VBS and the Free State connection – Magashule corruption crawls out of the rotting woodwork
The DA has requested the Auditor-General in the Free State to investigate the Free State Development Corporation’s (FDC) involvement with VBS, especially the R104 million rand which is alleged to have been looted as mentioned in Advocate Terry Motau’s report.
See the letter here.
The VBS Report implicates the Free State Development Corporation (FDC) in serious “looting” at the controversial VBS Mutual bank amounting to R104 130 932,00. The FDC’s 2017/18 Annual Report only refers to R10 018 233,00 which was inaccessible due to the curatorship imposed on the bank.
The FDC appears to have become a conduit through which resources are allocated to ANC cadres and cronies and family members of senior politicians. This is done through political influence under the pretext of promoting the development of small, medium and macro enterprises in the province.
As far back as 2008 the wife of the former MEC for Economic Affairs Neo Masithela, who was responsible for appointing the FDC board, received a loan from the entity. The former MEC for Finance, and current MEC for Education, Tate Makgoe and his associates received two loans of R2,66 million. At the time, the Chairman of the FDC Tsietsi Matang defended these loans on the grounds that MEC’s, their associates and families were regarded as previously disadvantaged.
The inappropriate links between former Free State Premier Ace Magashule and some of his criminal cronies to the FDC are legendary in Free State government circles.
Magashule has historical business ties with convicted fraudster Mohlouoa “Blacky” Seoe, who is a former chairperson of the FDC and did deals with the FDC after his departure from the entity. He was linked to Magashule through their joint involvement in SAMBAL investments which received lucrative lease agreements with the provincial government in 2011. Last year Seoe was found guilty of fraud relating to provincial government tenders.
Seoe and Magshule were both present at a visit to a Shell Filling Station that was bought by Magashule’s daughter, Thoko Alice Malembe. Malembe allegedly obtained the property worth R9 million with the intention to lease it to Shell through Magashule’s improper influence with the FDC in 2014.
The FDC took over the controversial Vrede Dairy Project from the Gupta-linked Estina in 2014 and immediately appointed a company E’tsho to manage the project that milked between 100 and 160 cows. The professional fees charged by E’tsho, that has other lucrative construction projects in the Free State, amounted to R12 million a year while the legitimate beneficiaries were completely side-lined. There are also 300 to 500 cattle missing which is among other issues relating to this project under investigation by the Free State Legislature Public Accounts Committee on the insistence of the DA.
At the end of 2016 the FDC allegedly allowed a company Ithuteng Consultancy owned by Glen Mudau Netshivhodza to collect and pocket rent amounting to R2 million at an FDC owned 42 unit housing complex called Village Square in Bloemfontein. Netshivhodza is from Magashule’s home town of Parys and is allegedly one of his confidants.
The Auditor-general’s report for 2017/18 indicates that the FDC incurred R109 797 410,00 in irregular expenditure due to non-compliance with supply chain requirements and serious internal control deficiencies.
The FDC’s track record indicates that the entity is politically compromised and appears to have become an instrument in the patronage and crony network that symbolises Magashule’s legacy in the Free State.
The DA will use all the legal instruments available to us to ensure that all those implicated in the VBS are held to account for their blatant looting of poor people’s money.
Statement issued by Dr. Roy Jankielsohn, Leader of the Official Opposition in the Free State Provincial Legislature, 12 October 2018
