28 June 2002

South Africa: The ANC's Virodene Backers

The African National Congress secretly arranged millions of rands in funding for Virodene. But the party's attempts to rescue the controversial Aids drug have backfired, as key players lapse into squabbles over shares, accounting and unfulfilled expectations.

The Mail & Guardian learned this week that among secret donors lined up to fund the development of Virodene was Wafic Sa-d, a Syrian-born tycoon notorious for his role as middleman in Britain's biggest arms scandal.

Funds from Sa-d were allegedly channelled to Virodene's promoters via ANC-linked businessman Max Maisela, while ANC treasurer general Mendi Msimang is said also to have played a role. It is claimed much of the money was handed over in dollar bills.

The saga raises a number of questions. Did the ANC's top leadership, convinced that forces opposed to an indigenous Aids "cure" wanted to sabotage Virodene, resort to struggle-era tactics to support the development of the drug?

Did those leaders, in the process, undermine President Thabo Mbeki's assurance four years ago that neither the ANC nor its leadership "has been or will be involved in any financial arrangement related to Virodene"?

And finally -- since accusations, counter-accusations and unfulfilled promises are all there is to show for years of effort and millions of dollars mobilised -- how wise was the decision in the first place to back Virodene and the eccentric ex-husband-and-wife team behind it, Zigi and Olga Visser?

An emotional Zigi Visser this week snapped at some of the hands that had fed him, claiming the funding had been inadequate. Maisela was "a total cabbage", he said, while Mbeki should have provided billions to develop a drug "he knew his own Cabinet ministers were cured with".

It was very different in January 1997 when Mbeki, then deputy president, and former health minister Nkosazana Dlamini-Zuma arranged for the Virodene researchers to brief the Cabinet on Olga Visser's "invention". Patients treated with Virodene gave testimony that Mbeki later described as "moving". The Vissers and their colleagues were home-grown heroes who showed that Africa could produce its own, world-beating solutions.

But things fell apart. The main ingredient in the Aids cure was soon revealed to be dimethylformamide, a toxic industrial solvent. The Medicines Control Council (MCC) refused to sanction clinical trials. The Vissers were faced with a court challenge by their partners, such as fellow shareholder Carl Landauer. He said there were suspicions the company formed to pursue the drug's development, Cryo Preservation Technologies, had "been involved in irregular and irresponsible dealing".

That court application unearthed a memo in which the Vissers referred to a 6% shareholding earmarked for the ANC, as well as 1% to "General" Joshua Nxumalo, a former ANC underground operative, for "ANC introductions work".

The ANC managed to deflect the implication it was commercially compromised: the Vissers retracted the 6% statement and the public protector issued a clean bill of health. Mbeki wrote an article saying: "Neither the ANC nor anyone in its leadership, whether working inside or outside government, has been or will be involved in any financial arrangement related to Virodene."

But his article, entitled "The War against Virodene", went further and all but accused the MCC and nameless others of conspiring to subvert the Vissers' legitimate search for an Aids cure. "How alien all these goings-on seem to be to the noble pursuits of medical research! In our strange world, those who seek the good for all humanity have become the villains of our time."

Mbeki had put his cards on the table -- moral support, yes; party financial involvement, no. Then all went quiet except for the odd report, such as the M&G's revelation last year that Zigi Visser had been booted out of Tanzania, where human trials had been shifted to circumvent the MCC's local ban on them.

What is becoming increasingly clear, however, is that senior ANC figures, and apparently Mbeki, maintained an active interest in the development of the drug and until recently helped mobilise financial support.

In May 1998 already, weeks after Mbeki penned his article, the Vissers prepared a letter to him in which they warned that funds were insufficient to maintain Cryo Preservation's international patents. They wanted Mbeki to provide assistance "in the form of introductions to possible partners or funders for a joint venture which will be beneficial to all".

It is not clear whether or how Mbeki reacted to this. At the time, negotiations were at an advanced stage with joint venture partners with a strong ANC flavour, and more joined later.

On May 26 that year an agreement was signed by the Cryo Preservation shareholders to transfer their rights to a new company, Virodene Pharmaceutical Holdings (VPH), in which a group of empowerment partners were to control a significant stake. These partners were led by one Zachs Mngomezulu, reportedly a former Umkontho weSizwe cadre, and included "General" Nxumalo. Mngomezulu's group was to have provided the better part of a R5-million tag to clinch the deal. The Vissers remained in ultimate control.

That agreement was never consummated properly: Mngomezulu and company apparently failed to pay the agreed amount. VPH's rights in Virodene remain subject to challenge by Cryo Preservation minority shareholders such as Landauer.

In the meantime, another businessman well connected to the ANC stepped in to help out. An early 1999 agreement between the Vissers and Karim Rawjee promised the latter some 20% of their shareholding in return for past and future funding.

Rawjee came to public attention later when the M&G published details of a network of Mpumalanga companies, among them the Corridor Development Company, that allegedly used state contracts to make money that was then channelled to ANC politicians. A director of the Corridor Development Company, Rawjee was also associated with the late Joe Modise.

But the Vissers's need for cash was insatiable. Clinical trials were running in Tanzania, experts doing lab and other work locally and abroad had to be paid, legal bills had to be settled and patents maintained worldwide. There were constant cries for help, such as a letter prepared in late 1998, addressed to Mbeki, begging for "bridging capital" to settle a London bill pending "investor funding" that was to come soon.

From at least early 1999 the Vissers addressed their constant funding needs to Max Maisela, the former Post Office chief and a Congress of South African Trade Unions investment adviser and presidential confidant. Insiders this week claimed to the M&G that Mendi Msimang, the ANC treasurer general, played a lesser role alongside Maisela.

Exactly how much Maisela provided, and where all that money came from, remains unclear: Maisela has refused to say. But there is documentary evidence that during the course of 1999, Visser acknowledged to Maisela receipt of at least R7,5-million. Interestingly one entry was described as R1-million "Mngomezulu cash from TG". The initials appear to refer to treasurer general Msimang.

In December 2000 and again in May 2001 Olga Visser met in Europe with a mysterious investor, whose identity they went to great lengths to conceal. