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Millions Out, Billions In (Part One): Businessman Thulani Majola’s investment in ANC and EFF kept everyone sweet

Millions Out, Billions In (Part One): Businessman Thulani Majola’s investment in ANC and EFF kept everyone sweet
Julius Malema in Giyani in March 2016. (Photo: Twitter, Tonny Myambo / @RivalaniMyambo)
Micah Reddy and Stefaans Brümmer for amaBhungane
By Micah Reddy and Stefaans Brümmer for amaBhungane
2 May 2021
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Some days Thulani Majola gave generously to the ANC; some days he gave to EFF leader Julius Malema. This even-handedness might help explain the hoard of government contracts Majola’s LTE Consulting accumulated over the years, whose value can be measured not in millions … but in billions. This is the first of a two-part series.


Politically connected businessman Thulani Majola, recipient of billions in questionable government contracts, has artfully played both sides of the political aisle, handing out millions to ANC causes and to EFF leader Julius Malema, often in the same period.

Majola’s company LTE Consulting made regular headlines for its role in a water project in Giyani, which failed to bring water but cost taxpayers R3-billion.

Majola also squeezed almost a billion from several projects the company secured from Gauteng’s department of human settlements. According to an analysis by News24, of that R1-billion, LTE received R224-million for projects it claimed it never worked on, while separate questions have been raised about how the company obtained one of the Gauteng tenders worth R200-million – see Mokonyane’s history with LTE alongside.

Despite public outrage and official investigations, neither scandal has yet damaged Majola – though  the Hawks raided LTE Consulting in November over an unrelated Covid-19 tender.

Over three years between 2016 and 2019, Majola doled out over R3-million to a Malema-linked front company, and over R14-million to various ANC structures. Donations were made in bursts, some modest, some substantial, their frequency peaking in the run-up to elections – see the accompanying graph detailing the payments.

The Malema donations were to Santaclara Trading, a company fronted by the EFF leader’s cousin Jimmy Matlebyane, a 28-year-old DJ who has listed among his addresses an upmarket Sandown home owned by Malema via his Munzhedzi Family Trust. The house was previously owned by the EFF.

Santaclara’s bank account subsidises Malema’s personal expenses and some party activities.

Another quarter of a million went to DMM Media and Entertainment, connected to EFF secretary-general Marshall Dlamini, a Member of Parliament.

Both companies have figured in previous amaBhungane reports – see Jimmy the DJ and the EFF connection and DMM Media: another EFF link alongside.

Asked if he or LTE made any other payments to any other EFF leaders or companies linked to EFF leaders, Majola’s response was “no”.

Majola’s ability to win massive government contracts in a diverse range of specialist fields across the country has astonished rivals – particularly given the number of projects that have got into trouble. It is hard to believe there is no connection between his generosity towards those with political influence and his success at winning or keeping contracts.

Tempting as it may be to surmise that LTE’s payments were “pay to play” because their timing coincided with particular tenders, the evidence for this is inconclusive, not least because many payments did not coincide.

This raises the question of whether the payments were general sweeteners to keep politicians onside. Either way, the conflicts of interests for the politicians who accepted money from Majola – and then acted in ways that advanced his interests – appear undeniable.

Following a months-long investigation into Majola’s political connections, we tell the story below, and in a second part to be published soon.

A promise made to Giyani

LTE first gained public notoriety after it was appointed in 2014 to deliver water to drought-stricken communities around the town of Giyani, in the Mopani region of Limpopo. The appointment was on an emergency basis, allowing authorities to bypass a competitive bid. Within a couple of years the project was beset by inflated costs and delays.

Giyani was once the capital of the apartheid-era Gazankulu homeland and then became the administrative centre of the Mopani district – an impoverished area of eastern Limpopo neighbouring the Kruger National Park, with limited access to clean water. Residents washed and drank from polluted, cholera-infected rivers and faced sporadic outbreaks of water-borne disease.

