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KZN Premier top chief gets bail in fraud and intimidation case

KZN Premier top chief gets bail in fraud and intimidation case
Des Erasmus
By Des Erasmus
2 Sep 2022
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The Director-General in the KwaZulu-Natal Premier’s office was arrested along with five others earlier this week, but released on bail.

Dr Nonhlanhla Mkhize, the Director-General in the office of the KwaZulu-Natal Premier, who this week was charged with fraud, intimidation and defeating/obstructing the course of justice in relation to the irregular appointment of service providers at Mhlathuze Water, was released on bail of R25,000 today.

Mkhize, 58, and her alleged accomplices Sipho Mabaso, Sithembelo Mhlanga of Mhlanga Incorporated, suspended Mhlathuze Water CEO Mthokozisi Duze, Thabiso Khumalo and suspended Mhlathuze Water CFO Babongile Mnyandu, were arrested on Sunday and Monday.  

Khumalo and Mnyandu were released on bail of R5,000 and R60,000 respectively on Tuesday, with the state not opposing. They will return to the Durban specialised crime court on 6 December.  

Bail was opposed for the remaining four applicants – including Mkhize - who were kept in custody while their legal representatives argued for their release.

Magistrate Garth Davis told the court that he would rule on the bail applications of Mabaso, Mhlanga and Duze on Tuesday, 6 September.  

Said Davis: “It will suffice at this juncture to note that applicant one (Mkhize) is not implicated in actual fraud and corruption… and that the limited role played by her… as stated in the application of the state. [In my view, this] shows that the evidentiary material advanced in respect of the first applicant does not cross the threshold of the likelihood that if she was released, she would attempt to influence or intimidate witnesses.”

Any concerns that remained could be satisfied by the fixing of appropriate bail conditions, said Davis.

No communication allowed

The most notable of the conditions was that Mkhize was to have no contact, directly or indirectly, with the management or board of Mhlathuze Water. She was also barred from entering the water authority’s premises in Richards Bay, or coming within 500m of it. Mkhize will also return to court on 6 December. 

Representing Mkhize in her bail application throughout the week, Advocate Griffiths Madonsela, SC, told the court that the case made by the state was “the weakest I have ever seen”.

“It doesn’t even get off the starting blocks,” he said.

Madonsela accused Investigation Officer Frans Mphaki of deliberate “falsehoods” in the affidavit he submitted in opposition to bail for Mkhize. “It demonstrates maliciousness,” said Madonsela.

There was no evidence to implicate his client, he reiterated, and keeping her incarcerated (for two days at that stage) was another show of “maliciousness”.

“The state says there was a conspiracy [among Mkhize and her co-accused] because she was overseeing forensic investigations in the province…. The director-general has nothing whatsoever to do with national entities like water boards. That is a national competency.”

But, he said, even if one was to accept the state’s case “with all of its shortcomings”, the question that remained was how it was an act of intimidation to introduce people to each other and facilitate a meeting.

“We dispute that the arrest of [Mkhize] is lawful in the first place.”

State failure to prove


The state had failed to prove that there were illegal happenings at the water board that Mkhize was aware of, said Madonsela.

The reasons for the arrests date back to November 2018, when the water authority put together a pool of 16 law firms to be part of a panel that would undertake legal work, predominantly entailing the recovery of funds, with a budget of R360,000. 

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But it was the inclusion of Mhlanga Incorporated, owned by lawyer Sithembelo Mhlanga, at the behest of Duze, that led to an alleged three-year looting spree, the bulk of which occurred during the Level 5 lockdown.  

Mphaki found that in total, Mhlanga was paid in excess of R37-million under the direction of Duze, who was acting illegally and outside of his board-mandated authority.  

According to the charge sheet, Mhlanga received 80% of all the legal work dished out by the water board, with the remaining 20% shared among the other 15 firms. 

