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The commission of inquiry into state capture returned its focus on Thursday to evidence relating to the R15-billion funding deal that had to be abandoned in mid-2016 due to pressure arising in light of South African Airways’ (SAA) flouting of procurement processes. BNP Capital, which had initially bagged the award, worth just over R20-million, to advise on the tender, ended up with a broadened scope of services, and a bigger tender value of R256-million in a matter of three months with no second procurement event.

Then board chairperson Dudu Myeni’s personal financial advisor Masotsha Mngadi features prominently in the evidence of current witness Daniel Mahlangu, the director of BNP Capital. According to Mahlangu, it was Mngadi who negotiated the two opportunities on behalf of BNP. Mngadi, he said, first approached him in February 2016, informing him of an opportunity that had arisen at SAA and proposing a joint venture between BNP and Inline Trading, an entity believed to be owned by Mngadi.

“In our understanding, Inline Trading was represented by Mr Mngadi,” Mahlangu told the inquiry, adding that he had not been aware of Mngadi’s position at Nedbank at the time. Mahlangu also revealed that despite BNP winning the contract – which was initially to provide advisory services for SAA for the pursuit of funds – he had never met anyone from SAA.

Myeni had introduced Mngadi to the new SAA chief financial officer Phumeza Nhantsi in November 2015, who told her that he worked for Nedbank and was her personal financial advisor.  Nhantsi would later hear from a board member that Mngadi was Myeni’s “person”, implying that his close links to the airline were due to his proximity to her.

Mahlangu said all his engagements with SAA were in written form, prepared by Mngadi, with BNP only signing off on them once it had made the relevant checks. Then Mngadi would meet with SAA in person.

According to Mahlangu, there had been no time for him to conduct a due diligence exercise on Inline Trading before venturing on the proposed deal, as Mngadi first approached him days before the closing date for the request for information for the tender.

BNP was at the centre of the controversy at the beginning of 2016, following the failed attempt by the Free State Development Corporation (FDC) to secure the contract for fundraising on behalf of SAA.  The national treasury found FDC to have gone beyond the boundaries of its own mandate by when it pursued the funding deal with SAA. No sooner was the coast cleared than BNP emerged. The loan sought by the national airliner was meant to help it consolidate its debt, and was pursued on the back of government guarantees, according to former group treasurer Cynthia Stimpel.

Mahlangu is expected to continue his testimony on Friday.

Issued by Corruption Watch