In the course of the Covid-19 pandemic the South African government went large on emergency contracts for everything from masks and hand sanitiser to makeshift housing and hospital beds.

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.