Only by prioritising a concerted crackdown that brings all stakeholders together can the country arrest the spread of financial criminality.
Former Mhlathuze Water chief executive Mthokozisi Duze allegedly received millions in kickbacks and bribes from a service provider contracted to the water board.
Investigators allege that Duze used the bribes to build a mansion worth between R15 million and R20 million in Mtunzini, KZN.
The service provider, Mhlanga Incorporated, allegedly paid hundreds of thousands to stock up on alcohol for Duze's luxury nightclub, Sprytz Premium Lounge.
The disgraced chief executive of Mhlathuze Water, Mthokozisi Duze, allegedly received bribes from a contractor and used the money to build a plush R20 million mansion and stock up on booze for his upmarket nightclub.
Duze, investigators allege, received bribes and kickbacks from prominent Durban lawyer Ralph Sithembiso Mhlanga, whose company – Mhlanga Incorporated – the water board had paid R38 million for rendering legal services. Mhlanga has, from time to time, acted as a judge of both the High Court and the Labour Court in Durban.
The lawyer allegedly gave Duze a series of bribes and kickbacks totalling more than R1.1 million either after invoicing Mhlathuze, or shortly after the company honoured his invoices.
In turn, Duze allegedly used the money to build a palatial mansion, valued at between R15 million and R20 million, in the gated Zini River Estate on KwaZulu-Natal's North Coast. He used some of the cash to stock up on booze for his Sprytz Premium Lounge in the Pietermaritzburg city centre. However, the investigators believe Duze, who lived way beyond his means, received considerably more bribes from Mhlanga than the R1.1 million they were able to prove with hard evidence.
The account of how Duze spent the dirty and tainted money he got from Mhlanga is documented in two hard-hitting affidavits. One of the affidavits, filed by the Asset Forfeiture Unit (AFU) in late 2022, was part of the unit's efforts to preserve Duze, Mhlanga and former Mhlathuze chief financial officer Babongile Mnyandu's assets.
In August 2022, the Hawks arrested Duze, Mhlanga, Mnyandu and five others and charged them with fraud, corruption and money laundering. Their arrests flowed from a forensic investigation by Integrity Forensic Solutions (IFS).
IFS' investigators found that Duze and Mnyandu, in total disregard of procurement policies, unlawfully and irregularly approved payments totalling R38 million to Mhlanga Inc, between 8 August 2019 and 30 September 2021. The criminal case is currently under way at the Durban High Court. Duze, Mhlanga and Mnyandu are out on bail. Duze resigned from his position in the wake of the scandal.
The second affidavit, by Leo Saunders, a director at IFS, is part of the court bundle in the criminal case against Duze, Mhlanga, Mnyandu and the five others. The AFU's affidavit, deposed by Mdumiseni Shangase, reveals that in total, Mhlanga, out of his law firm's trust account, paid R1,163,689-39 for Duze's benefit.
"It is clear from the above, therefore, that Mhlanga made direct and indirect payments from the Mhlanga trust account for the benefit of Duze in the amount of at least R1,163,689-39, before and during the period of Mhlanga's appointment to render services to Mhlathuze. I am advised that Duze did not disclose any of the benefits he derived from Mhlanga even though he was involved in the process of approving payments from Mhlathuze to Mhlanga."
Saunders' affidavit shows that on 16 November 2018, Mhlanga made a R20,000 payment with the reference "Sprytz". On 5 February 2019 and 6 March 2019, Mhlanga made two payments of R15,000 and R110,000 from his FNB Gold Business Account. The reference for both payments was "Sprytz". The R15,000 was at a point-of-sale on behalf of Sprytz, while the R110,000 was an electronic funds transfer (EFT).
Of both payments, Saunders said: "In the circumstances, the evidence available makes it reasonable to conclude that the combined amount of R125,000 paid by Mhlanga on behalf of Sprytz or Duze on 05 February and 6 March 2029, respectively, is an undue benefit paid by Mhlanga, designed to possibly influence the conduct of Duze in the execution of his duties at Mhlathuze in favour of Mhlanga."