In August 2014, the then Minister of Water and Sanitation, Nomvula Mokonyane, was in Giyani to reaffirm a long overdue promise made when Giyani was declared a disaster area back in 2009: the area would soon have access to that most basic, constitutionally guaranteed need, water.



The project announced by Mokonyane aimed to deliver clean water to over 50 villages. She handed the project to a state-owned water agency, Lepelle Northern Water. Soon after the minister’s visit, Lepelle appointed LTE, reportedly on Mokonyane’s “instruction”, though this is a matter of dispute.

LTE was to deliver a “turnkey” solution – oversee and run the entire project from start to finish, before turning it over to the government. The company subcontracted construction to another company called Khato Civils, which would perform the bulk of the work.

Mokonyane appears to have a long history with LTE. The company scored tenders from the Gauteng government during her time as Premier of that province, from 2009 to 2014. After she was made Minister of Water and Sanitation in May of that year, LTE was appointed to the Giyani project.

Mokonyane also played the important role of ANC elections head in 2016 – the year of the local government elections – when she let slip that the ANC spent R1-billion on its campaign.

Majola was particularly generous to the ANC that year. Majola donated in excess of R10-million to various ANC entities in the months preceding the August vote.

Over half of that amount went to the ANC in Gauteng – Mokonyane’s political home ground, where LTE continued to rake in a fortune from the province’s human settlements department.

Asked about her potentially conflicted position and whether she had ensured preferential treatment for LTE and facilitated the donations in return, Mokonyane said: “I wish not to comment on how and who funded and or is funding the ANC.” She did not respond to other questions.

But Mokonyane is not the only politician who appears to have been conflicted by Majola’s donations.

Malema enters the Giyani fray

In March 2016, about a year and a half after Mokonyane’s original Giyani intervention, Malema was on the ground in his stronghold of Limpopo, mobilising for the upcoming local government elections. Giyani’s water crisis had already registered on the EFF’s political radar.


Malema made a stop at the local Nkhensani hospital, telling media: “The people of Giyani have been complaining about water for a very long time. And we heard that there’s a company that has been given a contract for billions to come and give people water here. So, we wanted to see if that water has been delivered.”

The project was already on shaky ground and attracting negative media attention. In the month Malema was touring Giyani, City Press began a series of exposés with an article headlined R170m and still no water.

Four months later, the EFF leader became a recipient of Majola’s largesse. At the end of July 2016, Majola added Santaclara to his list of beneficiaries, making an initial deposit of R500,000 into its bank account.

Julius Malema in Giyani in March 2016. (Photo: Twitter, Tonny Myambo / @RivalaniMyambo)



From now on, Majola would be splitting his largesse between two parties that have partly funded themselves by selling political patronage – as media investigations have documented and the ongoing Zondo Commission on State Capture has heard.

The 3 August poll, just around the corner then, would be the EFF’s  first local government contest and, with an increasingly unpopular Jacob Zuma at the helm of the ANC, Malema’s relatively new party was projected to eat significantly into ANC support and position itself as kingmaker in hung metros and municipalities.

Interviewed by amaBhungane, Majola initially denied paying Malema or doing business with him. When it was put to him that the Sunday Times reported on two payments by LTE to Santaclara of R100,000 each, both made in 2017, he acknowledged those payments.

But he said he did not know of Santaclara’s connection to the EFF leader. He said he was approached by Santaclara’s chief operating officer, whose name he did not remember, and asked to make a donation for political t-shirts. The donation was made at his discretion, but he knew nothing about Santaclara’s business, or its owner, or the political campaign it was connected to; only that it was “a private company”.

He was, he said, merely contributing to a political campaign, as he had done for “the PAC, the ANC, the DA, and everybody”.

The two R100,000 payments that Majola admitted to in the interview made up a small fraction of the over R3-million LTE paid in total to Santaclara. When amaBhungane later sent him and LTE written questions asking about the additional payments, their response was flat out denial: “R200,000 was paid by Mr Majola as noted, with no further payments.” 

They also said that no member of LTE had any engagements with the EFF on the Giyani matter.

