Justice Minister Thembi Simelane. Picture: Picture: Neil McCartney
Civil society organisations have added their voice to calls for Justice Minister Thembi Simelane to urgently clarify corruption allegations that linked her to the Venda Building Society (VBS) Mutual Bank scandal.
Freedom Under Law (FUL), Ahmed Kathrada Foundation, Judges Matter and Defend Our Democracy have expressed concerns about the explosive revelation that Simelane, was connected to unlawful investments in VBS Mutual Bank.
Simelane allegedly took a R575 600 “commercial loan” from Gundo Wealth Solutions, owned by Ralliom Razwinane, and brokered unlawful investments of R349 million into the now defunct VBS Mutual Bank by the Polokwane Municipality while she was mayor of the city in 2016.
The organisations questioned whether it was appropriate for Simelane to have entered into the loan agreement, considering the apparent connection to unlawful deposits into VBS bank by the same municipality in which she was mayor.
“It is crucial that the minister responds fully and transparently to these allegations. Perceptions of corruption and conflicts of interest cause significant harm to public confidence in governance institutions and the rule of law.
“The minister carries political responsibility for key law enforcement agencies which not only are at the forefront of the fight against corruption; but are also involved in investigating and prosecuting the collapse of VBS bank itself, a critical entity in the allegations against her,” they said.
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The organisations said, with Simelane expected to take up her position on the Judicial Service Commission (JSC) at its next sitting in early October, there can be “no question marks over her probity and ethics.”
“South Africa has, on far too many occasions in recent years, suffered the effects of compromised individuals having a negative impact on the justice sector, and from the ravages of corruption. We continue to see the harm caused to governance institutions by unsuitable individuals, and how difficult it is to repair the damage they cause.
“We therefore call for the minister to account fully for her involvement in the incident. It would be untenable for such serious allegations against a minister in such an important portfolio to remain unanswered,” the organisations said.
When VBS imploded in March 2018, forensic investigations found it had rewarded Razwinane with kickbacks totalling R24.2 million for being a commissioning agent for various municipalities and state entities.
Investigators found these to be corrupt transactions and contraventions of the Municipal Finance Management Act.
Razwinane is currently on trial for fraud, corruption and money laundering for his role as a commission agent connecting municipalities, including Polokwane Municipality, with VBS.
Simelane used the “loan” to buy a coffee shop in two transactions in October 2016. The payments appear linked to kickbacks received in exchange for large deposits by Polokwane Municipality into VBS.
In October 2016, VBS paid R1.66 million in kickbacks to Razwinane and Gundo Wealth Solutions in exchange for two deposits totalling R130 million from the Polokwane Municipality. They were made shortly after Gundo signed a three-year contract to provide investment brokerage services to the municipality.
In turn, Razwinane paid R575,600, almost 35% of his kickbacks, to a company called Ricovert, the then-owner of Silvanas Coffee Shop on the ground floor of Fredman Towers in Sandton.
Simelane has confirmed the Ricovert transaction was to aid her purchase of the business. She characterised the deal as a legitimate “commercial loan” which was “fully repaid”.
“The transaction was completely above board,” she said.
While the reports stated that Simelane claimed that the transaction was a legitimate “commercial loan” which was fully repaid, neither the loan agreement nor proof of settlement of the loan was provided.
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