Paul O’Sullivan’s R4bn gift to SA – exposing corrupt Transnet deal linked to ConCourt judge

LONDON — In this fascinating interview, South Africa’s ace crime fighter Paul O’Sullivan tells the story of how a call to the Forensics for Justice tip-off line resulted in the termination of a corrupt R4bn contract at Transnet, the country’s rail and port utility. It also explains O’Sullivan’s confidence that his country will overcome its challenges, helped by a SA equivalent of Brazil’s Operation Car Wash. He explains how the corrupt network used a now well-exposed template, which in this case involved a major Italian construction group and with beneficiaries including the husband of one of South Africa’s 11 Constitutional Court judges – the highest law making body in the land. – Alec Hogg

Well, it’s a warm welcome to Paul O’ Sullivan. Jeepers Paul, your contribution to the South African fiscus continues to grow. An intervention with Transnet, and we’ll get into the whole issue in a moment, which has saved the taxpayer and Transnet more than R4bn, but how did you come across this corrupt deal?

If you go on the Forensics for Justice website, you’ll see that we have a contact form where you may leave the information anonymously. We also have a toll-free line, 0800 118 118 and on this occasion, it was 0800 118 118 that got us the information.

So, somebody called through to say there’s skulduggery happening at Transnet.

That’s pretty much it, yes.

Why did you decide to pick it up though?

Well, when we heard the size, you see, as you probably know we don’t have much in the way of resources. Although we’ve had a few donations, I’m left funding the operation of Forensics for Justice pretty much myself and we cherry pick the stuff that comes in. Some of it is of such a nature that we consider it to be in an individual’s interest and not in the public interest for us to pursue it. So, we really only do pursue things which are in the public interest and in light of the fact that we get so many contacts we go after the larger value items, you know the big-ticket items and this one was a big-ticket item at R4bn.

Paul O'Sullivan
Forensic Investigator Paul O’Sullivan

Now what’s extraordinary about this is it happened, well it was uncovered in November and to their credit, the new Transnet executive acted quickly, but this is almost a year since we had the changing of the guard, yet the Zuptoids are – well, perhaps not the Zuptas, but certainly the Zumas are very much alive and well, and plundering.

Yes, I think maybe not so. I mean if there’s anything here it’s a celebration because six months ago we wouldn’t have gone to Transnet, we would’ve just opened a docket and proceeded with the criminal charges, but on this occasion, I took the decision well, you know Cyril Ramaphosa has stated that state capture’s coming to an end, let’s test it. We went to Transnet; we met with them on the Friday. When we met with them, it was an informal discussion. We met with the new acting CEO, the legal officer and the Head of Capital Projects and I said, “Well, this is what we’ve uncovered”.

They were shocked to the core. They asked us whether we could put it in the form of a report and we said, “We’ll let you have the report by Sunday” or Monday in fact, but we sent the report to them on Sunday evening and on Monday I got a letter back saying that they’ve taken the decision to suspend the contract. Now that has to result in a celebration and we made the comment that the state capture, certainly as far as Transnet is concerned, is formally over.

Well, congratulations to the new chief executive Mr Tau Morwe, but let’s just go into this. It’s an international company, an Italian business that’s intimately involved in facilitating all of this.

Yes, and they’re not fresh at the game, so they’ve been playing in this field for a while and they have a particular liking, I think, with Mr Mavundla and I think that liking is as a result of the fact that Mr Mavundla has been able to swing contracts their way and we’re quite satisfied that what we’ve been looking at over there is nothing more than a commission conduit and that the people named as being part and parcel of the tender consortium if you want to call it that, the joint venture, they are all Zuma-ites well and truly you know and if you line them all up they’re a who’s who at the Zuma fan club. So, we had no doubt whatsoever that none of those people were intending to lift a pick and shovel and get stuck into the work.

