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PIC-funded businessman admits 'love relationship' with board member

Mar 27 2019 14:31
Sibongile Khumalo

A businessman who benefited from PIC funding has refuted claims that his dealings with the state manager were influenced by his romantic relationship with one of its directors.

On Wednesday, Lawrence Mulaudzi told the inquiry into the fund manager that he was indeed in a "love relationship" with PIC board member Sibusisiwe Zulu.

The relationship had been the subject of corruption allegations circulated by the anonymous whistleblower known as James Noko. The allegation, circulated over email, implied that Mulaudzi's relationship with Zulu had helped him clinch deals with the PIC.

"I can confirm that I have a love relationship with Ms Zulu," he said.

'False and a fabrication'

Companies associated with Mulaudzi secured PIC funding in recent years, and the businessman stated that the deals predated his relationship with Zulu.

He said he first met her in 2017, prior to his first dealing with the state-owned asset manager in 2015, and that allegations of "undue influence and impropriety" on Zulu's part regarding his dealings with the PIC were "false and a fabrication".

"I wish to place on record and under oath that Ms Zulu has never influenced or benefited from me in the transactions concluded with the PIC," said Mulaudzi.

In a wide-ranging submission to the inquiry, Mulaudzi sought to shed light on several issues involving his business interactions with the PIC, including how former CEO Dan Matjila imposed a merger between his entity, Kilimanjaro Capital, also known as KiliCap, and another empowerment company called Sakhumnotho.

'Devastating' Matjila directive

In 2015, KiliCap had approached the PIC for funding to acquire a BEE stake in Total South Africa for R1.7bn, in what was known as Project Atlas. Mulaudzi testified that during the application process, Matjila had informed them that there was another group interested in the transaction and that the two entities must form one consortium.

"We were very devastated by this directive from Matjila," he said.

He said KiliCap  made a "difficult decision to merge with Sakhumnotho, as 50% of the transaction was better than the whole transaction being taken away from us."

The rationale for the merger was not clear, apart from the assertion that the amalgamation would strengthen the company's B-BBEE credentials.

Central to the transaction was the R100m transaction fee paid by the PIC following the approval of the deal, in what has been described as higher than the industry norm at nearly 5.8%.

The PIC Fund Principal, Benedict Mongalo, said the fee was usually calculated at between 1-2% of the total transaction and the fee was usually negotiated down if it involved large amounts. 

The fees were split between the two entities and their advisors.

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