Pauli van Wyk’s investigation which exposes the real Malema and his VBS-funded splurging

There have always been two kinds of politicians. Those who follow a higher purpose, deriving their rewards from the satisfaction of service. And those whose self-interest is fed by the power which politics endows. Since the dawn of democracy, the balance has ebbed and flowed between these diametrically opposed philosophies. Indeed, democracy as a force for good only survives because of the many hardy souls through the ages who found the courage to stand up to those gaming this idealistic system. For that we can thank Socrates, who got the ball rolling two and a half thousand years ago when paying for this principle with his life. In South Africa, the protection of the young democracy is increasingly played by the Fourth Estate – and of late has been led by young women. SABC journalist Suna Venter paid the ultimate price at just 32 after, inter alia, taking a bullet in the face for challenging her corrupt bosses. Curiously, rather than deterring others, her example appears to have encouraged them. Especially, it seems, at the publicly-funded Daily Maverick. Two months ago DM’s assistant editor Marianne Thamm scoured through the trash of partying EFF members to expose the reality of a political party that acts very differently to the socialist sheet from which it preaches. This week her colleague Pauli van Wyk opened the EFF’s hypocrisy window wider still after meticulously researching and detailing EFF leader Julius Malema’s astonishing profligacy with money plundered from the poorest of the poor. The results of her investigation, republished  below with permission by the Daily Maverick, leaves nothing to the imagination. Only our collective bemusement at how this most entrepreneurial of politicians hasn’t already handed himself over to the police, or been arrested by law enforcers. Because when the penny finally drops among his constituents, as it shall, his future will be very bleak indeed. Because there is nothing more powerful than the truth. – Alec Hogg

VBS Theft, Money Laundering & Life’s Little Luxuries: Julius Malema’s time of spending dangerously

By Pauli van Wyk of Scorpio, Daily Maverick 

In July 2018, hundreds of panicked people queued for days at the headquarters of VBS Mutual Bank in Thohoyandou, Limpopo, in an attempt to extract their money from the failed bank. For some, the flames of panic were fuelled by the knowledge that their entire life’s savings were deposited at VBS.

Meanwhile, during the same month in 2018, Julius Malema utilised beneficiary of VBS-loot Mahuna Investments’ bank card to spend R900,000 on Gucci and Le Coq Sportif in Sandton City (R27,094), the Durban July (R30,860), the Hampshire Hotel in Ballito (R11,560), the Polokwane party venue Mekete Lodge (R416,900), and the Nando’s in Vryburg (R149).

If one VBS depositor managed to save R2,000 per month, it would have taken them more than one year to fund Malema’s Gucci and Le Coq Sportif expenses at Sandton City in just July 2018.

The R900,000 Malema spent during July 2018 from Mahuna Investments’ business account at Absa is part of Malema’s share of the loot – at least R5.3m robbed from VBS Bank. Without calculating tax implications, the VBS-sourced millions are about four times Malema’s annual salary as a member of Parliament.

Read also: Unarmed robbery at VBS beats highway heists hands down

CIPC documents show that Malema’s cousin, Matsobane Phaleng, is the official owner of Mahuna Investments and its banking account. However, Scorpio investigation shows that Malema used the Mahuna Investments account as his personal slush fund and alter ego.

(Neither Malema nor EFF spokesman Mbuyiseni Ndlozi reacted to emailed, detailed questions sent to the EFF top management on Thursday 5 September 2019. Malema has previously denied any link to Mahuna Investments or the VBS robbery.)

In his response to Scorpio’s question, Phaleng claimed that the expenses in Mahuna Investments’ bank statements are all his own, that the company is a legitimate business, and that he has done no wrong. He further denies that the account, of which he is the legal owner, is a recipient of VBS loot and says the company has paid all the relevant taxes.

(Read Phaleng’s response/comment to Scorpio’s questions here)

Scorpio attempted to get video footage from several shops where the acquisitions were made. Some of the shops delete their video footage every few months, and some cited legal considerations or fear for getting trashed as a reason for not sharing their footage with Daily Maverick. A close associate of a high-end shop confirmed that Malema is a “well-known” customer who has his “own shop assistant”. A second source in a managerial position confirmed the first assertion, adding that “… Julius visits the shop when it is quiet, and asks for unbranded bags before he leaves”.