In fact, the day that the tender was signed by the now dismissed Siyabonga, the day he signed the internal memorandum notifying that CMC Ravenna would get the contract, CMC Ravenna, the very same day did a press release claiming the full value of the contract of R4bn. I think that it was €255m  or €355m. They claimed the full value of that onto their audit book, which meant that they intended to carry out all of the contract work.

We then found out of course that not only had they claimed the full value of the contract, they had gone cherry picking amongst the other tender as subcontractors, which indicated that they had some form of inside information because they were able to phone the proposed subcontractors of other tenderers and invite them to come and do the work and by doing that they basically cast away their own proposed subcontractors and entered into agreement with others who did a lower price. Therefore, we were quite content that the whole thing was fraud.

It actually makes you sick when you read through that report. I suppose you say it is a celebration, but the reality is that this excrement, this kind of rubbish has been going on in South Africa now for years. It’s been facilitated even as in an instance now by an Italian company which is itself just about bankrupt, but I suppose that’s not before its turn, but essentially the depth of the excrement in South Africa has to be something that worries one when you look at the details of this information.

Well, I think it would worry one if nothing was being done about it, but in this case, you have to applaud Popo Molefe and the whole of the newly appointed Transnet board of directors and indeed the acting CEO and the legal manager. You know they could’ve just sent us packing, they could’ve said, “Listen, we’re not interested in this. We’ve awarded the contract and we’re sticking to our guns”, but they didn’t, they suspended the contract and now they’re carrying out their own internal investigation. This is a first for us, we didn’t have to go and open a criminal docket. So, the criminal docket has already been opened by Transnet, so it’s a real refreshing thing to see that state-owned entities that were captured are gradually becoming uncaptured one by one and I must admit for us it’s a really exciting time.

How many criminal dockets have you been forced to open?

Ah, you know I’d have to confess to not actually knowing the number, but certainly, in the last ten years it would be more than a hundred dockets where we haven’t been paid for the investigation. We’ve done it as a pro bono service and we’ve done it because it’s the right thing to do. I think that at the end of the day some of those dockets are left hanging around in dark corners and the National Prosecuting Authority or the Hawks, you know what we refer to as “the captured criminal justice system”, well, slowly but surely, I think the criminal justice system will become uncaptured as well. It’s so I’m afraid, but it’s painfully slow, but I’m hoping that by this time next year we’ll be able to applaud the fact that these criminals are starting to be roped into the criminal justice system and facing trials.

I mean we opened a docket against Jiba Mrwebi in 2012 and to this date they haven’t stood trial and there was a clear case there of defeating the ends of justice and perjury. We opened cases against for example, Lucky Montana in 2015. It’s more than three years ago. He hasn’t even been called in for a warning statement, not a cent of the money that he and his cohorts have stolen has been recovered because the Asset Fall Feature Unit deemed it not necessary to go after the R4bn that was swiped.

New NDPP Shamila Batohi
New NDPP Shamila Batohi.

So I think that type of thing happens when you have a captured criminal justice system, where they had Shaun the Sheep in the prosecution service. We had a whole host of people reporting to him, which were like-minded. Now I’m hoping that Shamila Batohi, when she starts work, the first thing that she’ll do in her first week is to suspend all those people that were involved in the capture of the criminal justice system, because if she doesn’t, she’s not going to succeed in cleaning up the NPA.

It is heartening though, Paul, that in the past, as you say, you had to do all the hard work, all the heavy lifting yourself and actually you couldn’t really take it much further than what you did, whereas this time round you got the tipoff, you did the investigation, you handed over the results of your investigation to Transnet and instead of ignoring it, they’ve actually acted as you said, with alacrity.

Yes, I must say I was really pleasantly shocked at the speed with which Transnet reacted. In the first instance I tried to get hold of Popo Molefe, but he was over in America, so I got hold of the deputy (I’m not sure if he was deputy chair, but he was a non-executive director anyway), Ed Kieswetter who’s a professor in Cape Town. I think I got hold of him, I can’t remember the exact day, but let’s say it was a Monday. I got hold of him at 5:00pm and said well, he’s on his way to Johannesburg; he can meet me at 9:00pm. So, I met him at 9:00pm and I showed him what we had. Sarah Jane Trent was with me and that was on a Monday or something like that, I can’t remember the exact date, but he said, okay he’s going to set up a meeting with the acting CEO and that meeting took place the following Friday and we showed them what we had.

