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Molelwane Consulting is the textbook definition of a shell company – you had virtually no money in your account, and then you received a large payment without clear evidence of the work done.
This was one of the evidence that was presented at the recent Judicial Investigation Commission of State Capture Allegations involving EOH.
EOH has been haunted by corruption scandals for years that led to the appointment of Stephen Van Coller as CEO to “professionalize the company” in September 2018.
Upon his arrival, he initiated numerous interventions to address corruption in the company, including expanding the scope of the ENSafrica and ENS Forensics investigations.
The investigation uncovered evidence of government failures and suspected EOH wrongdoing, including unsubstantiated payments, bidding irregularities and unethical business dealings.
In his testimony at the Zondo Commission, Van Coller said that potential irregular payments in EOH currently amount to R865 million.
Some of these payments involved Molelwane Consulting, a company linked to the mayor of the city of Joburg and regional president of the ANC, Geoff Makhubo.
During his testimony, Steven Powell, managing director of ENSafrica’s forensic department, shed light on Molelwane Consulting.
Molelwane Consulting was owned by Makhubo and his wife Florence Matlakhala Makhubo. He resigned as a director of Molelwane Consulting in 2019.
Another company highlighted in the investigation is Mfundi Mobile Networks (Mfundi), which had a SAP services support agreement with EOH Mthombo.
Although Mfundi received large payments from EOH, there was no clear evidence of the service provider’s projects and deliverables.
Mfundi Mobile Networks and EOH made large payments into Molelwane Consulting’s bank account, which followed a similar trend.
- He had a balance of only R621.45 when a payment of R80,000.00 came in.
- He had a balance of only R597.45 when he received a payment of R100,000.00.
- He had a balance of R63.19 before receiving a payment of R200,000.00
- He had a balance of only R617.77 before receiving a payment of R50,000.
In all of these cases, the account was practically exhausted before a large payment was made to Molelwane Consulting.
It is telling that Molelwane Consulting basically had no money in her account to perform the tasks for which she was employed by EOH.
With such a low balance, it is also questionable whether you could demonstrate that sound financial management and accounting can be relied upon.
Powell confirmed Judge Raymond Zondo’s observation that there was a pattern in which the account topped up when it was very low.
Flags raised over Mfundi Mobile and Molelwane Consulting
Powell’s evidence further noted that Mfundi Mobile was being used as a front company that was used to extract money from the city of Johannesburg.
He said EOH paid Mfundi Mobile more than R34 million for alleged work on public sector projects where they could find no evidence that any work was done.
Once Mfundi Mobile received payments from EOH, it would make large payments to Molelwane Consulting.
Molelwane Consulting, in turn, was contracted by TSS (now EOH Africa) to provide business development and advisory services.
As with Mfundi Mobile, Powell said they sometimes couldn’t find proof that these large payouts had been worked on.
The combination of a lack of evidence of work performed and large payments made to an account with a very low balance is a textbook definition of a shell company.
A shell company is a dormant company that is used as a vehicle for financial maneuvers, such as money laundering or funneling money to a specific source.
It allows scammers to hide ulterior motives, hide the source and flow of money, and hide the destination of ill-gotten gains.
In this case, Molelwane Consulting and Mfundi Mobile were allegedly used to receive money from EOH in exchange for lucrative tenders.
Powel said his evidence points to a quid pro quo textbook case involving Molelwane Consulting and Mfundi Mobile.
“What we have seen is a pattern of regular solicitation of grants along with the awarding of tenders.”
Provided an example of a bid from the City of Joburg, included below, showing payments to and from the two companies mentioned in this article.
Now Read: Explosive Evidence Reveals How EOH Financed The ANC
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