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Denel pays back City of Johannesburg loan

Denel repays loan from JohannesburgDenel has repaid the R290 million loan it owed to the City of Johannesburg, Mayor Herman Mashaba has confirmed.

Mashaba on 11 December announced that he had received notice that “the R290 million loan owed to the City by Denel has been repaid in line with the loan repayment date of the tenth of December 2018.

“This follows the lending of residents’ money to Denel, through Gupta-linked Regiments Capital, via an unsecured loan made without the City’s knowledge and irrespective of the financial risk posed to residents’ money,” Mashaba said.

The Denel board approved the R290 million facility on 4 September 2012. In October, Public Enterprises Minister Pravin Gordhan’s office stated that, “Based on historical records, there are no indications any breaches were committed in corporate governance rules or in Treasury’s public finance management regulations.”

The Minister’s spokesperson added that the loan from Johannesburg, via Regiments Capital, to Denel in 2012 was concluded by a previous city administration and a previous Denel board; Regiments Capital has since been identified as a Gupta-linked company retained by Johannesburg not by the Department of Public Enterprises or Denel and Johannesburg should investigate whether the contractual relationship between itself and Regiments was proper.

Mashaba stated that “While the City welcomes the repayment of the loan, it is unfortunate that said repayment was made possible through a bailout funded by money acquired from hard working taxpayers. The bailout has come in the form of a guarantee of R3.43 billion to Denel, which has been marred by allegations of state capture led by the nefarious Gupta family. Indeed, it is through the state capture project that the loan to Denel was made possible in the first place.

“A recent report by amaBhungane has shed light on alleged collusion between Regiments Fund Managers, which has also been linked to the Gupta’s former City Mayor, Cllr Parks Tau, and former MMC for Finance and current leader of the ANC’s Johannesburg Region, Cllr Geoff Makhubo. Working together, Cllr Tau and Cllr Makhubo paved the way for Regiments Fund Managers to transfer the R290 million to Denel.

“In turn, Regiments was able to enrich itself to the tune of a R3.42 million fee from Denel for securing the R290 million in debt from the City’s sinking fund. In 2006, Regiments Fund Managers received a contract to manage the City’s ‘sinking fund’ – a pool worth billions of Rand set aside to meet the City’s future debt repayment needs.

“A contract signed by Makhubo shows that Regiments agreed to pay 10% of its fees to Makhubo’s company, Molelwane Consulting, in exchange for Makhubo’s ‘maintenance of strategic relationships with the COJ [City of Johannesburg]’.

“With the blessing and alleged aid of Cllr Tau – who has admitted on record that he knew of the relationship between Makhubo and Regiments – Cllr Makhubo, who was tasked with exercising political oversight on one of the City’s largest contracts, was allowed to feast off the same set of contracts he had oversight over.

“Further, it is alleged that the role of Cllr Parks Tau was more than that of a bystander. Cllr Tau not only knew of the crooked deal, it is suspected that Cllr Tau allowed the arrangement to take place so as to also benefit his political party, the ANC. This will be confirmed through an additional ongoing investigation into the matter.

“Yesterday [10 December], I laid criminal charges of fraud, corruption, money laundering and racketeering against both Geoff Makhubo and Parks Tau,” Mashaba stated.

“The City is currently at an advanced stage of conducting its own forensic investigation into this matter.

“The City is currently at an advanced stage of conducting its own forensic investigation into this matter. Once completed, and given the serious nature of this criminality, I have instructed General Shadrack Sibiya, the Head of the City’s Group Forensic and Investigation Services Unit, to set up a meeting with the top leadership of the Hawks to ensure that every effort is made to see to it that blatant criminality is met with the full might of the law,” Mashaba stated.