Members of parliament’s justice committee quizzed the department’s minister Thembi Simelane on Friday about what they said was a “suspicious” loan with a repayment period of four years and an “extortionate” final interest rate of 47.7% when the loan was finally repaid.
The minister’s appearance before the committee was the first opportunity for her to publicly pronounce on the 2016 loan of R575,600, which was repaid together with R274,399 interest four years later.
Committee members have asked to see the loan agreement and will be advised by parliament’s legal advisers if this is legally permissible. They wanted to know why Simelane had not taken out a more favourable loan from a registered financial institution.
President Cyril Ramaphosa has also asked her to explain herself.
The loan to buy a Sandton coffee shop was taken out with Gundo Wealth Solutions, which earned commission from securing deposits for VBS Mutual Bank from municipalities, including Polokwane of which Simelane was mayor at the time.
Polokwane municipality invested R349m with the bank in contravention of the Municipal Finance Management Act, which prohibits investments by municipalities in a mutual bank.
I want to categorically state [that] I did not have an improper relationship with a contractor appointed by a municipality, and I did not receive any improper benefits from any contractor as alleged.
— Justice minister Thembi Simelane
MPs were also concerned about the possible conflict of interest that Simelane had as head of the justice system while investigations were under way into the collapse of VBS Mutual Bank.
News24 reported that last week the Hawks raided the Polokwane municipality to secure possible evidence of corruption linked to its investment in VBS Mutual Bank in 2016 and 2017.
The report said evidence linked to the loan that Simelane took out to buy a Sandton coffee shop was also seized and that Simelane’s former personal assistant was compelled to hand over the passwords to their private email, WhatsApp text messages, emails and other documents.
Gundo Wealth Solutions owner Ralliom Razwinane is on trial for 13 counts of corruption linked to commission paid to the company by VBS Mutual Bank in exchange for securing investments from the Polokwane municipality.
Municipalities were offered gifts and bribes to invest in VBS Mutual Bank.
“I want to categorically state [that] I did not have an improper relationship with a contractor appointed by a municipality, and I did not receive any improper benefits from any contractor as alleged,” Simelane said in a written statement to the committee.
DA justice spokesperson Glynnis Breytenbach suggested to Simelane that she was “the recipient of that dodgy money”.
Responding to questions by MPs, Simelane insisted that she had nothing to hide, that the high interest rate was due to the lengthy repayment period and gave the assurance that she had not and would not influence the National Prosecuting Authority (NPA) in its work and its investigation into VBS Mutual Bank. She said she had no jurisdiction over the operations of the NPA and was not involved in its decisions on prosecutions.
MPs, however, were concerned about the perception of a conflict of interest and what effect this would have on NPA officials worried about their careers. Several MPs believed that Simelane should step aside while the investigations were under way, with Breytenbach saying that the “inescapable conclusion” was that the minister could not sit at the pinnacle of the justice system, however honourably she conducted herself.
ACDP MP Steve Swart said the conflict of interest was “glaring” and was of huge concern as the possibility existed that the minister would abuse her powers.
Simelane also told MPs that after the Polokwane municipal manager informed her that VBS Mutual Bank was not a commercial bank, she ordered the withdrawal of its investments from the bank with the result that the municipality did not suffer any losses as a result of the bank’s collapse.
She said the investment in the coffee shop was intended as an alternative to political appointments that were of short duration.
“The idea was triggered by a bona fide intention to invest for the future and to make provision for employment opportunities generally, and for members of immediate family struggling with employment experience,” she said.
She had asked Gundo — the financial adviser for the Polokwane municipality — for financial advice and had been informed about its loan product. Questioned by Breytenbach, she said she did not consider it a conflict of interest to take out a loan from the company that was providing services to the municipality.
She also stressed that she had nothing to do with the decision by the municipality to invest in VBS Mutual Bank.
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