefit from this structure,” he told us in his written response.
He also pointed to his willingness over the past three years to provide copies of the incriminating share registers as proof of his good faith: “This, we did, as we knew and still maintain that there was no untoward, corrupt, ill handed activity that we as Kilimanjaro had committed in concluding transactions with the PIC.”
Mulaudzi told us that after Motau’s VBS report was published, “we held a special board meeting to address this matter and it was resolved that [Kilimanjaro] enters into a mutual separation agreement with Mr Magosha”.
But was this all for show? Mulaudzi and Magosha remain co-directors of several companies, including Kefolile Health Investments, which received R1.4-billion from the PIC. And when we sent detailed questions to Magosha, the letter was mysteriously returned to the investigative unit in an email from Mulaudzi who told it: “I have deemed it appropriate that I respond on all our behalf…”
But there was another piece of evidence which undermined Mulaudzi’s claims of ignorance: a message sent by Magula the day after R400-million landed in Mulaudzi’s company account. But first, some context.
The favour: Sibusisiwe Zulu[sidebarContentSingleImage target=modal url=https://amabhungane.org/wp-content/uploads/2019/05/Busi-header.jpg][/sidebarContentSingleImage]
In December 2016, Mulaudzi was finalising his third deal with the PIC: a R400-million loan to Kefolile Consumer Brands in order to acquire a stake in consumer goods company Bounty Brands.
But there was a problem: the transfer from the PIC was two weeks late. And Coast 2 Coast, the company that owned Bounty Brands, was panicking.
To underscore the urgency of the situation, managing director Greg von Holdt created a WhatsApp group called “Closing today”. By 10.15am he was apoplectic:
“Guys pls advise what is happening? I am on my way to your offices and I would like to speak to someone from pic today to know what is going on!!! This cannot continue. We are in default and have relied on your timetable. This cannot stretch out another day even!”
Mulaudzi’s business partner, Kinesh Pather, assured Von Holdt they were “working on getting the signatures at PIC”. But separate messages suggest that Pather relied entirely on Mulaudzi and his connections at the PIC.
Thirty minutes later, Mulaudzi sent a message to PIC board member Sibusisiwe Zulu:
“Dear Busi, I would like to ask for your intervention on the payment meant to be done by PTA office a fortnight back. They kept promising everyday that payment would be done with no success. Please I need your assistance. We are in breach of our bridge loan and we are frustrated not knowing where to get R5Million at the moment.”
When Mulaudzi testified at the commission in March, he confirmed rumours that he and Zulu are romantically involved, but claimed that they only became socially acquainted in November 2017, long after his deals at the PIC had been approved.
Zulu did not reply to Mulaudzi’s message, so it is not clear whether or not she agreed to intervene. She also did not reply to our questions, although she initially called us to confirm that she would respond.
The following morning, Pather told the “Closing today” WhatsApp group that he and Mulaudzi were “pushing all the angles and relationships we have”.
[sidebarContentSingleImage target=modal url=https://amabhungane.org/wp-content/uploads/2019/05/5-Kinesh.jpg][/sidebarContentSingleImage]
“Bru have u checked with Paul or someone in Pta if they doing the transfer please,” Pather asked when, a day (and many messages) later, the payment was still not reflecting.
But it was the message Pather sent after the R400-million landed in Kefolile’s account that was the most intriguing: “Bru let me know how we sort our brother out.”
Who “our brother” is in this situation is not at all clear, but we can hazard a guess that “sort out” meant what it usually means: someone needed to be paid.
The following day, Mulaudzi received the message that would make us question his claims of ignorance about Investar. The message from Magula contained a Standard Bank account number followed by a name: “investar connect”.
Was Magula “our brother” who needed to be “sorted out”?
AmaBhungane has confirmed that this account belongs to Investar but not whether Mulaudzi actually paid money to it. Magula ignored all our calls and messages.
The inquiry begins
In the end, it was Mulaudzi’s R300 000 payment to Pretty Louw that toppled Matjila from his R2-trillion perch.
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In September 2017, an anonymous insider, who goes by the name James Nogu, sent an email to the PIC board about Matjila, Mulaudzi and Louw. Although many of the allegations have been debunked, it set off a series of investigations into Matjila’s conduct, eventually culminating with the Mpati Commission.
As for Mulaudzi’s R20-billion deal pipeline on the crumbled piece of paper? For now, that part of the story remains fiction.