Business Maverick

This article is more than 4 years old

Business Maverick, Scorpio, South Africa

VBS scandal: SARS demands R28.2m from Brian Shivambu, displays clear connection to Floyd

15 Aug 2021

SARS’s Criminal and Illicit Economic Activities division traced stolen VBS money through two front companies into EFF deputy leader Floyd Shivambu’s FNB Private Wealth bank account. Shivambu’s sustained charade of ‘fighting for the poor’ instead of robbing them is, for the first time, highlighted by a state institution in open court proceedings following the taxman’s investigation into his brother, Brian, and the missing VBS millions.

Correction: In an earlier version of this story, one of the graphics used the image of Lorna Maseko, Floyd Shivambu's current girlfriend, instead of that of Siphesihle Pezi, Shivambu's then wife. It has since been corrected. We apologise for the error.

The South African Revenue Service (SARS) has slapped two companies Brian Shivambu is the sole owner of with a R28.2-million tax bill. This eye-watering amount includes penalties because Shivambu attempted to evade paying tax for the periods 2017, 2018 and 2019.

Shivambu “defrauded” VBS Mutual Bank out of about R16-million, SARS auditors and investigators found. He “committed a criminal offence” by not declaring this as income tax and VAT – conduct which is regarded as “intentional tax evasion” – and, when contacted by SARS auditors and investigators, acted in an “obstructive” manner and ignored most of their communications and requests.

Being dismissive of SARS, of course, compounded his problems. Shivambu’s conduct earned his companies 125% and 200% tax penalties, respectively. SARS further found the companies hopelessly insolvent and brought two liquidation applications against Sgameka Projects and Grand Azania, filed at the High Court in Pretoria in July.

Grand Azania and Sgameka Projects, SARS told the court, “have been utilised by its director and only shareholder, Brian Shivambu, as the vehicles through which he defrauded the VBS Mutual Bank of approximately R16-million”.

These open court procedures include reams of tax assessments and bank statements in support of SARS’ extensive investigation – including six months’ worth of bank statements from EFF deputy leader Floyd Shivambu’s FNB Private Wealth bank account, dated 25 May to 24 November 2017.

There were no legitimate reasons for any of the cash and “loans” flowing from VBS Mutual Bank, SARS’s Criminal and Illicit Economic Activities division told the court. SARS further regards all of it as taxable “income”.

The court papers do not go into the details of Floyd Shivambu’s finances, as these particular applications focus on Brian Shivambu’s companies. SARS, highlighting money flows emanating from VBS Mutual Bank, did, however, find in relation to Floyd Shivambu that:

Grand Azania paid R170,000 into Floyd Shivambu’s FNB Private Wealth bank account. Scorpio will show that Shivambu received much more – we traced about R3.6-million in VBS loot flowing to his Private Wealth account;

Grand Azania paid R140,000 to Trenditrade 23 (Pty) Ltd, trading as Land Rover Sandton, Sars found. This was Floyd Shivambu’s Range Rover, independent investigations by Scorpio and Mail & Guardian showed. Scorpio found that Grand Azania actually paid R1,118,000 towards Shivambu’s Range Rover;

Sgameka Projects paid an additional R680,000 to Trenditrade 23 Pty Ltd for Shivambu’s Range Rover;

Sgameka Projects paid R180,000 into Shivambu’s FNB Private Wealth account;

Sgameka Projects paid a total of about R1.3-million to two accounts owned by the Economic Freedom Fighters. Scorpio found that Grand Azania seems to have paid another R450,000 in stolen VBS money to the EFF;

Brian Shivambu’s Nedbank account only received R289,756, SARS investigators say, paid from Sgameka Projects – he was clearly a front and bagman for his brother;

WesBank received a R388,078 payment from Sgameka Projects, “in favour of NF Shivambu” – it stands for Nyiko Floyd Shivambu;

Sgameka Projects paid R4.8-million in VBS loot to Mahuna Investments, SARS said – a company Scorpio has found is a front for EFF leader Julius Malema; and

Sgameka Projects has a R1.46-million home loan for a house used by the Shivambu parents. The elderly couple is now in an invidious position, of their sons’ making, as they are living in a house regarded as the proceeds of crime.

Whether Brian and Floyd Shivambu declared their personal income tax to SARS, is at this stage unknown to Scorpio. Taking into account the brothers’ conduct of the past five years, along with the fact that Floyd Shivambu has never declared any additional income or assets to Parliament, suggests such declarations may be unlikely. It may mean that their SARS woes are far from over.

SARS’s findings so far support much of Scorpio’s past reporting on the crimes perpetrated against VBS and its depositors by Floyd Shivambu. Read here.

This journalist’s forensic analysis over the past three years, based on bank statements, contracts and documents, suggests that VBS was fleeced of about R21.5-million in cash and two loans for the benefit of Floyd Shivambu, Malema, their families, their businesses and their political aspirations. Read here.

