As a City of Tshwane municipal strike grinds on with administrators refusing to increase workers’ salaries because of crippling debt, authorities have for a decade had evidence of how R77m was stolen from the city’s coffers — and none of it has been recovered.
Financial records, seen by TimesLIVE Premium, reveal exactly how funds were looted from the city’s community safety department through a BEE fronting scheme and used to fund the lavish lifestyle of former senior official and convicted fraudster Jacobs Barend “Japie” Lerm.
The Special Investigating Unit (SIU) began its investigation into the city's procurement processes in November 2010, with the investigation concluding in 2013 and resulting in Lerm pleading guilty to more than a 1,000 charges of fraud and corruption. Several others, including two ex-wives, Suzette Lerm and Riana Notley, who is a former Gauteng magistrate, were cited by the SIU as people of interest but were never charged.
Japie Lerm, who was a senior manager in the city's community safety department, served a fraction of his sentence and none of the stolen millions have been recovered. After entering a plea agreement with the NPA in 2019, Lerm was sentenced to 15 years — five of which were suspended. Correctional services spokesperson Singabakho Nxumalo said Lerm served one year and seven months and benefited from a two-year special reprieve in 2019 and a special parole dispensation in 2020.
Suzette Lerm, who was questioned under oath at the time but the National Prosecuting Authority (NPA) decided not to prosecute her up until recently, still benefited from government contracts. The Sunday Times reported at the weekend that Suzette, now the owner of Pumulani Lodge in Kameeldrift, secured a contract to accommodate 121 Gauteng crime prevention wardens, known as “amaPanyaza” after premier Panyaza Lesufi, who launched the initiative to bring down crime.
Today the City of Tshwane is reeling under financial distress with finance MMC Peter Sutton recently describing its position as a “major financial crisis ... from a liquidity perspective”. In a statement issued on October 4 this year, the city said it was unable to pay Eskom. It said to avert further financial woes it was applying for exemptions to pay salary increases. The city is in the midst of a strike by municipal workers, warning that a pay hike will result in a rate hike.
Yet the R77m stolen from the city, some of which was suspected to have gone into the purchase of land in a highly sought-after property estate in the Mozambican coastal holiday area of Vilanculos and a beachfront house on the KwaZulu-Natal south coast, will probably never be recovered.
The NPA and Hawks say they could not find the assets that need to be recovered.
This is despite the SIU having provided the NPA and the anti-corruption task team (ACTT) with affidavits and a lengthy financial paper trail, including bank statements, trust records, property title deeds and vehicle licensing papers. The SIU, along with the Hawks and the NPA form part of the ACTT, a subcommittee of the justice crime prevention and security cluster.
The financial statements show how the money was stolen from the city through multiple bogus BEE fronting companies, and then flowed into trusts. TimesLIVE Investigations has established that at least of one of these trusts still owns a beachfront home in Amanzimtoti on KwaZulu-Natal’s south coast but the trustee, Notley, was never charged so no assets can be seized.
I went through hell with that man. I do not want to relive that terrifying experience. I honestly thought it was behind me but now you are asking all these questions
— Japie Lerm’s ex-wife, Riana Notley
SIU documents, seen by TimesLIVE Premium, show that between 2005 and 2010, Lerm approved bogus emergency procurement contracts for repairs to city building security systems. The systems were reportedly damaged in lightning strikes, the majority of which the SIU’s investigation showed never occurred.
The repair contracts were then awarded to companies linked to Lerm, which were run by his associates. Money was then paid into their trusts, which were the business shareholders.
SIU investigators’ affidavits show that the companies behind the looting were:
- Central High Trading 333;
- Green Flash Trading 166;
- Pacific Breeze Trading 630;
- City Square Trading 931;
- Island House Trading 48; and
- Omeida Trading.
Notley and her trust, Riternah Trust, were linked to Island House Trading, Pacific Breeze Trading and Green Flash Trading, from which she received payments. Some of that money was used to buy a house in Amanzimtoti, according to the SIU affidavits.
In her affidavit, senior SIU investigator Anna Beisheim-Basson provides an extensive breakdown of the financial flows between Lerm, his associates and the companies and trusts.
Beisheim-Basson stated that information, including invoices, showed how many of the assets were bought after payments were made to the front companies to perform the so-called emergency repairs. She said Notley’s Riternah Trust had made several payments to the amount of R980,000 for a 98m2 house in the Alaska estate in Amanzimtoti.
A title deed search conducted by TimesLIVE Investigations shows the trust still owns the house.
SIU spokesperson Kaizer Kganyago confirmed investigators referred evidence to the ACTT and NPA in 2013 gathered from their investigation, “which looked into events involving Lerm between 2005 to 2010”.
He said payments to an entity that was behind the planned purchase of a Mozambique property were discovered.
“The SIU could not verify whether the property was ultimately acquired,” he added.
Aleks Scepovich, whose company Alimex sold Lerm the land in Mozambique through a property development scheme in Vilanculos, told TimesLIVE Premium he did not know whether a house had eventually been built on the property.
“Lerm was supposed to build. I met his lawyers. [At the time] He did not conform to what he was supposed to do in terms of [the scheme’s] building requirements.”
He said the development was subsequently taken over by someone else years ago. “I am not sure what has happened since then.”
NPA spokesperson Mthunzi Mhaga said the AFU was unable to recover any assets “as Lerm did not have any” and Lerm’s alleged associates were never charged.
“If any of those associates were not charged criminally ... [the] AFU cannot recover assets ... without [a] guilt finding,” said Mhaga.
Notley, asked detailed questions about the businesses and trusts she was director and trustee of and which were used in the fraud, declined to comment. She said she divorced Lerm in 2019.
“I went through hell with that man. I do not want to relive that terrifying experience. I honestly thought it was behind me but now you are asking all these questions,” she said.
Suzette Lerm declined to comment.
Multiple attempts to reach Japie Lerm for comment, including through visits to his daughter’s Cape Town house where he lives, failed.
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