Africa Image Live


Grab the widget  Tech Dreams

Tuesday, 4 August 2009

The ANC Youth League and the missing millions

Draft report uncovers a host of irregularities — but league won’t act

The report, which tracks 32 deals worth at least R436-million, states the Companies Act has been violated
Youth league’s missing cash

Prominent ANC Youth League leaders should be made to account for millions of rands that went missing from the organisation’s investment wing Lembede Investment Holdings, and its subsidiary companies.

  • Malema wants investment arm closed

  • Nando’s television advert

    But the league’s executive has decided to sweep the report under the carpet and not pursue individuals who may have abused company funds or violated the Companies Act, which is a criminal offence.

    The 65-page Gobodo draft report, which the Sunday Times has seen, has uncovered a litany of financial irregularities that appear to have been the order of the day since the formation of Lembede Investment Holdings in 2000.

    Lembede was set up by the league to help to create business opportunities for young people and to free the organisation from financial dependence on the ANC main body.

    The Gobodo report has recommended that several former league leaders be questioned in relation to the transactions and monies they handled.

    Those who have been asked to account include former leaders Lunga Ncwana and Songezo Mjongile, who were high-profile associates of slain mining magnate Brett Kebble, former treasurer Pumezo Mqingwana, outgoing Lembede CEO Lonwabo Sambudla, and interim chief executive of the newly created National Youth Development Agency, Malose Kekana.

    Businessman Sello Rasethaba, who was also a close associate of Kebble and a friend of the league’s leaders, should also be questioned, the report says.

    League president Julius Malema initiated the probe after he publicly said last year the company must be disbanded. The ANCYL appointed Gobodo Incorporated in October last year to determine if there was any substance to the allegations of misuse of Lembede funds for personal gain.

    Lembede’s new board, under the chairmanship of current ANCYL treasurer-general Pule Mabe, released just two pages of the report on Thursday. It only mentioned the fact that the report found that Lembede had no audited annual financial statements and that the previous management failed to keep accounting records.

    Justifying his statement that no criminal charges would be laid against anyone, Mabe said the report did not point fingers at anyone. Although he said no further steps would be taken to address possible corruption, the report clearly states that the Companies Act has been violated.

    “We were never interested in personalities but wanted answers on whether Lembede was doing what it was formed for, or not. We have looked at the conclusions and want to implement the recommendations,” Mabe said.

    The draft report tracks 32 deals worth at least R436-million that involved Lembede Investment Holdings and its subsidiaries, but it does not reflect the current status of any of those deals. It also features many typographical errors and appears not to have been subjected to a final edit before the league’s leadership decided to release only certain details and then close the probe.

    Nine of the deals that Lembede struck are in the mining and resources sector, four are in telecoms and technology, and the rest are in fields including finance, fishing, forestry and engineering.

    Contrary to what Mabe said earlier this week, the report proposes follow-up inquiries with current and former Lembede officials and repeatedly records a lack of documentation and information to fully understand the scope, value or outcome of the deals.

    Among other things, Gobodo said:

  • Kekana, former chief of Lembede’s Progressive Youth Investment Company — a Lembede associated company — failed to account for R2-million paid by Nedbank for PYIC’s stake in the People’s Bank;

  • There is no record of any benefits being banked by LIH from its 10% stake in empowerment company Phikoloso Mining, which, at one point, held R270-million in shares in Brett Kebble’s Randgold & Exploration Company;

  • There is no trace of LIH’s R45000 share of a consultancy contract awarded to Nghala Mining, nor of its 5% holding, said in the report to be worth R5-million;

  • The LIH board was told in 2006 that the company’s stake in a company called Matodzi Engineering, one of Rasethaba’s companies, had been sold for R2888 889, but only R2.5-million was banked, leaving R388889 unaccounted for;

  • In 2003, Lembede set up a joint venture with Mococh, an oil company based on the Isle of Man, to import oil into South Africa and export it from here to neighbouring countries, including Zimbabwe. The venture only concluded one transaction — on behalf of PetroSA — and there is no record of any income from the deal being banked by LIH;

  • Lembede bought a share in the company Fibretek when it was sold off by Denel, but defaulted on its obligation to contribute R1-million to the company’s operating capital. As a result, Lembede’s share was sold for R200000, but Gobodo could not find what had happened to that income. The audit report suggests there could have been a violation of the Companies Act ;

  • Gobodo was unable to find any records concerning six deals reportedly entered into by LIH and was also unable to find enough documentation to assess the status of a deal between Lembede and Kebble’s JCI Gold. The deal appeared to include mineral rights and fishing licences;

  • LIH distributed R4.6-million to shareholders after selling its stake in Mahube consortium, which owned platinum mining rights, and LIH chairman Pumezo Mqingwana distributed a further R90000 to unidentified beneficiaries from a “discretionary fund”. Gobodo calls for more information on the transaction and the unexplained fund;

  • LIH entered into a scrip lending agreement with Kebble in 2005. It later emerged that Lembede did not actually own some of the stock it had put up as security and that LIH might have signed an agreement without understanding what was being agreed to;

  • Mjongile has to answer why there was only one transaction from PetroSA and what happened to the proceeds of the deal; and

  • Mjongile has to further explain what happened to the R200000 reported to have been received from Fibretek deal.

    Mjongile told the Sunday Times yesterday that, at the end of his term as Lembede CEO, he reported and handed over “everything to the ANCYL national executive. I was never contacted by Gobodo. If they needed clarity they would have contacted me.”

    Asked whether he had seen the report, he said: “I do not know what you are talking about.”

    Outgoing Lembede CEO Lonwabo Sambudla confirmed that the auditors interviewed him but this had had nothing to do with his period as CEO. He said he would hand over “everything” when he leaves, adding that, as chief operations officer, he had inherited problems left by the organisation’s previous managers.

    Kekana yesterday said he had never been a director or a shareholder of Lembede or its CEO, although the report clearly states that he was head of PYIC, which is Lembede’s associated company. He said he has “not been privy to any report nor have I been contacted for any investigations”.

    Mabe said Lembede’s assets would be consolidated into a trust.

  • No comments:

    AllAfrica News: Latest

    Pambazuka News :Comment & analysis