Wednesday, February 24, 2010

How Julius Malema Made His Millions

I couldn't think of an appropriate slogan for my ILSA original picture. You don't need to be educated to make millions, and fast, it seems. In South Africa, you just need to be black, corrupt and connected. Problem is, 40 million blacks seem to think that this is the model to quick riches too. Nobody has explained that the gift will stop giving at some point in the future.

Next thing, Juju will be hosting "The Apprentice", writing the foreword for Robert Kiyosaki's next book (which is a load of popular crap by the way), and having Financial Mail write editorials, gushing about his remarkable business acumen.

ANC Youth League president Julius Malema's millionaire lifestyle is being bank-rolled by lucrative government contracts awarded to his companies.

A Sunday Times investigation has found that, despite his claims to the contrary, Malema has benefited substantially from several tenders - and that most of them stem from his home province Limpopo, where he wields significant influence.

One of Malema's businesses, a small engineering firm, has profited from more than R130-million worth of tenders in just two years.

Malema's lavish lifestyle - from his luxury homes, Gucci suits, Breitling watches and parties where his guests are served R700 bottles of whisky and Mo√ęt&Chandon champagne - flies in the face of a politician who claims to earn a "middle income" salary.

Malema has often warned ANC supporters to be wary of individuals who cannot explain the source of their fortune.

But when asked about his business dealings yesterday, Malema said: "That is none of your business."

The Sunday Times has seen documents which show that SGL Engineering Projects and its subsidiaries, which Malema co-owns with Lesiba Gwangwa, have been awarded dozens of contracts since 2003 - often from cash-strapped municipalities in Limpopo.

The projects range from road and pavement construction to bulk water supply and upgrading cemeteries.

Asked about his involvement in SGL and its subsidiaries, and the string of tenders awarded to them, Malema responded: "What gives you the power to ask me that question? Let me tell you, I do not owe you any answer, to be honest. I am not accountable to you ... I am accountable to the ANCYL and ANC. My organisations have never raised any concerns about those things.

"There is no law that says politicians can't be businessmen. The problem with you is that when an African child is emerging and becoming successful, that is when you have a problem. That is your major problem that causes you sleepless nights.

"You want to see us dying in poverty. That is what you are committed to."

Official tender and government documents show that Malema - who has been dubbed a "tenderpreneur" (someone politically well-connected who has got rich through the government tendering system) - was involved in more than 20 contracts, each worth between R500000 and R39-million between 2007 and 2008.

Malema's share funded his two luxury homes, worth about R4.6-million.

While he has been seen driving a fleet of cars from a C63 Mercedes-Benz AMG, to an Aston Martin and a Range Rover, none of them is registered in his name. The only car registered in his name is a 2005 Audi A4.

Malema, the son of a former domestic worker, matriculated in 2001. Now, as co-owner of SGL, Malema is worth millions.

But yesterday Malema repeatedly refused to discuss his involvement in SGL.

"I have nothing to do with their operations. I know nothing about what is happening in SGL, where are they making their money, where do they get tenders. I know nothing about that," he said.

Attempts to contact Gwangwa were unsuccessful.

Besides being listed as a consultant for the Waterberg District Municipality, Gwangwa also sits on the board of Magalies Water, a state-owned water board which provides a range of related water and sanitation services to Gauteng, Limpopo, North West and Mpumalanga.

Although the Sunday Times could not establish whether SGL and its subsidiaries have cashed in on Magalies Water contracts, the firm was involved in a R2.1-million sewerage upgrade project, which was awarded by the Waterberg District Municipality and completed in July last year.

Other projects awarded to SGL between 2007 and 2008, include:

- A R39.3-million sewer reticulation project awarded by the Mopani District Municipality;

- A R27.9-million street paving and drainage contract allocated by the Greater Letaba Local Municipality; and

- A R28-million tender for several municipal infrastructure projects from the Tzaneen Municipality.


While the public documents reveal that some of the projects were completed on schedule, the majority of projects were not.

Other municipalities that have given contracts to SGL include Lepelle-Nkumpi, Bojanala Platinum District Municipality, Vhembe District Municipality, Mutale, Makhado, and Tzaneen District Municipality.

SGL was also awarded a tender by Roads Agency Limpopo (RAL), which has a budget of over R2-billion, and which is headed by Sello Rasethaba, a close friend of Malema.

Rasethaba was appointed last year shortly after Malema's ally, Limpopo premier Cassel Mathale, took office.

Another company that has boosted Malema's bank balance is Ever Roaring Investments, which made millions from managing and organising the state-funded annual Mapungubwe Jazz Festival in Polokwane.

According to government officials and politicians who oversaw the awarding of the multi-million-rand contract, it never went out to tender - until recently.

Last year the contract was awarded by tender to Ziyaphenduka Promotions.

Government officials in Limpopo painted a detailed picture of how the ANCYL president's businesses secured repeated tenders.

While Malema's companies often bid for the tenders, some of the contracts are awarded to contractors closely linked to him, who then subcontract his company.

Malema, through SGL, was recently selected as a service provider for government projects including the "implementation of roads and storm-water projects" for the current financial year.