In this article, we will dissect Phaleng’s claims along with an analysis of our data. We focus on the R5.3m in VBS money funnelled to Malema, which forms part of the illegal R16.1m Brian Shivambu’s company Sgameka Projects received from VBS. It is crucial to note that Sgameka Projects was not a legitimate company and provided no legitimate service to anyone. The only money it ever received was derived from VBS Bank. The company offered no service in return, paid no taxes and employed no staff. Everything flowing out of Sgameka Projects is, therefore, proceeds of crime. Sgameka Projects paid a total of R4.8m in several tranches to Mahuna Investments, the company’s VBS bank statements show. A further analysis of the Standard Bank accounts of Floyd Shivambu’s slush fund Grand Azania details how R500,000 was also paid over to Mahuna Investments.

 

Following the money

Scorpio followed the VBS money trail and can now provide a detailed account of how stolen VBS money funded Malema’s lifestyle, business ventures and political aspirations.

We analysed around 470 transactions effected in 2017 and 2018 that were captured in Mahuna Investments’ bank statements. These, including the VBS bank statements of Sgameka Projects and the Standard Bank bank statements of Grand Azania, form part of a broader criminal investigation into wrongdoing at VBS.

The Mahuna Investments account received over R10m in this period. About half of it is VBS money. As explained above, all money derived from Sgameka Projects is proceeds of crime.

Just over R4m from 12 unidentified sources was also paid into the account. In July and August 2018, Afrirent also paid a total of R500,000 to Mahuna Investments. amaBhungane’s Micah Reddy and Stefaans Brummer reported that these payments may be seriously questionable, and linked the payment to a possible kickback derived from a R1-billion fleet tender involving the City of Johannesburg.

(The rest of the money that landed in Mahuna’s bank account is the subject of another investigation, and you will hear about it soon – Ed)

Mahuna Investments is a slush fund that seemingly paid no taxes or any other business expenses, the bank statements show. It did not operate as a business, does not have a website or logo and seemingly did not tender for any state contracts, as Phaleng’s other company Tsa-Tshidi Trading did.

Instead it contributed towards Malema’s eldest son’s school fees, the Munzhedzi Family trust named after Malema’s middle son, Malema’s house and pool in the affluent Johannesburg suburb of Sandown, tailored suits from designer Linda Makhanya, a popular Polokwane party venue Mekete Lodge, the EFF’s birthday celebrations, and Malema’s own political campaigning.

At the same time, the bank card linked to Mahuna Investments has followed Malema around the country. By matching Malema’s diary documented on public social media accounts with the point-of-sale bank card transactions, Scorpio found that, among others, the VBS loot was spent in Durban and Ballito during the Durban July in 2017 and 2018, on the EFF’s fifth birthday celebrations close to East London, the 2018 land debate in North West, as well as in Seshego and Polokwane on numerous occasions, including Malema’s grandmother’s birthday in 2017 and during Christmas and New Year in 2017 and 2018.

These point-of-sale transactions, where the cardholder is in the shop, account for roughly 40% of all transactions in the Mahuna Investments account.

Read also: The Great VBS Heist: R1.9bn looted, at least 53 entities involved

At the same time, Malema’s cousin and “owner” of the Mahuna Investments account, Matsobane Phaleng, received a sum total of R245,000 in “director’s fees” paid into his personal account between 2017 and 2018. Phaleng’s public social media accounts, as well as those of his associates, do not suggest that he was at the same locations when and where the money from the Mahuna business card was spent (as detailed below).

When questioned, Phaleng described Mahuna Investments as a “small company” that is doing things right. Telephonically, he denied ever receiving any VBS money.

“I wish to put on record that we are a tax compliant small company and do not owe our taxes,” Phaleng said.

The Mahuna Bank statements recorded no tax or VAT payments in 2017 and 2018. According to tax law, VAT payments must be paid to SARS by the company which generates the income.

