BIG READ: Tender comrades — how Malema bankrolled his party

Hendrick Kganyago’s January 31 payment was not the first to Julius Malema’s front company Mahuna, nor would it be the last. Malema also wasn’t the only senior EFF figure benefiting from the BBT owner’s largesse.

On the morning of Thursday July 5 2018, about seven months before the tender was awarded, representatives of about 70 hopeful companies, including BBT, piled into boardroom A19 of the City of Tshwane’s fleet department offices in downtown Pretoria. They were there for a compulsory briefing on the fuel tender by City officials. Aspirant bidders who did not attend the briefing were automatically disqualified.

The very next day, Mahuna’s Absa bank statement reflected a R250,000 payment with a two-letter reference, “HK” — the initials of Hendrick Kganyago. Later payments to Mahuna were labelled “Mmaseroka”, the name of some of Kganyago’s companies and his family trust, or just “fuel payment”, leaving little doubt about what the payments were for.

Eighteen days after the briefing, on July 23, the bid window closed. It would now be up to City officials to evaluate the large stack of submissions, weed out noncompliant bidders and begin the laborious selection process that would end only the following year.

Throughout that time, the money from Kganyago to Mahuna kept flowing. On Friday July 27, at the end of the week of the briefing session, he paid R500,000 into the Mahuna account. He also paid R1m to a company linked to EFF MP and central command member Marshall Dlamini, who, the year before, had allegedly tried to lean on a senior Joburg metro executive to influence the fleet tender. While he was not publicly well known, he was starting to gain a reputation in the City of Tshwane circles as an EFF “fixer”.

Marshall Dlamini’s rise and political influence

Dlamini’s association with Malema went back years. He was said to have been close to the murdered ANCYL [ANC Youth League] secretary-general Sindiso Magaqa, who, like him, was from Umzimkhulu in KwaZulu-Natal. He joined the EFF early on but mostly flew under the radar as a businessman with strong political ties and, increasingly, a party back room operator. Those who knew him said he owned a security company and had at some stage provided security services to the party and its leadership.

Malema saw him as efficient and hard-working, and he quickly won the favour of the EFF commander-in-chief. Perhaps more importantly, according to those who got to know him, he was someone with money and could rake in a lot more of it for the party. That made him valuable and catapulted him into senior leadership.

In 2015, Dlamini made it into parliament — which the EFF treated as a carousel, constantly replacing MPs either as reward or punishment. He was also appointed — fittingly for someone with his business acumen — as the party’s commissar for economic development. According to a former EFF MP, Dlamini was initially reluctant to take up a parliamentary position as it meant letting go of business interests. But he nevertheless ended up in the legislature and, rather than leaving business behind for a career in politics, began to mix the two. 

Dlamini was said to always be willing to fund EFF activities, including clandestine ones. A City Press article about EFF members jockeying for positions claimed he had tried to bribe members with inducements like phones, which he furiously denied. He was credited with growing the party’s support in KwaZulu-Natal, where EFF votes quadrupled from around 70,000 in the 2014 elections to well over 300,000 in 2019, so party insiders were not surprised when Malema earmarked him for advancement. At the EFF’s elective conference in 2019, he replaced the lacklustre Godrich Gardee as secretary-general.

At times, Dlamini’s hustle was on display. Messages show him throwing his weight around the metros, in one case ordering officials to intervene in an internal legal matter in which he, as an MP with no political position in any metro, should not have had any involvement. Sources say he always knew much more than he should have about the administrative affairs of the metros. 

Corporate links to EFF

Dlamini was a director of a long list of companies, including more than a dozen with “DMM” in their name — his initials in reverse — though DMM Media and Entertainment was not one of them. This was the company that Kganyago paid, and its sole director was one Wesley Dlamini, who was 30 years old at the time. But beyond the “DMM” label and their shared surnames, there was a lot more connecting the EFF and Marshall to Wesley. 