An analysis of the spending habits recorded in the Grand Azania bank accounts, cross-referenced with Floyd Shivambu’s social media posts, suggested that the bank card linked to this account was following Shivambu across southern Africa – including to Zambia, where he spent his birthday at a luxury hotel. Read here. And the bank card of Mahuna Investments tended to follow Malema across the country, including to his hometown, Seshego, and the Durban July. Read here.

Scorpio concluded that both companies operated as a front or alter ego for Floyd Shivambu and Malema.

From our records it is further clear that VBS is only one illegitimate income stream for Shivambu and Malema – the EFF leaders strongly rely on business people and other questionable schemes to fund their high-flying lifestyles, businesses and political party. Read here.

In turn, Shivambu and Malema seem to offer their political muscle to negotiate business deals for benefactors and tend to intimidate anyone damaging to their benefactors’ business operations. Read here.

Brian and Floyd Shivambu and Malema have consistently denied any wrongdoing. Brian Shivambu also notified SARS that he will contest the liquidation applications, indicating that he disagrees with their findings. Neither Brian nor Floyd Shivambu reacted to questions sent to them via email and WhatsApp.

In the next section, Scorpio will dissect the VBS money-flows dropping into Floyd Shivambu’s FNB Private Wealth bank account as well as the funds paid towards his family and the EFF.

Follow the money

On 23 October 2018, days after Scorpio for the first time revealed that Floyd Shivambu had benefited from the VBS fraud, the EFF’s deputy leader stood up in Parliament and said:

“...I can state here categorically clear, without any fear of contradiction, that the EFF and ourselves as members of Parliament never benefited anything from the VBS looting and the so-called heist that happened there...”

On 16 October 2018, at the EFF headquarters in Braamfontein, Malema and the EFF leaders told South Africa that no one ever received any money from Sgameka Projects or Mahuna Investments, that the Shivambus’ bank statements had been checked and that no VBS funds could be found in their accounts. He also challenged Scorpio “to bring us the proof” in order to “act decisively” against any VBS thieves. In 2020 Malema made a big show of flashing his wallet to journalists to “prove” that there was no suspicious bank card holding VBS loot in it.

The facts as presented by Sars, however, bolsters Scorpio’s independent findings and paint a picture of the EFF deputy leader being a main beneficiary of the VBS millions stolen from depositors and channelled to his brother. This forensic analysis stands on the shoulders of Sgameka Projects’ VBS bank statements (dated June 2017 to July 2018), Grand Azania’s FNB bank statements (dated November 2016 to April 2018, and June 2018 to August 2018) and Floyd Shivambu’s FNB Private Wealth bank statements (dated 25 May 2017 to 24 November 2017). In this article, Scorpio will highlight four themes:

Floyd Shivambu stole the VBS money

VBS Mutual Bank, through several illegal schemes, funnelled about R15.2-million in cash through three companies to Sgameka Projects.

Of this, Sgameka Projects paid R5.16-million in 22 tranches to Grand Azania between 13 June 2017 and 2 March 2018.

When comparing Floyd Shivambu’s FNB Private Wealth bank statements (dated 25 May to 24 November 2017) with the above, Scorpio found that:

Sgameka Projects paid R180,000 in three tranches into Shivambu’s FNB Private Wealth bank account between 18 and 26 August 2017; and

Grand Azania paid R1,660,000 in 23 tranches into Shivambu’s FNB Private Wealth bank account between 14 June and 24 November 2017.

This means we traced – beyond any doubt – at least R1.84-million flowing from VBS Mutual Bank through two front companies into Shivambu’s FNB Private Wealth bank account.

Curious timing

Hundreds of thousands of rands habitually hopped between VBS Mutual Bank, Sgameka Projects, Grand Azania and Shivambu’s FNB Private Wealth bank account within hours, and sometimes within days, of receiving VBS loot.

Three examples:

On 8 June 2017, the very first money – R5-million – was deposited into Sgameka Projects by a VBS company used for fleecing the bank. By 13 June, Sgameka Projects dumped R400,000 into Shivambu’s FNB Private Wealth bank account;

On 10 July 2017, Sgameka Projects paid R600,000 to Grand Azania, of which R50,000 reflected in Shivambu’s FNB Private Wealth bank account the next day; and

On 5 October 2017, two payments totalling R1.2-million in VBS loot were paid into Sgameka Projects. One day later, on 6 October, Sgameka Projects paid R200,000 to Grand Azania, of which R100,000 reflected in Shivambu’s FNB Private Wealth bank account on the very same day.

The payments into Shivambu’s FNB Private Wealth account – which we could trace from origin to end user – are all described as “Repayment Gaw”, a referral to “Grand Azania Wines”. This brings us to the next theme.

Following the breadcrumbs

The six months’ worth of Shivambu’s FNB Private Wealth bank statements are useful in the way that they establish certain payment patterns.

As shown above, we now know that “Repayment Gaw” was used 23 times to mark VBS loot moving from Grand Azania to Shivambu’s FNB Private Wealth bank account.

Following this pattern, it seems that Grand Azania paid R4.269-million in VBS loot and other questionable funds in 61 tranches, all described as “Repayment Gaw” and dated 1 November 2016 to 31 August 2018.