In 2012, Phaleng also denied any family relationship to Malema. Read about the Phaleng/Malema feeding scheme as documented by Mail&Guardian here.

In answers to Scorpio seven years later, on 8 September, Phaleng said that “it is not a secret that (Malema) is one of my many cousins”.

Wasn’t me!

Vehement denials and violent online attacks on journalists became the trademark of Malema, Floyd Shivambu and EFF followers since October 2018 when their involvement in the VBS bank robbery spilled into the public.

Malema claimed repeatedly that “no VBS money came into our coffers” and that the EFF’s “books are open” for all journalists to see.

None of this is true.

Scorpio has five times requested Malema and EFF treasury-general Leigh-Ann Mathys to open their books as promised. First, we were told to wait until after the May 2019 elections. After the elections we received no reply to our requests.

In their report titled The Great Bank Heist, Motau and Werksmans stated that 53 people and entities stole R1.89bn from VBS bank. Brian Shivambu, the frontman for Malema and his brother Floyd, was listed as “amongst the biggest recipients” of illegal money.

In the first article in this series, Scorpio shone a spotlight on the VBS-loot channelled towards the EFF: ‘Cruising nicely’ on VBS: EFF’s parties, lies and looted money.

These machinations are a crude scheme designed to mask the money’s origin and obscure the ultimate beneficiaries: Julius Malema, Floyd Shivambu and the Economic Freedom Fighters.

Mahuna Investments – whose is it?

There is no documentation or explanation to support the R5.3m siphoned off from VBS which Sgameka Projects dumped into Malema’s slush fund.

According to Phaleng, Mahuna Investments did consultancy work for Sgameka Projects. That, however, is practically impossible as Sgameka Projects conducted no business, delivered no service and received no other income apart from the VBS loot.

Matsobane Phaleng told Scorpio Mahuna Investments never received any funds from VBS Mutual Bank. However, these credits from Brian Shivambu’s Sgameka Projects are clearly marked as “VBScredits*shivambu”.

Scorpio asked Phaleng to assist our investigation by describing the consultancy work done for Sgameka Projects, how many people he employed, what his rates per hour were and what his recommendations to the problems for Sgameka Projects were. Phaleng said only:

“I have answered your questions.”

Nothing in Mahuna Investments’ bank statements suggest any of the above expenses or income. In fact, nothing in Mahuna Investments’ bank statements suggest that the company operates as a legitimate company. The expenses rather suggest that the money was used for personal expenses such as clothing, groceries, accommodation and travel expenses.

Further to that: VBS bank statements show that Brian Shivambu’s Sgameka Projects delivered no service to deserve the cash payments from VBS-linked companies and he did not qualify for the home loan and business loan VBS granted to the company.

So, WHO was spending Mahuna Investments’ money?

Around 200 of the 470 transactions Scorpio analysed between 2017 and 2018 are point-of-sale transactions. A bank card is used in these transactions and the shop and location of the sale is recorded on the bank statements.

Scorpio matched Malema’s diary publicly documented on various social media accounts, including his own and the EFF’s, to these payments. In this section, we will present some of the examples of how the bank card followed Malema around the country.

The bank card was used intermittently – some months, hundreds of thousands of rand was paid using the bank card, and some months only internet payments reflect on the bank statements.

The bank card wasn’t in use, for example, during the EFF’s birthday celebrations in July 2017, but several internet payments reflect that R354,000 were paid from Malema’s slush fund to Eyadini Lounge during this period. This article reflects VBS-money paid from Mahuna Investments to and for the benefit of the EFF:

VBS loot also paid for expenses at the Durban July in 2017. An internet payment of R538,410 reflects on 28 June in the bank statements, described as “Opulent Marquee”.

The Opulent Experience Marquee was one of 30 tents pitched for the Durban July that year. Whether the half-million VBS-rand payment relates to a business venture for Malema, or entrance to the tent, is uncertain at this stage. Malema did not answer questions relating to this payment. (Entrance for 10 people under its most expensive package can now be had for R70,000.)

