PE Fraud Sees 9 Arrested, For Money Laundering Over R56 million

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Nine suspects arrested in connection with multiple charges of fraud, corruption and money laundering

South Africa, Cape Town – Nine suspects arrested in connection with multiple charges of fraud, corruption and money laundering exceeding R56.4 million are expected to appear at the Port Elizabeth Magistrate’s Court on Friday morning.

Hawks spokesperson Lieutenant Colonel Philani Nkwalase said the Hawks Serious Corruption Offences team arrested the suspects, aged between 30 and 65, on multiple charges of fraud, corruption, and money laundering exceeding R56.4 million actual loss, while the potential loss is around R200 million.

Nkwalase said nine people would be charged along with six juristic persons (entities). The tenth person who was to be arrested has died.

The suspects, who were allegedly warned to hand themselves to the Hawks at the Mount Road Police station on Friday morning, included two former Nelson Mandela Metropolitan Municipal officials, two influential community office bearers and five business people.

He said the Metropolitan municipality was among those selected for a rapid bus system in 2010 and the Integrated Public Transport System project was administered with funding allocated by the National Treasury.

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He said in the same year another project called implementation and maintenance of an Institutional Contracts Management and Administration System (ICMAS) was undertaken.

Nkwalase alleged the service providers chosen on those two projects were reportedly irregular and their prices allegedly inflated, saying the matter was reported to the Hawks for investigations in September 2018 following an audit report by the National Treasury between October 2014 and March 2017.

“It is alleged that the suspects operated a syndicate with the common purpose to unlawfully circumvent the prescribed procurement processes to irregularly and fraudulently benefit specific suppliers or consultants,” he said.

Nkwalase said it was further alleged influential office bearers colluded with municipal officials and controlled decision-making in the appointments of specific persons in critical municipal posts. That was purportedly done to influence procurement processes as well as the appointments of entities willing to advance the interests of the syndicate.

He said the alleged objective was to ensure a steady stream of unlawful payments from the municipality to members of the syndicate where the funds were distributed to other syndicate members.

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“This now forms the second leg of our investigation, on the first leg conducted in April 2017, we arrested six suspects that included two company directors, one entity, one municipal official and one person from Eastern Cape Province Rugby Union.”

Cape Argus

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