UPDATE: Mashaba lays charges against Tau and Makhubo for R30 Million State Capture Deal

The Johannesburg mayor, the DA’s Herman Mashaba, laid criminal charges against his predecessor, the ANC’s Parks Tau, and the former member of the mayoral committee (MMC) for finance and current leader of the ANC’s Johannesburg region, Geoff Makhubo.

The charges include fraud, corruption, money laundering and racketeering against both Makhubo and Tau.

Mashaba laid the charges against the two at the Johannesburg Central police station in Johannesburg on Monday.

Mashaba laid the charges following an amaBhungane report revealing allegations that Makhubo and Tau allegedly orchestrated a windfall of at least R30 million for Makhubo by allowing him to unduly act as a broker for Regiments Fund Managers, giving the fund managers unfettered access to lucrative deals within the city.

A statement issued by the office of the mayor after Mashaba had laid the charges says that in 2006, Regiments Fund Managers received a contract to manage the city’s “sinking fund” – a pool worth billions of rand set aside to meet the city’s future debt repayment needs.

By 2015, Regiments had amassed an estimated R300 million in fees. A contract signed by Makhubo shows that Regiments agreed to pay 10% of its fees to Makhubo’s company, Molelwane Consulting, in exchange for Makhubo’s “maintenance of strategic relationships with the COJ (city of Johannesburg),” the statement further reads.

“With the blessing and alleged aide of Cllr Tau – who has admitted on record that he knew of the relationship between Makhubo and Regiments – Cllr Makhubo, who was tasked with exercising political oversight on one of the city’s largest contracts, was allowed to feast off the same set of contracts he had oversight over.”

The statement further alleges that as a councillor, Makhubo had consistently failed to relinquish his 67% stake in the Molelwane Consulting – as confirmed by the city’s integrity officer.

The statement further claims it is alleged that the role that Tau played was more than that of a bystander.

“Cllr Tau not only knew of the crooked deal, it is suspected that Cllr Tau allowed the arrangement to take place so as to also benefit his political party the ANC. This will be confirmed through an additional on-going investigation into the matter.”

It is further alleged that when the tender process in 2011 had excluded Regiments, it was Tau, as the mayor of the city, who stopped the tender, citing a lack of social responsibility in the requirements of bidders.

Mashaba said in the statement: “It is unprecedented for a mayor to block a tender process for this or any other reason. But we all know what was the real aim of this move, it was to protect Regiments once again.

“By interfering and stopping this tender, it is our contention that Parks Tau contravened the Municipal Finance Management Act and involved himself in the procurement environment for corrupt ends.”

In correspondence, Regiments is said to have provided a shopping list of expectations, including lucrative deals which they expected Makhubo to deliver.

The report by amaBhungane shows that Regiments received almost everything on their wish-list: “In January 2011, the city agreed to release R18.4 million of Regiments’ fees; in March, Regiments facilitated a smaller R250 million loan for the city and received R1.25 million as a raising fee; and in December, Regiments was one of two bidders awarded Johannesburg Property Company tender.’’

Makhubo’s final mission was the delivery of the sinking fund contract; despite Regiments not being the preferred bidder and having been disqualified from the initial tender process, only to be saved by Tau’s intervention.

By 2011, amaBhungane suggests Regiments had already “invested” quite heavily in both Tau and Makhubo – apart from Molelwane’s 10% stake.

The evidence suggests that not only was Regiments a regular donor to ANC coffers but that the company had allied itself with ANC funders for some of its other BEE deals. One such deal shows how both Makhubo and Tau’s wives received a lucrative set of shares then worth R3 million. The shares are now said to be worth approximately R50 million.

“Indeed, their actions also paved the way for the state capture project to reach into the very heart of the city itself through Regiments’ facilitation of a R290 million deal to Denel,” the statement reads.

New evidence proffered by amaBhungane now suggests that Regiments was “double-dipping” and received a R3.42 million fee from Denel, seemingly for securing the R290 million from the city’s sinking fund.

“What is clear is that Regiments Capital bought influence in the ANC by benefitting its leadership, their families, and paying for the ANC’s regional elective conference.

“The city is currently at an advanced stage of conducting its own forensic investigation into this matter.”

Once completed, and given the serious nature of this criminality, Mashaba said he had instructed General Shadrack Sibiya, the head of the city’s Group Forensic and Investigation Services Unit, to set up a meeting with the top leadership of the Hawks to ensure that every effort was made to see blatant criminality was met with the full might of the law.

“The ANC, and particularly Cllr Geoff Makhubo and Cllr Parks Tau, has consistently fought the multi-party government’s efforts to combat corruption in the city. It is now clear to see why.

“While they have the chance, Cllrs Tau and Makhubo must do the right thing and resign from public office.”

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