It was here that the original crime allegedly took place, which led to a cascade of events involving muscleman Mabaso impersonating an intelligence officer in the employ of the state, heavily armed bodyguards and investigators coming face to face at a disciplinary hearing, and a series of incriminating phone calls linking the sordid mess to the office of the Premier in KwaZulu-Natal. 

Luxury and bribes


The money was used to fund openly luxurious lifestyles and pay bribes along the way, according to Mphaki. 

There is clear evidence that Mhlanga used his money to build a R16-million home in Ballito, while the state believes proceeds of the looting bankrolled the construction of Duze’s R20-million home in the exclusive Mtunzini Zini River Estate on the KwaZulu-Natal North Coast.

Furthermore, Mphaki believes Mhlanga lied when he was appointed to the legal panel, when he said he had the capacity to undertake any work, which he did not. Duze allowed Mhlanga to outsource his work. Mhlanga appointed the controversial ANC-linked business – Morar Incorporated – to assist, and together they pocketed R12-million. 

Said Mphaki in his affidavit: “Mhlanga Incorporated’s records submitted to the water board indicate that this work was performed over a period of 64 days. Substantial parts of the work that was claimed to have been performed, is claimed to have been performed during the Level 5 lockdown, when the republic was shut down and movement of all citizens was restricted.

“The persons that Mhlanga had listed in his invoices and supporting documents as the persons that assisted him in performing the work have submitted statements under oath to the effect that they did not perform the work claimed by Mhlanga.”

Mphaki said that the claims submitted by Mhlanga were “manifestly fraudulent” and that the work was never done. 

In a supplementary statement, Mphaki said he was aware that the board of Mhlathuze Water initiated a forensic audit and investigation into allegations of irregular conduct by Duze and CFO Mnyandu on the basis of a complaint received from a whistle-blower. Both Duze and Mnyandu were suspended in 2021. 

On 27 January 2022, the board received a presentation of the outcomes of the preliminary investigation and agreed to proceed with laying a criminal charge. Mphaki said he received the report in March 2022 and was allocated members from the National Clean Audit Task Team to assist him in his investigation. 

Allegedly intimidated


But it was between the board taking a decision on laying a criminal complaint and the docket landing on Mphaki’s desk, when chairperson Thabi Shange was allegedly intimidated by Sipho Mabaso, who had allegedly been sent to Shange’s home by Mkhize.

According to Mphaki, between 11 and 13 February 2022, and after multiple calls with Mkhize, Mabaso – who Shange was told worked for the National Intelligence Agency – arrived at her home, demanded she hand over the forensic report, and threatened her with arrest. 

He also, according to Mphaki, tried to convince Shange to meet with Duze and Mhlanga, to resolve the matter and drop all charges against the duo. 

Mphaki said that after becoming aware of the incident, he subpoenaed the phone records of Mkhize, Mabaso, Duze and Mhlanga. 

“The analysis of the telephone records supported the statements made by the complainant.”

Acting in concert?


“The collective evidence makes it reasonable to conclude that Mkhize, Mabaso, Mhlanga and Duze were acting in concert… towards a common objective through Mabaso, to intimidate Shange into desisting the furtherance of the ongoing investigation,” said Mphaki. 

He said that while Mabaso had once been a member of the SANDF, he was not a member of any law enforcement agency. 

“The profile of Mabaso reflects that he has been charged for several violent crimes ranging from assault with intent to commit grievous bodily harm, two [charges of] pointing of a firearm, theft, robbery and malicious damage to property. Mabaso has also been charged with fraud and forgery. This notwithstanding, I could not confirm that Mabaso was convicted for the various offences for which he was charged, save to show the past dangerous history of Mabaso.”

Mphaki said it was unusual that Mabaso would be an associate of the other accused. “On the balance of the evidence available, it appears that Mkhize, Mhlanga and Duze did not have any other reason to associate with Mabaso except that he was required to muscle Shange into stopping her from proceeding with the ongoing investigations against Duze and Mhlanga.”  DM

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