Scorpio has good reason to believe there are many more of these irregular and illegal payments, if any of the authorities cared to look.

It is a family affair

Another pattern emerges of Floyd Shivambu’s former wife, Siphesihle Pezi, and his children benefiting handsomely from the VBS loot as well as additional questionable income (the children will not be named in this report because they are minors). There is no evidence that Pezi knew she was the beneficiary of the proceeds of crime.

Pezi seems to have received a total of at least R555,087 paid in 22 tranches from Shivambu’s FNB Private Wealth bank account. These typically followed right after the VBS loot hopped to Sgameka Projects, Grand Azania and Shivambu’s FNB Private Wealth account. Examples include:

On 14 June 2017 Shivambu received R120,000 in VBS loot from Grand Azania and on the same day paid R40,000 towards “Wife Familyexpenses” (sic). The SMS notification of payment was sent to his wife at the time, who is registered as “Sihle Pezi” on his banking app;

Later that month, on 31 July 2017, Shivambu received R50,000 in VBS loot from Grand Azania, and on the same day paid R15,000 towards “Mompasi Sihlepezi” (sic), R4,500 towards “Childsupport Floydshivambu” (sic) and another R3,000 towards “Childsupport Floydshivambu” (sic); and

On 12 August 2017 Shivambu received R50,000 in VBS loot from Grand Azania, and on the same day paid R40,000 to “Wife Floyd”.

Grand Azania made similar payments totalling at least R680,000 towards his former wife and children:

On 21 July 2017 a R400,000 deposit was made towards a Mercedes-Benz for Pezi; and

On 1 September 2017, a R50,000 payment was sent to Pezi, described as “Sihle Floyd”.

The EFF

Multiple payments emanating from VBS Mutual Bank as well as other questionable sources were funnelled through Grand Azania, Sgameka Projects and Shivambu’s FNB Private Wealth account into two accounts owned by the EFF, or paid towards service providers on behalf of the EFF. Examples include:

SARS investigators highlighted how VBS loot totalling R1.3-million flowed through Sgameka Projects into two accounts owned by the EFF between 28 July and 4 November 2017;

On 12 December 2017, Sgameka Projects sent R200,000 in VBS-loot to Grand Azania, which on the same day sent R450,000 to an EFF account (as well as a R20,000 payment to what seems to be Shivambu’s FNB Private Wealth Account); and

Between 25 May and 24 November 2017 Shivambu paid about R167,000 from his FNB Private Wealth account towards and for the benefit of the EFF.

What does Floyd Shivambu’s income look like, and what did he buy with his VBS loot?

An analysis of Shivambu’s FNB Private Wealth bank account suggests it underpins the administration of his life: He pays insurance, rent, iTunes bills, his children’s school fees, holidays, food and travel expenses from this account.

It is also the recipient of at least R1.84-million in VBS loot Scorpio can definitively prove, based on his bank statements dated 25 May to 24 November 2017.

Shivambu’s total income in this six-month period was just over R2.3-million. This figure includes his parliamentary income of R260,448.85. Shivambu received a parliamentary salary of about R44,000 each month, plus three smaller ad hoc payments for which the reason is unclear.

This leaves the public with an alarming conundrum. Floyd Shivambu is the deputy leader of the third-largest political party in Parliament. Since the inception of the EFF, he has declared no additional income, trusts or assets to Parliament. Read here.

From his personal bank statements we know that in the six months between 25 May and 24 November 2017 he received just over R2-million more than he legitimately should have.

Scorpio’s investigations into Floyd Shivambu’s riches have suggested for years now that he receives additional income that is not consistent with any legitimate reasons.

We now have incontestable proof.

What is also incontestable, is that he displays the same spending habits in his FNB Private Wealth account as he did with the Grand Azania FNB Gold Business bank account.

From his FNB Private Wealth account, Shivambu splurged about R800,000, largely funded by VBS loot, on Gucci (R152,477.48), Louis Vuitton (R114,803.53), Burberry (R80,898.67), Fabiani (R22,414.99), Versace (R14,725) and Salvatore Ferragamo (R68,768.88).

His favourite shopping outings are at Hyde Park and Sandton Square in Johannesburg, and the V&A Waterfront and Canal Walk in Cape Town.

It seems that payments originating from VBS Mutual Bank often triggered a massive spending spree. For example:

On 18 August 2017, Floyd Shivambu received a payment of R100,000 from Sgameka Projects into his FNB Private Wealth account;

On the same day, he used the VBS loot to pay R27,200 at Gucci and R33,850 at Louis Vuitton;

A day later, on 19 August 2017, he spent another R19,700 at Gucci; and

On 20 August, R2,198 was paid at G-Star Raw.

***

Back then, on 23 October 2018, Floyd stood up in Parliament, proclaiming: “...we as the EFF, without any fear of contradictions, want to call on all the law enforcement agencies to take decisive action against all the people who did wrong in VBS bank.”

Someone in SARS seemed to have listened.

To be continued... DM

Read questions sent to Floyd Shivambu here.

Read questions sent to Brian Shivambu here.

Categories:

Tags:

DM is much better if you are signed in...

Business Maverick