EDITORIAL: A symphony of corruption

SA capitalism is staring down the barrel of deeply entrenched systemic flaws. The Delta Property Fund scandal has laid bare a troubling pattern of unchecked executive power that echoes the infamous Steinhoff scandal.

First off, let’s take a moment to applaud the whistle-blower Philip Dube. An Uber driver by day and unlikely hero by night, Dube lifted the veil on Delta corruption with precision. His bravery serves as a reminder that even in a world rife with corruption, there are still those who dare shine a light on the darkness

Dube’s exposé comes almost five years after Delta, which rents its real estate portfolio mainly to government departments, stunned investors with a statement a forensic investigation had found holes in its accounts. Among the issues identified in the summary of the investigation report were commission payments in the three years to February 2020. The commissions result from invalid, lapsed or no-broker mandates. Delta also failed to disclose related party transactions, hiding conflicts of interest or undue benefits.

That was enough to spark a selling frenzy in the company’s share price, crashing by more than a third, destroying tens of millions of rand in shareholder value and conjuring up painful memories of scandals involving Steinhoff and Tongaat Hullet. The company is now worth about R150m, a stunning fall from grace for the company that fetched about R1.4bn when it floated on the JSE in the glow of investor goodwill in 2012.

While the fallout from Delta may not have the global impact of Steinhoff, the underlying issues are strikingly similar: corporate governance failures, financial mismanagement and a flagrant disregard for accountability.

The latest performance of corporate mismanagement was orchestrated by former CEO Sandile Nomvete, and his sidekicks, CFO Shaneel Maharaj and COO Otis Tshabalala. They turned a simple R200m loan from the Bank of China into a labyrinthine web of deceit, including unsubstantiated payments, procurement irregularities and dubious financial dealings.

Nomvete played his role to perfection. From backdoor negotiations to creative invoicing, he transformed Delta into his personal playground. His sidekick, Maharaj, was no more than an apprentice, approving payments disguised as transactions with the National Health and Allied Workers Union (Nehawu). Tshabalala as COO was aware of and participated in the unlawful authorisation of payments. The trio are banned from directorship for anything between life, 15 years and seven years, and rightly so.

One of the most troubling aspects of this scandal was the role of Alfred van Wyk, the relationship manager from the Bank of China moonlighting as a private loan facilitator. For the right fee, Van Wyk ensured the loan extensions kept rolling.

Secret mandates, unsubstantiated payments and procurement irregularities became the norm. Mhlandla and Zimzin, entities linked to Nomvete involved in brokering lease agreements with the public works department, were handsomely rewarded for their so-called services, while Nomvete personally benefited.

What of the board? The board’s apparent lack of awareness of these activities raises serious questions about their role in providing oversight. It is not unreasonable to surmise that the board was more of a passive observer than an active participant as stewards of shareholder capital.

While the scale of the Delta scandal may be smaller, the lessons it imparts are universally applicable. The scandal is the latest evidence of the power of unchecked authority and the lengths to which individuals will go to exploit it. It is a cautionary tale, a modern-day fable of greed and deceit, and a reminder that sometimes the most unexpected heroes emerge from the unlikeliest of places.