At that stage, it hadn’t formally come together in the form of a report, but it wasn’t far away from doing so, and so Jane and myself spent the weekend putting the report together and when we tabled it, I think they went through it. We sent it to them on a Sunday night, they went through it and I got a letter back before close of play on Monday saying that they’d taken the decision to not only suspend the contract, but they’d also decided not to make any interim payments to the contractor. They’d also decided to report the matter to Treasury and to the Hawks, which was pretty much everything we’d asked of them.

So we just put all our files together. In fact, I think today or tomorrow Sarah Jane is handing over the files. She already met on Friday with the SIU and she’s handed over the files there and she’s now meeting with their internal investigators to hand over the files there, so I imagine this thing will now be managed internally by Transnet and we’ll just sit on the side lines and watch.

And maybe get onto the next tipoff that you can pull through.

Well, we’re already busy with that one.

Edward Kieswetter, that’s an interesting name that you bring up there because he used to be one of the senior executives at the SA Revenue Services during the Pravin Gordhan era. So, if you think about it, here you have a guy who’s hugely efficient, I think he went on to become Chief Executive of Alexander Forbes as well, who’s heart is in the right place, who knows about the urgency, who’s serving the public in this role and many like him would’ve been ejected from SARS because of the fake news reports etc. Have there been any further developments on that front, the whole Sunday Times issues you had with him?

Well, actually no, we demanded the Sunday Times to retract the three stories. I gave them a seven-day deadline, on the seventh day they retracted all three stories and they made an apology to the people concerned. What they haven’t done yet is, I still have to find the time to deal with that issue, they haven’t retracted the fake story they put about myself and Sarah Jane Trent. So, you had the situation where you have dirty cops and there are plenty of them out there, at the rank of brigadier and general who kidnapped Sarah Jane from our offices in February 2017 and stole her cellular phone. To this very day, she doesn’t have it back. They then download the contents of the phone and they published the contents by giving it to a journalist. Now before he wrote the story, I pointed out to the journalist in question, that he’s dealing with criminals.

You know now this journalist put his own spin, an illegally defamatory dishonest spin on the contents of Sarah Jane’s phone and ran a story under the by-line, “The WhatsApp’s that Paul O’ Sullivan doesn’t want you to see”, which is an absolute load of rubbish. I had never seen the WhatsApp’s myself and to this very day, I still haven’t seen them, so you have these dishonest journalists at the Sunday Times and they’re still there and then you have SANEF who take the law into their own hands without seeking my version of events. I state that I’m going to deal with this journalist, I’m going to open a criminal docket with him, and they accuse me of threatening him. Well, it’s a warning, it’s not a threat, but you know I will have my pound of flesh and Sunday Times sooner or later will be made to pay for what they’ve done.

We saw today that KPMG has also asked for apology, so that’s all developing, but getting back to the Transnet story, to this particular Transnet story, reading through some of the documentation that you put together one of the leading figures or one of the big beneficiaries in the corruption is one Charles Sarjoo who is married to a Constitutional Court judge, Leona Theron. Now that must be sending off all kinds of alarm bells. What’s that connection?

Well, we flagged that already 18 months ago. When she was appointed to the Constitutional Court, the DA curiously issued a media statement stating what a fine appointment Jacob Zuma had made. Now we were confused by that because it was clear to us, and we made the point to the DA, we approached them and said, “Listen, you guys know who’s just been appointed to the Constitutional Court and they had no knowledge. We pointed out to them that Leona Theron was in business with both Michael Hulley and Jerome Brauns in separate businesses I might add, so the three of them weren’t together in one company. She was in business in one company with Jerome Brauns and she was in business in another company with Michael Hulley.

