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This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

Business interests of elected officials

Majali's R65 000 loan for the renovation of Skweyiya's home

Sandi Majali's controversial R65 000 loan for the renovation of Minister of Social Development Zola Skweyiya's home was made only four weeks after a consortium, IT Lynx -- of which he was a part -- demanded that Skweyiya award it a stalled R400-million tender.

This new evidence casts doubt on Majali's earlier excuse that he had no motive to try to bribe Skweyiya, and Skweyiya's excuse that he was in no position to advance Majali's interests.

The Mail & Guardian revealed last year - after initially being gagged by a court order - how Majali paid R65 000 to Hartkon, a construction firm, for renovations at the Water-kloof Ridge, Pretoria, home of Skweyiya and his wife, Thuthukile.

Skweyiya reasserted this week that there was no conflict of interest and maintained that he was unaware of Majali's interest in the social grant payment business until alerted to this by the M&G in May last year. "I conduct my work with integrity ... I would not be unduly influenced by anyone," he insisted, noting that the loan had been repaid.

Attorney Barry Aaron, who acts for Majali and IT Lynx, also repeated his denial that Majali's payment to Hartkon was in any way intended to corruptly influence Skweyiya.

Majali made the payment from the account of Imvume Management, the oil-trading company he heads. This was on the same day, December 19 2003, that Imvume received a R15-million advance from state oil company PetroSA. Majali's diversion of much of this advance to the African National Congress is at the core of the Oilgate scandal.

The M&G also revealed that Majali had offered a job to Thuthukile Skwe-yiya, who was about to return from her posting as ambassador to France.

It was admitted that companies in the Imvume group had benefited from lucrative contracts to distribute social grants payments on the state's behalf. Social grants are regulated by Skweyiya's national Department of Social Development, but the grants distribution contracts were awarded by provincial departments. Majali's companies benefited at the time through their partnership with Cash Paymaster Services, which held such contracts in five provinces.

Aaron, representing Imvume and Majali, last year confirmed the R65 000 payment to Hartkon. He said the payment was a loan to Thuthukile Skweyiya, a long-time friend.

Addressing the question of whether these payments were not improper while Majali's companies were active in fields regulated by Skweiyiya, Aaron replied: "While [you] correctly point out that Imvume was involved, either directly or indirectly, in projects with the minister[s] concerned, these were already ongoing, established, contractually secure projects ..."

Aaron's argument, in short, was that the payment that benefited Skweyiya could not have been an attempt to bribe him since Majali's contracts in Skweyiya's field were secure.

But evidence submitted in a court case, brought by Aaron on behalf of IT Lynx last year, now shows that Majali stood to gain from Skweyiya wielding his power at the time - to reinstate a mega-project which was not "contractually secure".

On November 21 2003 - just short of a month before Majali's R65 000 payment - lawyers acting for IT Lynx, which included Majali and the Imvume group as a minority shareholder, wrote to Skweyiya.

They demanded the implementation of a tender to develop new information technology required by Skweyiya's national department to administer social grants. The consortium claimed that IT Lynx was duly awarded the R500-million contract in July 2002.

Papers filed in the Pretoria High Court show that finalisation of the tender had been blocked by Skweyiya in September 2002 pending negotiations with the National Treasury over what was clearly an expensive project. The IT Lynx consortium tendered a price of R353-million, plus royalties it estimates at R43-million. It claims in court papers that the State Information Technology Agency (Sita), which administered the tender on behalf of Skweyiya's department, had properly awarded it the tender. It now wants the court to order Sita and Skweyiya's department to reinstate the tender award or pay it R149-million compensation.

Apart from Majali and his Imvume group, the partners in the IT Lynx consortium also included Net 1 Support Services - a sister company of Cash Paymaster Services, which the Imvume group had partnered in provincial grants distribution contracts. The ultimate holding company of Cash Paymaster Services, United States-listed Net 1 UEPS Technologies, earlier described Imvume Resources in regulatory filings as its "national black empowerment partner".

Serge Belamant, managing director of Net 1, now says his corporation is not involved in the litigation Aaron is pursuing. He also says Imvume ceased to be Net 1's empowerment partner about two years ago.

It is unclear whom Aaron is now representing. Both Aaron and Obbey Mabena, who claims to be the current chair of the IT Lynx consortium, declined to provide any details about the make-up of the consortium, or Majali's precise role in it.

In a press statement this week, Mabena would only say: "Mr Majali's company merely has a minority stake, as an investor, in one of the groupings comprising the consortium."

Belamant said, however, "Sandi was going to look after the operations side."

The IT Lynx dispute also raises new questions over Skyweyiya's explanations at the time about why Majali's R65 000 "loan" and offer of a job to his wife could not have been intended to corrupt him.

He argued that the "loan" was his wife's business, not his; that he was unaware at the time that Majali was active in the social grant sector; and that grants distribution contracts were a provincial competency, where he had no say.

Skweyiya did not tell the M&G at the time about the information technology tender, which had been issued on behalf of his national department. The court papers show that Skweyiya would have had personal knowledge of the tender, both because he had ordered it put on ice and because it was to him that IT Lynx had addressed its November 2003 letter of demand.

This week Skweyiya refused to answer questions about what he knew about the tender, saying the matter was sub judice.

Doubts remain whether Skweyiya really did not know of Majali's involvement in the social grants sector. Thuthukile Skweyiya last year told the M&G that she had not taken up Majali's job offer because Skyweyiya had asked her not to.

This week, the minister refused to explain why he had done so, if he were unaware of any potential conflict of interest. He insisted it was a private matter.

However, Thuthukile Skweyiya's comments suggest he may have been aware of the possibility of a conflict. She told the M&G last year: "When I told Zola, he said I can't work with Sandi, that's why I turned it down. I think he mentioned something like he [Sandi] is involved in companies where I can't be involved because I'm married to him ... I can't really remember."

Even if Skweyiya had been unaware of Majali and Imvume's involvement in IT Lynx, it is unlikely that he did not know of the participation of Majali's partners, Net 1/Cash Paymaster Services in IT Lynx.

Net 1/Cash Paymaster Services is one of two major grants distribution businesses in South Africa between whom the largest chunk of the social development budget is handled.

Parliamentary records show that Cash Paymaster Services lobbied Skweyiya as early as 2000 to buy the new information technology that is now the subject of the disputed tender.

The revelation of Majali's involvement in the IT Lynx consortium also raises further questions about the failure of Public Protector Lawrence Mushwana to investigate the R65 000 payment.

Mushwana found in his Oilgate report released last July that there was "no substantive allegation or indication that the minister performed any official action or omission that could have favoured Imvume in any way".

Mushwana somehow concluded that he could not investigate whether the payment might have been intended to influence "official action".

(Oilgate: Did Majali try to bribe Skweyiya? Stefaans Brümmer and Sam Sole, Mail & Guardian Online, 2006-02-03)

This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. Return to the Nelson Mandela Centre of Memory site.