By this stage in 2017 Sgameka Projects has sent the first three illegal VBS-payments to Mahuna Investments, totalling R2.5m.

Phaleng denied receiving any VBS payments. His answers further seem to suggest that Mahuna Investments funds the Opulent-tent annually. Said Phaleng: “We host the Opulent Experience Marquee annually at the Durban July, and we make money out of selling cooperate (sic) tickets, beverages and food.”

This answer seems, however, to be contradicted by the Mahuna Investments bank statements. The only payment towards “Opulent Marquee” was effected in July 2017. No such payment reflects in June or July 2018 bank statements.

Mahuna Investments received another R1.8m in VBS loot towards the last part of 2017, while the same spending trend followed Malema towards Christmas and right into the new year of 2018. In early December 2017, on the 12th, Malema addressed the EFF’s student command at the Stay City Hotel in Johannesburg. On the same day, the Mahuna Investments bank card paid for a shopping spree at Sandton City Gucci (R9,900), Louis Vuitton (R11,100), Total Sports (R1,197) and Checkers Hyper (R268.51).

When Malema left for Seshego and Polokwane to celebrate Christmas and New Year in his home town, the Mahuna Investments bank card followed him too. On the eve of the festive season, R13,529.52 in VBS money was spent on PnP, Truworths, Edgars and Spitz in Polokwane. An internet payment on 30 December 2017 described as “New Year Eve” for R4,300 was also effected to an as yet unknown account.

The VBS game went belly-up by early 2018, when Treasury’s Ismail Momoniat instructed municipalities to ask for their money back from VBS. The bank had no money to pay back the municipalities, and recorded a “liquidity” crisis. The Reserve Bank was at that stage unaware of the fact that “liquidity” crisis was key for “robbed into insolvency”.

Then the house of cards came crashing down.

The SARB put VBS under curatorship in March 2018 – about a month after Sgameka Projects effected the last illegal VBS-payment of R500,000 to Mahuna investments. In May 2018, Floyd Shivambu’s slush fund Grand Azania paid R500,000 to Mahuna Investments. Our data suggests, for now, that this was the last VBS-based payment dumped into Malema’s slush fund.

By this time, May 2018, Malema had R5.3m in money robbed from VBS to spend.

In early July that year, Malema, various family members and friends again attended the Durban July. The Mahuna Investments bank card was there for the party, too. About R45,500 was spent between 6 and 9 July during the family’s stay, including at the Durban events venue The Werehouse (R10,860), the Hampshire Hotel in Ballito (R11,560), Lifestyle Tops in Ballito (R2,090.96) and what seems to be a fuel purchase at the Montrose Garage close to Harrismith (R990.15) on the way back to Johannesburg.

There were no expenses towards the Opulent Experience Marquee in this year as Phaleng claimed.

July 2018 is also the month when VBS-depositors queued outside the bank’s headquarters in Thohoyandou for three days, some sleeping outside the bank, in an attempt to get their money back.

Our data shows that when he attended the July 2018-land debate in Vryburg, Mmabatho and Rustenburg, the Mahuna Investments bank card was there with him. Again.

During 17 to 19 July 2018, the bank card paid over R6,200 for fuel, accommodation in Christiana (close to Vryburg) and Rustenburg, a purchase at a Mmabatho pharmacy and Nando’s in Vryburg. The social media accounts of Malema, the EFF and their followers place Malema in each town on the dates the point-of-sale payments were made.

The bank card linked to Mahuna investments also attended the EFF’s fifth birthday celebrations, along with Malema. It paid R29,380 on 28 July 2018 for what seems to be accommodation at the Premier Hotel in East London, just over 30km from the Sisha Dukashe Stadium in Mdantsane where the EFF held their birthday rally. A day before, the card spent R4,454.97 at Ultra Liquors in East London.