Now Jerome Brauns was the council that acted for Jacob Zuma in his fraud and corruption trial, the one that was subsequently dismissed and then reinstated. I can’t remember the year now, but I think that it was 2009 or 2010. The state asked in the high court for a postponement of 30 days before commencing the trial and the defence, which Jerome Brauns and Michael Hulley was instructing. So, the two of them were there together, they asked for a postponement of eight months and the judge eventually gave the postponement of eight months without, by the way, notifying anybody present in court that day that she was in business with the defence council and his instructing attorney.

So, we found that quite curious and we couldn’t understand how it was that this escaped both the media and the judicial services commission, so we have in fact, reported it to the judicial services commission, but more importantly, she was a high court judge then. Therefore, during that eight-month postponement we all know what happened, Piccoli was suspended, the acting NDPP was Mokotedi Mpshe who unceremoniously withdrew all the charges against Jacob Zuma and Jacob Zuma went on to become president.

So, we’re saying in its own little way, Leona Theron is responsible for the ten-year reign of misery that this country has suffered and how she then was promoted to the Appeal Court and then to the Constitutional Court as a reward for letting Zuma have the eight-month postponement, which enabled him to become president. So, we’re not happy about Leonia Theron, but we noticed that her husband, Charles Sarjoo has got massive tax judgements against him, so I’m just left wondering how a woman can sit in the Constitutional Court when her husband is embroiled in all these business activities with insanely high tax judgements against him.

He’s also mentioned there as part of the beneficiaries here. How does that work, how does Sarjoo get benefit from this corrupt joint venture?

Okay so what you’ve got, if you look at the joint venture or the consortia if you want to call it that, so you have a joint venture, which consists of a number of companies and two consortia and the companies involved are CMC Ravenna Africa Pty Ltd. or CMC Ravenna in its own right from Italy and that’s a one percent stakeholder. Then you have a company called CMI Infrastructures Pty Ltd., which owns 69%, so you have 69% and one percent and that’s 70% and then you have two consortiums and those each own 15% of the joint venture, which in theory means they will all be doing 15% of the work and getting 15% payment each. Now that is of course not going to happen.

In one of those consortiums, you have an entity, the consortium is called Masinya Empowerment Group Consortium, and that is made up of five companies or CCs. In fact, it’s three CCs and two Ptys and one of those Ptys is Charles Sarjoo as a sole director of a company called Sarkum Housing (Pty) Ltd. Now interestingly enough, Sarkum Housing, Charles Sarjoo, and other companies he’s related to have massive judgements against them and they’re all tax judgements.

So there’s a tax judgement for R2,064,000, there’s a vat judgement against Sarkum Projects for R181,000 and there’s Sarbou Construction with R5,069,000 in VAT judgements against it. By the way, this froze right across the consortiums, so many of the people involved as beneficiaries of this joint venture have outstanding tax judgements against them. If you add them all together, it comes to over R150m, so you’re just left wondering how on earth it is that these people manage to get by a tender process for R4bn.

The whole thing is really extraordinary, Paul, but just to summarise and whatever happens with this event is certainly going to affect Charles Sarjoo and by definition, surely his wife, Leona Theron who is a Constitutional Court judge. The mind boggles, but the feedback I get from many South African business executives visiting London that I engage with, is that the excrement is just too deep, that South Africa will never get out of this. I hope that you think differently.

I must say, I don’t agree. If I thought that was the case, I would have used my Irish passport and I would’ve gone to live in Europe, Australia or somewhere like that. No, but I believe the tide has turned, the wind is blowing in the opposite direction and the house of corruption, which is built on very shaky foundations will collapse. When we see its leader, Jacob Zuma being trotted off to jail in orange uniform together with all the people under him including all these people that were involved in this tenderpreneur business, which didn’t just affect Transnet, it affected PRASA, Eskom, and South African Airways.