In 2019 Malema declared amaBhungane an “enemy of the revolution”, banning us from party events and vowing to “never answer any question from amaBhungane... Let them write any nonsense they want to write about us.”

The EFF did not respond to requests for comment for this article. Spokesperson Vuyani Pambo said the ban remained “firmly” in place.

AmaBhungane first sent a written request for comment to ANC spokesperson Pule Mabe in September but received no response. Attempts to follow up by email and WhatsApp last week elicited no substantive response.

Julius intervenes as water money runs dry

As the town of Giyani crawled its way out of another bone-dry Limpopo winter in 2016, there was talk of delayed payments to service providers on the water project, amid growing concerns over enormous cost overruns. The national Department of Water and Sanitation had run into severe cash flow problems.

The department’s spokesperson told reporters in November 2016 that the department was short of cash to complete the wider series of water projects in the Giyani region, of which LTE’s work formed a part, adding that “we believe each financial year government would allocate us a certain amount to complete the project in stages”.

Contractors became increasingly anxious about payment backlogs. The ballooning expansion of the project meant that, by that stage, billions of rands were at stake for LTE and the sub-contractors it had brought in. There was talk that the national Treasury was investigating.

For any company in LTE’s position, it was a time when quid pro quos from political friends in high places would come in handy.

On 27 October 2016, the EFF lobby machine kicked into gear. The party published a press statement condemning the Treasury’s “decision” to terminate the Giyani water project.

“The EFF strongly condemns the decision by the national Treasury and, accordingly, we have written letters to the Office of the President, the Minister of Water and Sanitation, and the Minister of Finance respectively, demanding that the process to deliver water to the people of Giyani should not be discontinued.”

That same day, EFF deputy president Floyd Shivambu wrote to then Finance Minister Pravin Gordhan, saying: “It has come to our attention that national Treasury has written to Giyani municipality instructing that the project to deliver water to the people of Giyani should be terminated due to shortage of funds.

“We write to demand that the process to deliver water to the people of Giyani should not be discontinued because for a very long time, the people of Giyani have [been] promised water.” 

Malema then began hounding Mokonyane, demanding that the service providers be paid. Mokonyane, speaking at an ANC meeting in the Eastern Cape a few months later, said that Malema called her eight times between 15 and 23 December.

Malema acknowledged the calls in a media report from the time. “Yes‚ I called her. It’s not even a secret because workers in Giyani had not been paid during December holidays and they called us.”

Malema apparently did not name the contractors on whose behalf he was demanding money. Approached for comment, Mokonyane said that the calls were a matter of public record.

On 24 December, one day after the last of the barrage of Malema phone calls and just in time for Christmas, LTE sent Santaclara a R100,000 payment.

Only the next month, in January 2017, did Gordhan break his silence and respond to the EFF claims, telling Shivambu: “An investigation was conducted into the matter and no evidence was found to [suggest] that the national Treasury has made any attempt to terminate funding for any water related projects in the Greater Giyani Local Municipality as alleged.”

An EFF love letter – with a few omissions

As the new year began, Mokonyane’s department admitted to falling behind on payments. Khato Civils – the company hired by LTE to do most of the construction – moved its workers off site, claiming it was owed over R250-million for work done. Khato began legal action over the payment dispute, but later withdrew it.

A Water and Sanitation Department spokesperson told amaBhungane in January this year: “The reason for the delay of payment was due to the need to conduct the verification of the work done on the ground and the quantity surveyors from DWS and Lepelle Northern Water team had to conduct measurement of the work done per submitted interim payment certificates.

“Initial delays in payments were due to claimed work not corresponding with work verified by the departmental technical teams.”

Meanwhile, the EFF kept applying pressure. On 7 February 2017, Shivambu, who was also the EFF’s chief whip in Parliament, signed and circulated a letter addressed to Mokonyane.


