ANC Youth League in debt to the tune of R14 million

THE ANC Youth League is in debt to the tune of R14 million to creditors who supplied goods and services for various functions.

The Mail & Guardian reports that, in addition, there were questions relating to the whereabouts of the league’s R2 million share of a R20 million payout by Nedbank for its part of a stake it had held in People’s Bank through Lembede’s associate company, the Progressive Youth Investment Company.

These dealings reportedly fell under the previous board of Lembede, which has since commissioned an audit by Gobodo. Lembede is the league’s investment arm.

Youth league's dirty-money deals

A confidential dossier on the financial affairs of the ANC Youth League suggests prominent members massively enriched themselves through transactions under the banner of the league’s investment arm, the Lembede group.

The dossier, in possession of the Mail & Guardian, also reveals how deeply the league has sunk into debt.

Figures attached to a September report prepared by league treasurer Pule Mabe reflected a total of more than R14-million owed to creditors who supplied goods and services for functions, including the league’s national congress in April and its rerun in June.

A separate report prepared early this month by Lembede chief executive Lonwabo Sambudla shows how multimillion-rand deals involving Lembede companies often benefited prominent individuals within the league -- which helps to explain, perhaps, the Porsche-and-patio lifestyle with which they have come to be associated.

The new board of Lembede, chaired by Mabe, tasked auditing firm Gobodo earlier this month with investigating Lembede’s financial affairs. The M&G has learned that the investigation might focus on some of these individuals.

Among those apparently implicated in the dossier is Malusi Kekana, who now heads the Umsobomvu Youth Fund established by government to promote youth entrepreneurship.

The Progressive Youth Investment Company (Pyico), a Lembede-associate company then headed by Kekana, was part of a BEE consortium that bought a 30% stake in Nedcor’s People’s Bank in 2001. But Nedcor bought the shares back from the BEE consortium in 2004/05 by assuming the debt incurred in the original transaction and paying R20-million over and above the amount.

There are large questions about the whereabouts of Pyico’s -- in other words, the league’s -- share of the R20-million. Pyico held a 10th of the 30% stake, meaning it should have received R2-million. Chris Mamabolo, a former director of African Milestone -- one of the companies which formed part of the BEE consortium -- confirmed this week that Kekana represented Pyico and that the R20-million was shared by all the companies in the consortium.

“We accepted the R20-million payout by Nedbank because the deal was under water. Nobody was going to make money out of it. They [Nedbank] offered us the R20-million as a consolation prize and this was shared between all the shareholders,” said Mamabolo.