By the way, we’ve noticed that one of the people involved over here, this fellow Mpelane Mvundle, he’s also involved with the Jacob Zuma Foundation along with Dudu Myeni, so there’s a whole lot of links over here and when we start analysing it we can see that really the big stamp that goes across the whole thing is Zuma and I think Zuma stays over, I think the ANC have voted a new leader in and I think the new leader is going to clean up the mess and hopefully the country will start to benefit from it. The money these people have stolen could’ve built a lot of hospitals, schools and housing for the poor, so it’s really the poor people in the country that have suffered the most and hopefully that will now change.

Can you see it becoming something like Operation Carwash in Brazil, which has been going on for years now and has put one president in jail, get another one impeached, 36, I think was the last count of politically influential people. In fact, I loved the description that came through one of the US publications. They said, it was like having the equivalent of the leader of the house of representatives and the leader of the senate both now in jail as an example”. Can you see that happening in South Africa?

Yes, I think we’re going to see a lot of prosecutions. The problem is the resources that are going to be needed. I sat down with Sarah Jane Trent a few weeks ago and we worked out with the resources available, with the backlog, because what you have to remember is the resources available for prosecuting cases was turned against the wind and it was used to prosecute people like myself on fake charges. I think I had five or six criminal trials, all of which fell by the wayside.

People were getting arrested and charged on fake charges just to shut down the anticorruption machinery in the country. Now all those people are still in the National Prosecuting Authority and you’re just left wondering are they going to prosecute now the real criminals and are they going to do it with the necessary gusto that they have to. I think what has to happen, is we need to get the criminal justice system uncaptured and that’s still a work in progress. Once it’s uncaptured, I see no reason at all why we don’t see these people lining up to go to prison.

It seems quite a template that they use. Again, in this instance, you refer to the McKinsey regiments plundering of Transnet where McKinsey did all the work and regiments essentially just took a commission. So, it isn’t unusual or it shouldn’t be too difficult to unravel all of this if they used almost like a cookie cutter approach.

Yes, we’ve seen the modus operandi here and we’ve described it in our report, that it was almost identical to the McKinsey regiment’s modus operandi or the McKinsey Trillian modus operandi where you have a front winning the job and getting all the work, but then being forced to have all these BEE partners and the BEE partners are nothing more than commission conjurers. They get paid for sitting back and doing nothing and I have absolutely no doubt that not one of any of the individuals involved in the tender, including Mavundla himself have an iota of a clue about how to build a wharf at a port in Durban.

Paul, just to close off with, I’m not sure if you watched the Johann Rupert chairman’s conversation with Given Mkhari, but the one thing that bothered me a lot was Mkhari’s desire to get people together to network. It’s almost like entrepreneurship in South Africa is who you know and then you make money out of it, which we are seeing from these tenderpreneurs, rather than providing a service to the public. I suppose if you can change that then you can change the whole philosophy, but am I misreading this, is tenderpreneurship really the preferred route for those who would or should be entrepreneurs?

Well, I think it has been the preferred route under Zuma. There are many capable black entrepreneurs out there. In fact, some of them have come to our offices and they’ve said, “We want to investigate corruption and the reason we want to investigate it is because we expected to win this tender and we didn’t because we weren’t prepared to pay the right people”. So there are a number of contractors out there, good quality, well-trained, highly educated, competent black-owned construction firms or other types of constructing firms like IT and so on, who want to do the work, sharpen their pencil and do a tender. They can win the tender and then they stand and watch somebody else get the job because they’re greasing palms, so I think it then leads to a situation where if you don’t pay you don’t get work and it’s that cast, we have to break and I think we’re starting to break it.

The best way to break it is to send a few high-profile people to prison and let the country see them going off to prison and then perhaps people will start tendering correctly and not paying backhanders. You know there’s a good system they use in the UK, which I’ve been analysing here where you get over the hurdles and once you get over the hurdles and you qualify to bid, there’s an online bidding process. So, you go online and it’s like an auction and you bid and you know the price keeps going until everybody stops bidding and then there that’s the person that bids last, he wins the tender and that is very transparent and that’s the sort of thing that we need to start doing in South Africa.