EFF Letter to Mokonyane by DM Photos


 

The letter included wide-ranging allegations, including that the minister’s alleged lover was in control of departmental payments despite not being an employee. The letter homed in on the failure to pay contractors, asking whether the Water and Sanitation Department was facing legal action for non-payment and, if so, why it was not paying.

The letter appears to have partly relied on a complaint by an anonymous whistleblower, dated 1 February 2017, and addressed to the police, the Hawks and the Special Investigating Unit (SIU).


Whistleblower Complaint by DM Photos


 

But it is what the EFF did not include in its letter to Mokonyane that appears to be particularly telling. 

The whistle-blower’s five-page complaint said that LTE and Khato were appointed “without following due process” and claimed it was a “well-known fact” that a top Water and Sanitation official was receiving kickbacks from the two companies.

None of that made its way into the EFF’s letter to Mokonyane. Instead of asking why LTE and Khato – irregularly appointed, overpaid and allegedly corrupt – were still being paid, the EFF leadership wanted to know why unspecified service providers were not.

Awkward questions come up in Parliament

In Parliament, the EFF leadership’s apparent obsession with Giyani did not go unnoticed.

In minutes of a May 2017 meeting of Parliament’s water and sanitation portfolio committee, chairperson Lulu Johnson mentions a “viral” letter circulating on WhatsApp in which the EFF was demanding that then-president Zuma ensure the contractors were paid.

“Mr Johnson said … from this, one could smell a direct interest from the EFF hence such demands were made.” Johnson asked sarcastically if the EFF itself was contracted by Lepelle Northern Water, “as they clearly had a vested interest in the project in Giyani”. 

Johnson told amaBhungane that Mokonyane “did indicate to us that she was being harassed by the EFF” and that the minister reported to the committee that the EFF wanted money for LTE.

But the EFF appeared to be speaking from two very different scripts.

While LTE was funnelling money into Santaclara, and the party top brass were pushing for funding to flow to LTE’s controversial project, the EFF’s representative on Parliament’s standing committee on public accounts (Scopa) took a very different line.

The all-important Scopa oversees the financial affairs of public entities. It took a keen interest in scrutinising the affairs of the water and sanitation department and Lepelle, including the Giyani project. 

The EFF’s Ntombovuyo Veronica Mente, who stood out for her active role on the committee, would likely have been unaware of the payments to the Malema company. Unlike the ANC payments – which appear to have been made to party structures and had references such as “ANC GP”, “ANC TG [Treasurer-General] Funds”, and “ANC Fundraiser” – Santaclara was not a party account, even if the EFF benefited alongside Malema.

Records from an August 2017 sitting of Scopa show that Mente singled out Majola, saying his was a name that “kept cropping up in a number of fraudulent transactions in the list of irregular expenditure”.

Mente kept asking uncomfortable questions about the Giyani project. According to minutes of a December 2018 sitting of Scopa, Mente was “not convinced” that the emergency used to justify the project was real. Rather, “it was a well-orchestrated ‘emergency’ that paved the way for a bigger project”.

She also underscored the enormous cost overruns, claiming that the price of a borehole, which normally cost around R100,000, had a price tag of R1.4-million in Giyani.

The authorities move in

When Mente made these later remarks, the project was already dead. Khato’s workers had moved off site for the last time. Lepelle terminated its contract with LTE.

The auditor general delivered critical findings, pointing out that, despite actual expenditure of R2.5-billion, “the project was not near completion”.

The auditor general also highlighted “excessive project management and professional fees, and excessive construction rates”, as well as the “double counting of professional hours”. In short, government had been fleeced.

There were protracted tussles between the Water and Sanitation Department and contractors over outstanding payments, which were only settled in 2020 when, according to its spokesperson, the department paid out a total of R81-million for work done.

The SIU has instituted legal proceedings to recoup money paid to LTE and its subcontractors, and for the decision to appoint LTE to be declared unlawful. 

Asked if the SIU was investigating possible kickbacks paid by service providers to politicians or officials, a spokesperson said: “Yes. The SIU is working with [the] Hawks on the matter. The SIU is unable to disclose anything further at this stage given the sensitivity of the investigations.”

