Justice Minister Thembi Simelane told Parliament today that she took a loan from a VBS broker to invest in a coffee shop as political positions are short-term.
Simelane was asked by the Justice Portfolio Committee in Parliament to explain her involvement in the VBS loan saga.
SECURING THE BAG
Simelane said that when one is appointed as an office bearer in a public office, it becomes difficult to get a job outside of public service or even to assist family members with employment because of nepotism and favouritism. "This necessitated that I investigate the feasibility of commencing a business and a coffee shop seemed a feasible option that I could create employment for myself and my next of kin," she said, adding that the coffee shop, which has since closed down employed between 8 and 12 people, depending on some of the work that was contractual. "I made this consideration so that I have an alternative when public office life comes to an end," she said.
SHE CONSIDERED CASHING IN ON HER PENSION
Simelane said before taking the more than half a million loan from Gundo Wealth Solutions, she initially wanted to partially withdraw from her pension after working for the government for 15 years. She said at the time, her pension was around R800 000 and the percentage she was going to pay for tax did not make the whole idea viable.
"I asked Gundo for advice on how best I could finance the business and I was advised against the withdrawal of my pension. During those discussions, I was informed by Gundo Wealth Solutions of the loan products that they have that I could access," she said. Gundo Wealth Solution is a brokage company owned by Ralliom Razwinane, who is currently on trial for fraud, corruption and money laundering related to his role in facilitating unlawful investments between several municipalities and VBS. Razwinane allegedly received over R24m in kickbacks from the back for bringing in municipal investments. Simelane said she registered the coffee shop on 20 September 2016 and on 30 September, she signed a loan agreement with Gundo and offer to purchase with the owners of the coffee shop. The loan of R575 600 was paid to Recovet, the company that owned the coffee shop."
WHY SHE PAID THE LOAN ONLY FOUR YEAR LATER
Simelane told the Portfolio Committee on Justice that she repaid the loan back in three instalments in 2020, four years after taking the loan. There have been questions on why the minister paid the money after so long and she explained that the coffee shop was, at the time, not fully registered and that it only had its own bank account in 2019. She repaid the loan back in October, November and January 2020. Simelane said she paid over R800k, and the money included interest. A few months before that, she said the National Treasury had ordered municipalities which had invested with to withdraw their investments with the mutual bank.
