Forensic report found exec bought six cars – including a Maserati – four properties and a posh home in Steyn City.
He bought a top-of-the-range Maserati Coupé, four properties for cash in just seven months and received a fat deposit for his posh house paid for by a service provider.
The details of how Herbert Msagala, the group executive for Transnet Capital Projects, amassed at least R17 million in a year are contained in a forensic report.
The report, dated October 2017 and compiled by forensic investigations company Nexus, found that he:
• Bought six cars – including a Maserati GranTurismo GT Coupé, a Ford Ranger and a Hyundai H1 – all for cash;
• Acquired four properties within seven months – none of which is bonded – for a total of R15.2 million; and
• Paid the full purchase price of R7 million for a his property in the exclusive northern Johannesburg enclave of Steyn City in just nine instalments.
All of the purchases were made through his family trust bank account.
Msagala said he adequately explained all his purchases and was acquitted in a disciplinary process. Transnet is appealing the outcome.
Although investigators could not pinpoint Msagala’s source of wealth because he didn’t declare all his interests, a proof of payment document of a R950 000 deposit from businessperson Sipho Sithole into the account of the conveyancer working on his Steyn City property transfer was found in his work email.
Sithole is one of the directors of IGS Consulting Engineers, which received several tenders worth more than R100 million combined, from Transnet.
Msagala remains at work after his suspension was overturned on a technicality.
“We discovered email correspondence regarding the purchase of this property. On January 28 2016, the estate agent, Quanita de Jager, addressed an email to Sithole, and CCed among others, Msagala,” the report states.
“In the email Ms De Jager mentions that a deposit of R950 000 was received and that the balance was still outstanding. It appears as if the deposit was paid by Mr Sithole, since the email is addressed to him. If the deposit was made by Mr Sithole, it may well constitute gratification as defined in terms of the Prevention and Combating of Corrupt Activities Act.
“Mr Msagala’s conduct appears to have contravened the Procurement Procedures Manual which stipulates that employees must refrain from using a position of authority and/or facilities provided by Transnet, to further their own interests; and that they must desist from allowing personal interests to influence business decisions or tasks and disclose any actual or potential conflict of interest.”
ONLY ONE VEHICLE, THE NEW AUDI Q7, IS FINANCED. THE REMAINING SIX VEHICLES WERE ALL BOUGHT AS SECONDHAND AND PAID FOR IN CASH. THE ESTIMATED VALUE OF THE VEHICLES ACQUIRED IN CASH IS R2 MILLION
Nexus investigators wrote that they interviewed one of the estate agency owners about Msagala’s Steyn City property.
Msagala, she said, was a walk-in client and arrived one day and told her he wanted to buy a property in Steyn City, but that she’d have “to deal with Sithole regarding the purchasing of the property”.
Investigators also conducted searches on Msagala’s vehicles and “set out the vehicles owned in two separate time periods, pre-September 2015 and post-September 2015”.
“The reason for this is that IGS received its first payment in September 2015,” the report states.
THE NEXUS INVESTIGATION FOLLOWED A TIPOFF ABOUT ALLEGATIONS OF FRAUD REGARDING THE TESTING AND SUPPLYING OF VALVES ON THE NEW MULTI-PRODUCT PIPELINE PROJECT BY IGS CONSULTING ENGINEERS.
The investigators found that, before September 2015, Msagala bought three cars, all second-hand. But after IGS received its first payment, Msagala bought seven cars in less than a year.
“Only one vehicle, the new Audi Q7, is financed. The remaining six vehicles were all bought as secondhand and paid for in cash. The estimated value of the vehicles acquired in cash is R2 million,” the report found.
It also found that Msagala bought a house in Harrismith in his 19-year-old daughter’s name.
Nexus asked for Msagala’s salary advice slip to assess whether he could afford his lifestyle.
“The assets acquired … to the value of R17 million, are, however, grounds for reasonable suspicion that Msagala might be living beyond his means. A criminal case of corruption has already been registered with the South African Police Service,” the report states.
The Nexus investigation followed a tipoff about allegations of fraud regarding the testing and supplying of valves on the New Multi-Product Pipeline project by IGS Consulting Engineers.
Transnet sources told City Press that Msagala was acquitted on a “technicality” and the company was taking the matter on review to the Labour Court.
Read: Transnet’s Mr Clean, Mohammed Mahomedy, nearly quit. This is why
Msagala said the IGS allegations were first raised in 2015 by former Transnet group chief executive Siyabonga Gama. “I comprehensively responded to Gama on each allegation. He proceeded to institute internal disciplinary proceedings which were concluded last year when I was found not guilty and acquitted on each charge,” he said.
“The process was presided over by an independent chairperson appointed by the Transnet Bargaining Council.”
Msagala said that, after he was acquitted, “Transnet through Gama sought to appeal the outcome through a referral for a review application to the Labour Court, to set aside the acquittal verdict by the chairperson”.
Msagala said the Labour Court is still to make a judgment on Transnet’s review application and he said he could not comment further.
IGS did not respond to calls and messages requesting comment over a period of two weeks. City Press spoke to a confidant of Sithole, as well as one of his senior engineers, both of whom undertook to pass messages, but no comment was forthcoming.
This report does not necessarily reflects the opinion of SA-news.