Majola and LTE respond

Majola and his chief operating officer at LTE, Sham Maharaj, have denied that they failed to deliver value for money. They said they effectively managed a huge undertaking in a difficult, remote environment, delivered what was paid for and completed 80% of the project at a fair and competitive price.

“We spent in the bundus three and a half years, burnt by the sun, building this pipeline,” said Majola.

They said similar projects were more expensive and their work on Giyani was only a portion of a much bigger project.

Maharaj said the work listed in it was delivered, measured, invoiced, paid for and audited, and claimed that the auditors who raised questions about LTE’s work gave short shrift to site visits and failed to consult LTE.

The negative publicity LTE received was because “we’ve irked somebody” by stepping onto “hallowed ground” dominated by bigger and more established firms, said Maharaj.

Asked if the payments to Malema had anything to do with buying political support from the EFF during the Giyani controversy, LTE said it was “common knowledge” that the Department of Water and Sanitation payments to the contractor “were, on occasion, delayed”.

“If the EFF, via one or more channels, engaged [the Water and Sanitation Department] to facilitate delayed payments to contractors and sub-contractors, this was outside the ambit of LTE, hence LTE was not party to any of these engagements. No member of LTE ever engaged with the EFF on the Giyani Project, either in Giyani or anywhere else.”

Khato Civils, the main sub-contractor, would not respond to questions. It denied all involvement in wrongdoing but said ongoing litigation prevented it from responding to media enquiries. DM

Additional reporting by News24.

Mokonyane’s history with LTE


LTE was picked to run the Giyani project from a panel of service providers used by the national Water and Sanitation Department. The minister, Nomvula Mokonyane, appears to have had a history with the company dating back to her time as Premier of Gauteng from 2009 to mid-2014.

During that time, LTE scored massive contracts, including one for a R200-million sewer reticulation project in Sweetwaters, Kanana Park, to the south of Johannesburg, which was awarded by the Gauteng department of human settlements in 2014.

The Sweetwaters contract was so questionable that it sparked a falling out between Majola and other directors of the company, who were surprised to learn that LTE had been appointed irregularly for construction work it did not have capacity to perform.

LTE outsourced most of the work on Sweetwaters to Khato Civils – the same company it would later cut into the Giyani deal – but it was LTE which carried the risk, causing such concern among some within the company that they demanded the contract be cancelled. DM

Santaclara: Jimmy the DJ and the EFF connection


Santaclara Trading, the recipient of LTE donations, has figured in previous amaBhungane investigations. It was implicated in a questionable Johannesburg R1.2-billion fleet tender and a fuel tender worth hundreds of millions in Tshwane. In both metros, the EFF had political clout as de facto partners in unstable DA-led coalitions.

AmaBhungane’s prior reporting, along with further financial information which amaBhungane has seen and Sunday Times reports, have confirmed that Malema controls the account and that he personally – and to an extent the EFF – have benefitted from Santaclara.

Santaclara’s director is Jimmy Matlebyane, a Polokwane-based DJ who goes by the name Jimmy-fire Malema on Facebook, and regularly performs at Makete Lodge, a business venture closely tied to Malema family interests.

Matlebyane has also listed 49 Edward Rubenstein Drive in Sandown, Johannesburg, among his residential and business addresses – the same property owned by Malema’s Munzhedzi Family Trust.

Matlebyane hung up when amaBhungane contacted him for comment.

Malema does not respond to amaBhungane questions, but has previously distanced himself from Santaclara, telling Sunday Times he had “no relationship” with it. 

He said: “They are young boys who are trying to find their feet … they are legitimate traders, but because of their association with me, you guys want to destroy them. Go on.”

Santaclara is used in much the same way as another of Malema’s companies, Rosario Investment, which has also catered to both personal and party interests.

Rosario, formerly Mahuna Investments, is also fronted by a relative of Malema – his cousin Matsobane Phaleng.

