Parliament isn’t buying justice minister Simelane’s defence of 47% interest VBS loan

6 Sep 2024

Appearing before Parliament’s justice committee on Friday, Justice Minister Thembi Simelane was adamant that there was nothing untoward about the private loan of R575,600 she received from VBS Mutual Bank, but many questions remain.

Justice Minister Thembi Simelane came out fighting on Friday, 6 September, telling Parliament’s justice committee that she had not received “any improper benefits” as mayor of Polokwane – despite admitting accepting a R575,600 loan from VBS Mutual Bank in order to launch a coffee shop in Sandton.

Simelane said that despite the fact that Polokwane municipality had invested R349-million in VBS through the same fixer who arranged her loan, Gundo Wealth Solutions, there was no conflict of interest.

She told the committee that she had sought financing for a private commercial venture in 2016 because she “wanted to create employment opportunities for myself and my next of kin”, which her position as Polokwane mayor did not allow owing to anti-nepotism regulations.

Read more in Daily Maverick: VBS: Hawks raid Polokwane municipality, seize evidence linked to Simelane's coffee shop loan

Simelane said she had initially intended to withdraw money from her retirement savings to finance the coffee shop.

“I experienced difficulties because of the cost and the charges … The percentage of tax was making the whole idea not feasible.”

Instead, she approached Gundo Wealth Solutions, which had been appointed as “investment manager” to the Polokwane municipality in April 2016, after what Simelane described as an “unsolicited bid”.

Simelane said: “I asked Gundo for advice on how best I might finance [the cafe]. Gundo informed me of a loan product they had I could access.”

Simelane subsequently received the loan of R575,600 from Gundo, which she ended up paying back in three instalments between October 2020 and January 2021.

The justice minister appears to be leaning heavily on the fact that she repaid the loan as evidence that no wrongdoing was committed.

“If you ask assistance from someone who doesn’t have a direct bearing on the municipality it is possible, and I paid it back,” she said.

In addition, Simelane several times cited the fact that she personally “instituted the withdrawal of [Polokwane municipality] funds from VBS” as evidence that she had no inappropriate relationship with the bank.

She also maintained, however, that she had no involvement in making those investments in the first place, because “councillors do not participate in supply chain management” – raising the question of how she could then order the withdrawal of the relevant investments.

https://www.youtube.com/watch?v=3uYfkU7wCZ4

Not so fast, Minister…

As justice committee MPs pointed out, there are multiple other unexplained aspects to this story.

DA MP Glynnis Breytenbach questioned why Simelane would have approached Gundo for a loan in the first place, instead of an ordinary commercial bank.

“Why would you have negotiated a loan with an entity doing business with your municipality who was not a registered financial service provider?” Breytenbach asked.

“What was so attractive about doing business with Gundo?”

The question is doubly relevant given the “extortionate” interest Simelane was charged on her loan, which – at more than R200,000 – amounted to about 47% of the money loaned.

“It makes the whole transaction look exceptionally suspicious,” Breytenbach said.

Another MP suggested that Gundo was simply a “mashonisa” – a loan shark.

Simelane responded that she was operating under the assumption at the time that Gundo was a registered financial services provider, although she later learnt that this was not the case. She also claimed that the loans being offered by commercial banks were not affordable.

Read more in Daily Maverick: VBS scandal archive

The justice minister suggested that there was nothing fundamentally untoward about asking anyone for money.

“I have requested a number of times either from my brother or anybody, ‘Can you loan me money?’,” Simelane said.

Turning to ActionSA MP Athol Trollip, she sketched a scenario:

“I can ask you, Honourable Trollip, can you borrow [sic] me money on Friday? On Thursday you kill your mum, the following week.”

Her point appeared to be that sometimes one can accept money without realising the source might go on to do something dubious.

“In hindsight, one would have done things differently,” she conceded.

Read more: Justice Minister Thembi Simelane on the ropes, but evades questions about VBS bank

Show us the loan agreement

Multiple MPs requested that Simelane produce the loan agreement she signed with Gundo, which she did not bring to the meeting.

Simelane did admit under questioning that she had not disclosed the loan, either to the National Assembly or to President Cyril Ramaphosa as a member of his executive, despite knowing the scale of the VBS fallout.

FFPlus MP Heloise Denner expressed disbelief on this point, suggesting: “You must have known that anyone [having dealings with VBS] would be tainted?”

It was also suggested by MPs that the reason Simelane hastily paid back the loan in four months, some four years later, was because the chickens had suddenly come home to roost regarding VBS.

Simelane was also grilled at length on arguably the most-concerning aspect of this all: what faith the public should have in the justice system if the justice minister is being implicated in this kind of wrongdoing.

Asked several times if she would step aside while the matter was being investigated, Simelane did not give a straight answer, but said she welcomed the investigation.

Ramaphosa says it will be dealt with

Meanwhile, on the other side of the world, while wrapping up his state visit to China, President Cyril Ramaphosa was asked by journalists what he intended to do about the Simelane issue.

Read more: Ramaphosa calls meeting with Justice Minister to explain ‘loan’ from accused VBS investment broker

“I would say that as a president, I do need the space and the time to be able to deal with this matter, and certainly the matter is being dealt with as I indicated some few days ago. So it’s not a matter that’s going to be swept under the carpet,” Ramaphosa said.

If Simelane is concerned about her position, she showed little sign of it during Friday’s parliamentary appearance, at one stage joking with MPs: “The sun shines even on difficult days.” DM

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Not so fast, Minister…

Show us the loan agreement

Ramaphosa says it will be dealt with