Hardcore prawn: How Bosasa made fishy money
Bosasa’s former CFO has revealed all on how the company used a Krugersdorp prawn farm to launder cash
A prawn farm in Krugersdorp sounds unrealistically fanciful, but controversial state contractor Bosasa set one up in 2015 with the purpose of laundering fishy cash and avoiding South African Revenue Service’s (Sars) tentacles.
Details of the farm were made known during the state capture commission’s hearings on Wednesday when former Bosasa chief financial officer Andries van Tonder detailed how the company cooked its books to derail investigations by Sars and launder cash for bribes.
While the prawn farm bred “beautiful prawns” – and was visited by former president Jacob Zuma – Van Tonder said that was not its only purpose.
It all started with a failed Bosasa venture into the aquaculture business via a project called SeaArk Africa, which aimed to breed seawater prawns in a controlled environment.
“Large sum of monies were transferred to SeaArk. Up to about R50m over three years was earmarked to pay consulting fees to various consultants on the project,” he said.
However, while the project failed due to a “lack of funding”, plans were put in place to mitigate the losses from the project. This included changing SeaArk’s name to Bosasa Supply Chain Management.
Here’s where it got fishy, he said.
“Bosasa Supply Chain Management could be used for income tax management. Basically, food items were on-sold from Bosasa Supply Chain Management to Bosasa Operations at a profit margin of about 20%. That profit was offset against the losses it previously incurred,” Van Tonder said.
It showed a massive financial turnaround. Van Tonder said the value of the benefit was about R37m.
But Sars conducted an investigation into the company’s utilisation of the assessed losses and the equipment write-offs reflected in its books.
“We had to show that the SeaArk project continued, and we did it by building a prawn production facility in Krugersdorp. And an entity for this purpose was called Bio Organics. It was funded by Bosasa.
“Artificial seawater was manufactured to grow the prawns in for this project. [Bosasa CEO Gavin] Watson even invited Zuma to view the facility. It was a very successful operation; we bred beautiful prawns,” Van Tonder said.
“The second thing that had to be done is that we had to show that the processing plant equipment that was never unboxed was installed and being utilised. None of this equipment ever was used in the kitchen facilities in the group ... We managed to convince Sars that the assessed loss was indeed legitimate. It was not a lawful result,” he added.
According to him, Watson ordered the shutting down of the prawn project and the retrenchment of all staff – this despite Van Tonder saying he told Watson that would contradict what was told to Sars. Nonetheless, the farm was closed down and the equipment sold.
Once Van Tonder had finished his testimony, he was replaced by former Bosasa central divisions manager Frans Vorster, who dragged the ANC’s name through the mud.
Vorster testified that Bosasa allegedly hosted the ANC’s call centre at its offices ahead of the national elections in 2014. It also threw a massive celebration at its premises for the ANC after its victory at the polls was announced.
The deal to host the call centre and the celebration at Bosasa’s expense was allegedly struck by environmental affairs minister and alleged Bosasa beneficiary Nomvula Mokonyane.
“In 2014, we were instructed to prepare a call centre for the ANC for them to run their national call centre from our facility. The IT department had to set up their computers, had to open phone lines for them to use. Exactly what they did from the call centre, I’m not sure. There were about 20 to 25 people who manned the call centre,” Vorster said.
He said his division had to carry the costs for the call centre in the run-up to elections.
Bosasa also footed the bill for “a massive function” to celebrate the ANC’s election victory.
“At the same time, a massive marquee tent was set up in front of one of our national stores. The renting of the cutlery, the food … everything was paid for by Bosasa. After the ANC won, they had a massive function on the premises. The person from the ANC who drove the process was Mokonyane. It was a function for about 400-plus people,” Vorster said.
He said the bill for the celebration was paid through Kgwerano Financial Services, a Bosasa subsidiary.
It was not the first time Mokonyane’s name came up in Vorster’s testimony. He also alleged he was instructed by Watson to rent a car for Mokonyane’s daughter between December 2015 and January 2016. He told the inquiry the car was rented in his name, and that the total bill for the rental and the insurance excess from Mokonyane’s daughter “bumping” the car came close to R100,000.
Asked about Vorster’s testimony, ANC spokesperson Zizi Kodwa told the SABC during an interview the inquiry must be allowed space to do its work.
“The name of comrade Nomvula Mokonyane, which has been mentioned before, she wrote a letter to the commission raising a number of other legal issues. It cannot be on the basis that we take it [testimony at the commission] as the gospel truth,” Kodwa said.
“Nomvula Mokonyane at some point, she was part of the election team of the ANC, in the period that we are talking about. There’s a specific mention that she was driving the process. Whether she will come here in her capacity, or in the capacity as the head of elections at the time, is something we must wait for the commission to decide.”
The inquiry will continue on Thursday. It is believed another former employee from Bosasa will take the stand.