The affidavit shows that on 8 June 2020, seven days before Mhlathuze paid one of Mhlanga's invoices valued at R3,450,000, the lawyer made a R153,761-60 payment with the reference "Mw" and "Sprytz". "Mw" is an abbreviation for Mhlathuze Water. The affidavit said the payment was an undue benefit aimed at influencing Duze to act in Mhlanga's favour while executing his duties at Mhlathuze.
On 8 July 2020, eight days after Mhlathuze paid Mhlanga Inc a further R3,450,000, Mhlanga made a R200,000 payment from his trust account with "Mw" as the reference. He paid the R200,000 over to his FNB Gold Business Account. From there he routed the money to his other account, held at Standard Bank. On 17 July 2020, Mhlanga paid the cash to Rubio Investments.
On the same day, he paid a further R120,000 from his Standard Bank account to a company called Seyema Consulting. IFS' investigators found that Seyema Consulting is the registered name of Sprytz Premium Lounge. They also found that Duze is a director at Rubio Investments. He has been a director of the company since 2011.
On 24 August 2020, Mhlanga made a payment with the reference "Sprytz" and "Sihle B/Day". On 27 November 2020, he made another payment of R20,000, with the reference "Sprytz". Shangase's affidavit shows that on 08 June 2020 and 02 December 2020, Mhlanga respectively paid a company called Liberty R153,761-60 and R50,303-79. The payments were for the supply of liquor to Sprytz Premium Lounge.
The affidavit read:
Since Saunders had already found that Duze owned a club called Sprytz Premium Lounge, we suspected that the payment to Liberty could have been to Liberty Liquors to supply alcohol to Duze's club.
Avashin Singh, an accounts clerk at Liberty Liquors, told IFS' forensic detectives that the two payments were for the supply of liquor to Sprytz Premium Lounge.
Further, Saunders' affidavit shows that on 6 April 2021 and 24 May 2021, Mhlanga paid hardware and building material retailer Woodlands Builders, based in Pietermaritzburg, two respective amounts of R101,307-30 and R150,000. He referenced the payments as "Mtunzini". The payments, the affidavit shows, coincided with Duze's construction of a mansion at the Zini River Estate in Mtunzini, near Richards Bay.
"The payments of R101,307-79 and R150,000 made by Mhlanga to Woodlands Builders between April and May 2021 were made during the time that the house at 138 Mtunzini was under construction. These payments are reasonably suspected of being made by Mhlanga in respect of building the house at 138 Mtunzini, for the benefit of Duze, as the owner of the house constructed at said address," said Saunders' affidavit.
Shangase's affidavit shows that Mhlanga paid R98,692-21 to Nyati Slabs on 06 April 2021. This payment, with the reference "Mtunzini", was also for Duze's benefit. Lastly, on 22 July 2021, Mhlanga paid R89,624,00 to Geldenhuys and Tarr, said Shangase, adding that the payment had the reference "Pius", which is Duze's middle name.
In March 2013, Saunders' affidavit shows, Duze paid R900,000 cash for a piece of land in Ashburton, outside Pietermaritzburg. In August 2018, he paid R375,000, also cash, for another vacant plot in the same neighbourhood.
"Duze received undue benefits from Mhlanga to the extent of around R1,079,997-18 at this stage of our investigation. The proceeds were in respect of, inter alia, payments towards the construction of the house at Mtunzini estate, alcohol purchased for Duze's nightclub Sprytz Premium Lounge, and other amounts that do not reflect how these were used," concluded Saunders' affidavit.
He said it was not likely that Duze received only R1,079,997-18 from Mhlanga.
"My suspicions are premised on the fact that the house that Duze has recently built at 138 Mtunzini is stated by the service providers that constructed the house as being valued at between R15 million and R20 million."
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