Like Santaclara, Rosario has received money from companies that have been awarded government tenders. The two companies’ names are a nod to revolutionary symbolism. Rosario, Argentina, is where Che Guevara was born. Santaclara is the Cuban town that houses Guevara’s mausoleum. DM

DMM Media: another EFF link


Another key EFF official with a role in the LTE saga is the secretary general, Marshall Dlamini, a founding member of the party and an MP since May 2019.

LTE paid a total of R250,000 to DMM Media and Entertainment, a company amaBhungane has previously linked to Dlamini — in December 2018 and April 2019.

The sole director of DMM Media is Wesley Dlamini, a relative of Marshall, who has worked for at least one of his other companies. DMM Media shares its name with Marshall’s DMM Holdings. Wesley has also shared directorships in separate companies with Brian and Lucky Shivambu, brothers of EFF deputy president Floyd Shivambu.

Approached for comment, Wesley Dlamini initially told amaBhungane he was in a meeting and could not talk. Attempts to reach him later via telephone and WhatsApp were unsuccessful.

Before Marshall’s sudden rise to the EFF top brass in December 2019, the EFF MP was a key fixer in the metros where the EFF had political clout. Previous amaBhungane reports identified him in attempts to meddle in tenders in Johannesburg and Tshwane. DM

The Giyani scandal in brief


Lepelle Northern Water, an agency of the Water and Sanitation Department, bypassed standard competitive bidding processes and awarded the contract to LTE, arguing that the local community faced a genuine emergency and speed was essential.

The initial contract dealt with a handful of emergency measures to the value of roughly R100-million, and was due to last only a few months.

But the price tag would steadily rise after Lepelle added a host of additional, non-emergency jobs to the list, in particular the installation of major bulk supply pipelines, which pushed the bill up by 25 times the original cost. In the end, the cost had exploded to around R3-billion, without an open tender process required in law.

Following press reports and public outcries, the SIU investigated LTE and its contract with Lepelle. The SIU would eventually catalogue numerous negative findings against the contract and charge that it was awarded improperly. DM

Chumming the waters


The EFF’s Malema, Majola’s LTE and the key subcontractors on the water project are tightly interlinked.

LTE outsourced construction to Khato Civils, which would perform the bulk of the work. It also appointed a company called South Zambezi for engineering and project management services.

Khato and South Zambezi are both owned by controversial Malawian businessman Simbi Phiri, who had previously teamed up with Majola on a questionable water and sewer reticulation project in Sweetwaters, south of Johannesburg. Nomvula Mokonyane was Premier of Gauteng at the time.

Malema is said to have been in close contact with Simbi Phiri and has appeared with him in a video said to have been shot at Phiri’s house in Midrand, Johannesburg, in which the two men are seen drinking together. The video was trending on social media in mid-2019.

A source who knows the two men says that Malema frequented Phiri’s house around this time. 

Phiri has featured in previous amaBhungane investigations in connection with a City of Joburg bridge contract and a massive Malawian water scheme worth hundreds of millions of dollars, in which Phiri was “both referee and player”. 

Phiri’s companies, Khato Civils and South Zambezi, were appointed by the Malawian government on a “turnkey” project to “carry out feasibility studies, procure and construct”. This placed Phiri in a conflict of interest as he stood to gain from construction that his own companies were assessing.

The Giyani project mirrors the Malawian one in that LTE allegedly outsourced much of its oversight role to Phiri’s South Zambezi, which was supposed to oversee Khato’s construction work.  

Khato denied any wrongdoing, but would not respond to detailed questions for this article, saying that the matters raised were before court.

In response to a question about the subcontracting arrangement, LTE said: 

“Due to the emergency nature and scale of the project, LTE outsourced various work packages to various professional service providers, many of whom were working concurrently. One of these service providers was South Zambezi which is an independent engineering company. As a Turnkey appointment, there was no conflict of interest between Consultant and Contractors. 

“Furthermore, [the water and sanitation department] had appointed independent auditing and oversight services on all works and payments made thereof.” DM

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