Johannesburg - A former Transnet executive must pay back R26 million he used to buy six properties worth R15.2m in eight months and 36 cars in just over a year through the proceeds of unlawful activities.
Ex-Transnet Capital Projects chief executive Linyenga Herbert Msagala, his trusts, IGS Consulting Engineers and its sole member, Sipho Sithole, were hauled before the Special Tribunal by the Special Investigating Unit (SIU) and Transnet to force them to repay R18.4m siphoned from the state-owned rail, logistics, port and pipeline company.
During the tribunal’s proceedings, it was established that Msagala received a further amount of over R8m from IGS and Sithole.
Special Tribunal Judge Lebogang Modiba detailed the extent of the crimes Msagala, his trusts, Sithole and his company are accused of committing following an investigation by the SIU.
Judge Modiba found that between September 2015 and March 2016, Msagala bought six properties in Gauteng and the Free State valued at R15.2m.
Two of the properties were registered in Msagala’s then 17-year-old daughter Bonolo’s name, while the rest were registered under the Msagala Investment Trust.
In September 2015, Msagala bought a plot in Steyn City in Dainfern, north of Johannesburg, for R7m, another property in Bedworth Park in the Vaal worth R1.46m. In October 2015, he paid R200 000 for land in Phuthaditjaba, a farm valued at R1.2m in February 2016. Another property was acquired in March, 2016, for R4.5m, as well as the last in Harrismith in the Free State for R840 000.
Msagala settled the balance of the purchase price, conveyancing and transfer costs for the Steyn City property without any loan financing in the form of six ATM transfers in the amount of R999 999.99.
Judge Modiba explained that the amounts were made to avoid scrutiny for the purposes of banking and Financial Intelligence Centre controls.
She said it is unclear how the Phuthaditjaba property was paid for as the Msagala Investment Trust account had not been opened yet but he started receiving cash from IGS before the account was opened.
According to Judge Modiba, Msagala acquired 36 cars between February 2016 and January 2017, and these were owned by the Msagala family trust.
She said it was highly probable that the substantial payments Msagala received from IGS enabled him to purchase the cars.
Judge Modiba said Msagala had never purchased so many properties and cars within such a short period before he started receiving payments from IGS.
She found that Bonolo was 17 when she allegedly purchased these properties while her Capitec bank account never received deposits in excess of R4 000 and there was never a balance in excess of that amount.
She claimed to receive a R25 000 monthly allowance, but Judge Modiba said Msagala purchased or financed the properties registered in Bonolo’s name from the money he received from IGS.
”It is probable that Bonolo knew nothing about her father Msagala’s nefarious activities and what the source of the money used to purchase the properties was,” the judge said.
Judge Modiba further added: “Justice would not be served by holding Bonolo personally liable for the losses Transnet has proved to have incurred. Therefore, no order is made against Bonolo”.
She also made no order against Loretto Msagala, the ex-Transnet executive’s wife.
The properties and cars have been forfeited to the state.
Judge Modiba found that Msagala received secret profits amounting to over R26m from IGS and Sithole while he was still employed by Transnet in breach of his employment duties.
The first payment deposited into one of the bank account controlled by Msagala was R500 000 paid in November 2015, and by December 31, 2016, over R24m had been deposited into this account, including almost R16m deposited in cash.
Msagala is also facing a criminal investigation, and his pension benefits held with the Transnet Retirement Fund, which has been under the tribunal’s May 17, 2020, preservation order, will be executed as payment towards his debt.