The Mahuna Investments bank card followed Malema to Cape Town, too. At the height of the land debate, on 22 August 2018, the EFF’s Twitter account posted a video of Malema in Parliament discussing the amendment of section 25 of the Constitution. The Mahuna Investments bank card shows he arrived the previous day, made a payment to the City Lodge at the V&A Waterfront (R1,861.80) as well as at the Capital Mirage Hotel (R2,095) for the evening of 21 August, and seemingly left Cape Town the next day after the parliamentary session. The Mahuna Investments bank card also paid R350 at the airport Wimpy and R1,000 was withdrawn at the airport ATM.

In September 2018 Malema is in Polokwane. The Mahuna Investments card, again, is there too. Nimmys Butcher House in Seshego posts a picture of Malema and his wife on Instagram on the 23rd, thanking them for their support.

On the same date, Malema bought R1,470 at a Liquor store in Polokwane. Another payment of R4,521 was recorded at the same store on the following day.

December 2018 was another big spending month. Malema spent just over R1m on Polokwane party venue Mekete Lodge (R367,000), what seems to be designer suits from Linda Makhanya’s LM Tailored Suit (R59,000), Gucci (R10,200), @Home (R29,233), Mr Price Home (R13,905.10) and PnP (R5,807.81).

Following that, between 20 and 31 December 2018, Malema’s slush fund effected several payments in Polokwane, including a R50,000 internet payment labelled “Fireworks”.

Julius Malema has in the past vehemently denied any knowledge of or link to Mahuna Investments. When questioned again on Thursday, 5 September, over the curious similarities between his movements and that of the Mahuna Investments bank card, Malema did not reply.

In the light of how the Mahuna Investments bank card followed him around the country, his denials seem to enter the realm of a statistical impossibility.

The data further doesn’t fit into Phaleng’s version of accounts. He told Scorpio that “all the transactions are to the benefit of the company, we invest in everything and everywhere where there’s potential for returns.”

Payments to Gucci and Louis Vuitton in Sandton City, as well as a payment to Matsobane Phaleng marked “director fee”.

When we asked how the company benefited and what return it received from bankrolling Malema’s child, school funds paid to Wits University, Malema’s house in Sandown, the Economic Freedom Fighters and the expenses on Gucci, Louis Vuitton, PnP, Woolworths and Nando’s, Phaleng replied only, “I have answered your questions, thank you.”

The big-ticket items

Just under 270 transactions from the 470 Scorpio analysed are some form of internet payment.

Scorpio grouped several payments that seemingly fit together. Not all of these themes can be described yet and necessitate further investigation.

A grouping that received a relatively small amount in VBS funds – a total of just over R200,000 – relates to Malema’s eldest son and what is described in the bank statements as “school” or “school fees”. Scorpio confirmed that at least two payments of R50,000 and R15,757 were paid to a primary school and a private school. The name of Malema’s eldest son appears at least three times in the Mahuna Investments bank statements, of which one payment is described as “camp”.

Malema’s Munzhedzi Family Trust, named after his second son, is also referenced in the bank statements in a R10,000 payment from Mahuna Investments.

Not all the payments in this grouping seem to refer to his children. At least two payments seem to have been paid into the Standard Bank account of Wits University.

A Polokwane party venue Mekete Lodge seems to be Mahuna Investments’ single biggest expense – a business venture Malema, EFF member Herbert Matlaila and at least three of Malema’s direct family members, including Phaleng, seem to be deeply involved in.

Phaleng said, “We run our hospitality business at Mekete, and we also host public events and bring famous local and national artists and DJs at Mekete, and we charge for entrance and sell food and beverages”. About Malema’s relation to Mekete Lodge, Phaleng said, “he attended almost all these events, and he’s one of our good patrons, and we really appreciate his support”.

At least 35 internet payments were effected to Mekete Lodge in 2017 and 2018, totalling R2.07-million.

These payments are described as “Mekete Grading”, “Bar and Kitchen”, “Tent Mekete” and “Mekete Irrigation”. This includes four payments marked as “Slaysunday” (R654,000) and “Intimate Sunday” (R28,000) – different events held at Mekete. It seems that five payments marked as “buying stretch tent” totalling R180,000 were also to the benefit of Mekete Lodge.

