She then turned to Gundo for advice on how she could best finance the coffee shop and was advised against withdrawing her retirement savings. Instead, Gundo told her about a loan product they had which she could access.
After weighing her options, she saw no conflict in securing a loan from Gundo, as the company was a municipal contractor.
She then concluded the registration of her own company, T5 Investments Group on September 26 2016. On September 30 she signed with Gundo Wealth and Ricovert, the owner of the coffee shop, to purchase the bistro.
The coffee shop employed between eight to 12 people, she said.
As per the loan agreement, the money was repaid over three instalments by T5 Investments and Silvana to Gundo. These payments were made on October 9 and November 12 2020 as well as January 7 2021, totalling an amount of R849,999. This amount included an accumulated interest of R274,399, which Simelane said was about 11.2%.
As the loan only covered the purchase of the business, T5 still had to pay for the shop's operational costs, including rent and equipment which Ricovert had left behind, until October 2019 when it was fully registered.
Simelane ‘didn’t get money from VBS Bank but Gundo, and saw no conflict’
Justice minister briefs parliamentary committee about a loan she took from VBS investment broker Gundo Wealth Solutions when she was Polokwane mayor
Image: Freddy Mavunda
Justice and constitutional development minister Thembi Simelane says she saw no problem with obtaining a loan from a financial adviser implicated in the VBS Mutual Bank scandal.
With the money she purchased a coffee shop and told parliament she repaid the full amount, including interest, over three payments.
Simelane was summoned to appear before the portfolio committee on justice and constitutional development after it emerged she was involved in dealings with Gundo Wealth Solutions, a company with ties to the defunct bank when she was Polokwane mayor.
She received a nearly R600,000 loan from Gundo.
The company brokered investments on behalf of VBS and the municipality which had invested R349m in the bank.
The loan she received from Gundo was for Simelane to purchase Silvana’s Bistro, a coffee shop in Sandton, in October 2016.
WATCH | Justice minister Thembi Simelane appears before portfolio committee
In the committee meeting on Friday, Simelane said she had no improper relationship with Gundo as mayors and councillors are not involved in procurement processes.
The executives in the municipality issued an advert, a supply chain management process was undertaken and Gundo was appointed as the municipality's investment manager and financial adviser for three years.
This was at no cost to the municipality as in a tender where a budget is set aside, but Gundo earned a commission for any amounts received from the investment, she said.
She said she never received any improper benefits from Gundo, as reported.
As an office-bearer in the public service, political positions were short-term and it was difficult to find work outside the public service. She thought of a feasible option to find employment opportunities and support her family by buying a coffee shop.
“I intended to withdraw partially from my retirement savings coming from pensions of being an employee of the public service for 15 years. I experienced difficulties because of the cost of the charges. The pension was about R800,000 and the percentage of tax and all of that was making the whole idea not feasible,” she said.
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She then turned to Gundo for advice on how she could best finance the coffee shop and was advised against withdrawing her retirement savings. Instead, Gundo told her about a loan product they had which she could access.
After weighing her options, she saw no conflict in securing a loan from Gundo, as the company was a municipal contractor.
She then concluded the registration of her own company, T5 Investments Group on September 26 2016. On September 30 she signed with Gundo Wealth and Ricovert, the owner of the coffee shop, to purchase the bistro.
The coffee shop employed between eight to 12 people, she said.
As per the loan agreement, the money was repaid over three instalments by T5 Investments and Silvana to Gundo. These payments were made on October 9 and November 12 2020 as well as January 7 2021, totalling an amount of R849,999. This amount included an accumulated interest of R274,399, which Simelane said was about 11.2%.
As the loan only covered the purchase of the business, T5 still had to pay for the shop's operational costs, including rent and equipment which Ricovert had left behind, until October 2019 when it was fully registered.
Ramaphosa calls for Simelane to account amid VBS corruption claims
In February 2020, she said her mayoral office received calls from national and provincial Treasury informing the municipality that VBS was going under administration and she should institute a forensic investigation into the municipality’s investments in the bank.
However, the municipality had withdrawn their investment by then as per instruction from Simelane after the acting municipal manager discovered the bank was not a commercial bank.
She then told Gundo Wealth’s owner Ralliom Razwinane she would withhold the repayments of the loan pending the completion of the Limpopo government's investigations into the bank.
“The investigation took about 18 to 20 months. On October 9 2020, the same day I made a payment, I officially received the report in hand as the mayor from the Limpopo treasury.”
She thought this loan would not be a conflict of interest as Gundo did not receive payments from the municipality.
“There was no improper relationship. I requested a loan and the loan was advanced. The department of justice and constitutional development plays no role in the National Prosecuting Authority's (NPA) [decisions] on who to prosecute. The office I hold does not have a relationship in instructing or convincing the NPA on how to act in their mandate.”
Razwinane is on trial on 13 counts of corruption linked to the looting of the bank. A portion of the kickbacks allegedly received, which were loaned to Simelane, form two counts of the corruption charges.
TimesLIVE
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