According to information in our possession, Wesley had listed one of Marshall’s companies — Eyethu Translodge & Plant Hire — as his employer. In 2016, in response to subcontractors who accused Eyethu of not paying them, Marshall claimed he had sold the company the previous year when he became an MP. Company records also showed that Wesley was a director of separate companies together with Floyd Shivambu’s brothers, Lucky and Brian. DMM Media even had the same logo on social media as DMM Holdings, which Marshall had established in 2014 “as a black-owned enterprise providing diversified services and products”. 

Tender awarded amid inflated costs

By the time the fuel tender was awarded on January 31 2019, Kganyago had paid Malema and Dlamini R10.8m in 17 payments. But it didn’t end there. Kganyago was enjoying an enormous windfall, and despite the recommendation by tender adjudicators that the City of Tshwane negotiate the winning bidders down, the City failed to mitigate the damage. This is where the figures become more intricate. 

To begin with, the government regulates a “basic fuel price” based on the imported cost of fuel, which fluctuates monthly. Next, taxes and levies, costs and allowable margins are piled on to yield wholesale and retail prices.

Fuel-tender bidders were providing quotes tied to a regulated wholesale price, and their quoted prices should have risen or fallen monthly in relation to that price. So, if a bidder quoted 50c cheaper than the wholesale price for a litre of fuel in, say, June 2018, come February 2019 it would receive the wholesale price for that month less the 50c — the difference in this case expressed as a discount to the City of Tshwane on the wholesale cost of fuel. 

Quotes provided by bidders should have been adjusted every month, in line with variations in the fuel price, and the margin between the quoted and wholesale prices should have remained the same. But this did not happen. By the time the tender was awarded, six months after the bid window had closed, the regulated fuel price had fallen by more than a rand per litre of diesel and more than two rand per litre of petrol. The City of Tshwane should have reduced the amount it was paying the fuel suppliers, but its own financial records showed that it did the opposite. 

When the contract started in February 2019, the City was overpaying for the two types of fuel it used, unleaded 95 and high-grade diesel, by R4.74 and R2.51, respectively. The fact that these costs were higher than pump prices completely defeated the point of the tender to source low-cost fuel for the City.

Slush funds and revolutionary allusions

Despite its intention to negotiate fairer prices, the City of Tshwane appeared to be a willing victim of BBT’s rip-off. It put the overpayment down to an “honest mistake”, but one that, as amaBhungane reported, was “replicated faithfully, month after month”. And as Kganyago’s profits accumulated, he kept pumping cash into DMM and Mahuna, which was renamed Rosario Investment in 2018 after being exposed as a Malema front. He also began making payments to the Malema front company Santaclara.

Despite its intention to negotiate fairer prices, the City of Tshwane appeared to be a willing victim of BBT’s rip-off.

There was an intriguing allusion to revolutionary history in the names of Malema’s two slush funds. In 2016, the year Malema visited Cuba to pay his respects to Fidel Castro, he changed the name of Voorsprong Trading and Projects, as it was then known, to Santaclara Trading. Santaclara is the town in Cuba that houses Che Guevara’s mausoleum. Rosario Investment refers to the city of Rosario — Guevara’s birthplace in Argentina. Naming companies used to fund a life of extravagance and greed in honour of a famously selfless and ascetic revolutionary was a strange paradox, and a fitting testament to Malema’s contradictory politics. 

By August 2019, Kganyago had stuffed a total of R15m into the slush funds of his political friends. It was perhaps owing to the political protection he enjoyed that he was able to swindle the City of Tshwane with such reckless abandon.

In June 2020, in a case brought by one of the losing bidders for the fuel tender, the North Gauteng High Court set aside the tender, ruling it “irrational” and “unfair”. The judge noted that the overpayments had “only ceased after September 2019, coincidentally after an article appeared on the amaBhungane website”. 

In October 2021, reports emerged that the Hawks were investigating the tender and had requested information from the City relating to “allegations of fraud and corruption committed against the City of Tshwane relating to the [tender], which was awarded to Balimi Barui Trading, MDZ Holdings and Rheinland Investment CC”. Like so many other Hawks investigations, nothing has been heard of this since.