Malema has a long history with the venue. It was once owned by a close friend, the now-deceased Matome Hlabioa, who died in 2015. It is not certain who the real owner of Mekete Lodge is. Malema’s cousin Tshepo Malema and the EFF’s Herbert Matlaila seem to be involved with the marketing of the event.

Malema’s VBS contributions to Mekete Lodge seem to have landed on rich soil. The business is now a wedding venue, a lodge, a party venue and showcases some of South Africa’s hottest local music and performing talent.

Another big-ticket item – almost half a million rand – seems to be Malema’s designer suits. Between 2017 and 2018 Mahuna Investments paid a total of R415,087 in 10 tranches, marking it as “cooperate wear” (sic) to the Standard Bank account of what seems to be fashion designer Linda Makhanya’s business, LM Tailored Suit. Some payments were described as “JM”, or “JSM”.

Makhanya reacted on questions sent via WhatsApp, saying his company LM Tailored specialises in personalised image consultations to clients including royal families and state presidents. He, therefore, claims confidentiality, and declined not to comment on the half a million VBS rand in his account. When asked if he will donate the VBS money to victims of the robbery, Makhanya said:

“I understand your job is to seek such information but our nondisclosure agreements doesn’t permit me to disclose any more information than the information on public display (on his Instagram account).”

Scorpio did confirm that the Standard Bank bank account receiving the R415,087 from Mahuna Investments belonged to LM Tailored Suit.

The single biggest payment to Makhanya of R148,827 were effected on 2 September 2017, days before Malema’s graduation from Unisa. By the time this payment was effected, Mahuna Investments had received R2.5m in VBS loot from Sgameka Projects.

A payment to designer Linda Makhanya marked as “cooperate wear” and another incoming payment from Brian Shivambu’s Sgameka Projects.

Malema’s house at 49a Edward Rubenstein, Sandown, Johannesburg, is another big-ticket item. In the first part of this series, as well as here, Scorpio described how Mahuna Investments effected four payments totalling about R460,000 towards the house. Malema has “rented” there from as early as 2012. It was registered earlier in 2019 as an asset on the books of the EFF.

These payments from Mahuna Investments, effected between July 2017 and February 2018, are linked to upgrades to a pool and the property.

This extract shows payments to the Sandown house at 49a Edward Rubenstein Julius Malema used to rent, director’s fees paid to Matsobane Phaleng, several payments marked “July 26” referring to the EFF’s fourth birthday celebrations and another marked “EFF Eyadini”, paid to the party venue in Durban where some of the EFF celebrations where held.

According to the neighbours, Malema still lived on the property in 2018. The deed documents that Scorpio has seen show that around June 2017, the property was transferred to the name of the “Economic Freedom Fighters”. The purchase price was R5.25m. The origin of the balance of the funds paid towards the house so far is unknown at this stage.

Malema’s party the EFF benefited handsomely, too, from the VBS looting orgy, as described in this article.

No criminal prosecution

Based on our analysis of the VBS-scandal and the R16.1-million flowing towards the EFF leadership, Julius Malema, Floyd Shivambu, Brian Shivambu and Matsobane Phaleng contravened several acts, criminalising their conduct.

Law enforcement have the relevant bank statements, which forms part of a broad criminal investigation into the VBS robbery.

So far, the VBS liquidator Anoosh Rooplal is the only one to have shown any results. Rooplal has sequestrated and liquidated a handful of former VBS bank managers, related family members and related companies. Several court procedures have been initiated to claw back more of the R1.89-billion robbed from the bank.

Brian Shivambu, too, has already paid up R1m, and conceded to repay another R1.78m. The money relates to a possibly illegal and fraudulent loan of R4m to Sgameka Projects in order to open a wine bar in Soweto.

In his final response, Phaleng said, “we are taking legal advice as to whether it is legal for you to obtain our bank statements without our consent because we suspect that you used illegal methods to get them”.

He did not explain who the “we” are that he refers to.

Scorpio will welcome legal action and any chance to investigate more of Mahuna Investments’ income and expenses which supported Malema’s lifestyle, business propositions and political aspirations. DM