State Capture 1/3: The rot reaches deep into Lowveld forests
As a result of this, the company subsequently lost a deal which would have greatly enriched its owners at the expense of the parastatal.
Father and son, Dries and Johan Muller confirmed to Lowvelder that they were approached by acting CEO Harvey Theron and a non-executive director of Safcol towards the end of 2015, with a proposal worth millions of rand.
“At that stage we did not realise what this was all about, and that they were testing us. Only today we see the bigger picture and realise that we could have been the means to an end for the state capture of Komatiland Forests (KLF),” the Mullers said.
A source close to Safcol’s board confirmed this, and explained that on the day CEO Nomkhita Mona and the CFO resigned, COO Francois de Villiers had to make a presentation regarding the future of Ringkink Sawmills.
Theron interrupted the presentation and indicated that he had met with Dries and Johan and proposed the following work be outsourced to them:
• Stump to mill (the harvesting and transport of the trees)
• Safcol would increase the mill’s intake from 10 000 cubic metres to 250 000 cubic metres per year
• The final product would be transported to Pretoria
• Safcol would sell all the wood through the Muller family’s extensive distribution networks.
This proposal did not make sense, because Safcol has the infrastructure in place. “Safcol has the equipment and the teams of workers to fell the trees,” Lowvelder was told. “In fact, Safcol has the skill set to do it all.”
“The deal would also have meant that KLF had to park its equipment in the yards and get rid of its workers, while the Mullers would handle 250 000 cubic metres of wood at R35 per cubic metre – R8,75 million per year, at a loss for KLF.”
Furthermore, Ringkink would make a clean sweep of R10 per cubic metre for the 250 000 cubic metres of logs at
R2,5 million per year in their pockets.
According to the source, there were already transport contracts in place for KLF. If Ringkink was given that as well, it would be a further R2,5 million per year in its coffers.
Ringkink would saw the wood in its own sawmill and that would be a further R12,5 million per year. With the transport to Pretoria, another R1,25 million per year, the family business would earn R18,75 million per year. With the sale of the wood they would have looked at R200 per cubic metre, totalling R25 million per year.
The source calculated that it would have amounted to R43,75 million for the owners – Safcol’s loss in revenue.
In a lengthy interview with Lowvelder, Dries and Johan Muller described how devastated the family was when its 10-year contract with Safcol was not renewed at the end of 2015. However, Theron wanted to negotiate the new deal with them.
“We did not know where the authority came from for them to negotiate the deal,” said Dries. He added that from the moment they indicated that Ringkink was not for sale, all doors closed on them.
They cannot remember if it was a phone call or an SMS that informed them that the deal was off.
“The decision put us in a dire financial position. We never realised that we were puppets in some kind of political game,” Dries said.
He recalled an earlier meeting at Safcol’s head office in Centurion, where somebody told them that they were “too honest” and they will not “come right” with “these” people.
Theron told Lowvelder that the Safcol/Ringkink contract had expired. “The Safcol board took a decision not to renew the contract due to financial losses suffered by Safcol.”
Regarding the behind-the-scenes negotiations he had with the Mullers, Theron stated that discussions concerning a partnership with Ringkink Sawmills was “of an explorative nature” for the purpose of Safcol’s “vertical integration strategy”.
State Capture 3/3: Relentless pressure capturers’ chief tactic