SGL would therefore be a frontrunner in the rush to benefit from the Limpopo government's request for a R5-billion loan from the Development Bank of Southern Africa (DBSA), to build and upgrade roads in the province.

The Sunday Times has established that Limpopo province has applied for the loan, but the development bank's Rosemary Mangope declined to comment.

The SA Communist Party and trade union federation Cosatu have repeatedly warned against "a culture of tenderpreneurship".

SACP general secretary Blade Nzimande described tenderpreneurs as the "biggest threat to our revolution", and Cosatu general secretary Zwelinzima Vavi has called for a "lifestyle audit" of politicians ''living in expensive houses and throwing lavish parties".

Malema said he would welcome such an audit. "All of us need to be audited. We are agreeing with Cosatu, as the youth league. We are saying that anyone high profile in politics must be audited.

"We are prepared to go for a lifestyle audit, conducted by the democratic institutions of our government - if that (process) is well arranged."

Finance minister Pravin Gordhan this week announced that a task team would investigate corruption in tender and tender and procurement processes in all nine provincial governments

* Malema's businesses all share an office bought and registered under Segwalo Consulting Engineers in Limpopo's capital, Polokwane.

The office, in Fauna Park, was bought for R1-million in August 2006, with a bond registered for R950000 with First National Bank. Besides SGL and Ever Roaring Investments, Malema is also a director of Blue Nightingale Trading 61 and 101 Junjus Trading.

In his own words

- "We are the elite that has been deliberately produced by the ANC as part of its policy to close the gap between blacks and whites in this country. It was the ANC that made it possible that, as part of that elite, some of us are now able to live in the suburbs." - Explaining in December 2008 that the salary he receives from the party makes him part of the black middle class.

- "People go to the township and boast about drinking imported, expensive liquor and the German sedans they drive. This is an insult to the people. What type of message are you sending when you change cars like you are changing shirts?" - Speaking at Esselen Park, where the ANC held its three-day election manifesto conference in December 2008.

- "Being involved in business compromises the independence of the ANCYL because every time you open your mouth, you must check if business will be happy or not." - Following Malema's decision to close down the ANCYL's investment arm, Lembede Investments, which was fraught with allegations of corruption.

- "Never be scared to iron out problems with your mayors and municipal managers because they are your servants. We voted them into power so that they can serve us and not enrich themselves or those close to them." - Speaking at the Peter Mokaba memorial lecture in Vereeniging in September last year.

- "The rich keep getting richer and it is white males who continue to own the means of production in the country. Not even Tokyo (Sexwale), who is the minister of human settlements, is an owner. Tokyo is owing the white baas because he wants to borrow from the banks. Who owns the banks? Tokyo is a rich man, but he doesn't own." - Speaking at the 16th national congress of the South African Students' Congress in Durban in December last year.

Related Article:

ANC Youth League stand by Cipro claim

The ANC Youth League insisted that the Companies and Intellectual Properties Registration Office (Cipro) had not carried out instructions to remove its president Julius Malema from company directorship.

"That things has been clarified several times - the lawyer even showed e.tv the acceptance by Cipro of the application," said spokesman Floyd Shivambu.

On Tuesday Cipro insisted that Malema had not applied to be resigned as the director of three companies and co-director of one which did business in Limpopo, where Malema hails from.

"It's just confusion - as far as we are concerned, he has resigned," said Shivambu.

The league spent Tuesday conducting a media blitz on the controversy over the league president's assets and suggestions that he may have used his political influence to benefit the companies he was associated with.

They believe it is part of a conspiracy by several forces and say they have given a list given to them by the National Intelligence of people being targeted, to police.

They are being targeted because they are seen as supporters of President Jacob Zuma.

Shivambu would not say which police station it was handed in to.

"We are not going to give details of that but that list exists. It is an official document that is coming from the state intelligence."

2 Opinion(s):

Anonymous said...

And that is why the judicial system in SA is so lenient towards socio-economic offenders - it's all part of the "transformation process". Socio-economic criminal offenders represent roughly 20% of the prison population, even though the vast majority of criminal offenders fall into the socio-economic category. Economic offences have a 56% lower chance of conviction than violent ones.

Socio-economic offences include vehicle theft, hijacking, fraud, corruption, and trafficking in metals and precious stones.

Reported crime between 2003 and 2008 remained fairly stable - according to some accounts - allegedly deviating no more than 6% from the full-term coverage year-on-year. Yet the number of sentenced admissions to prisons dropped 47%, from 178,569 in 2003 to 94,566 by 2008.

"If you consider the arrest rate for police for socio-economic offences has been rising proportionately (to violent ones), the lower overall conviction rate (of 6.5%) of those who walk free are socio-economic offenders," says Michael O'Donovan, a specialist in large socio-economic databases who spends a great deal of time monitoring the capacity of SA's judicial and penal system.

Source: Medical Research Council; Interpol; Central Stats Service. From an article written by Malcolm Ray, "Law and disorder". Finweek, 3 September 2009.

Anonymous said...

The picture is a classic. Well done.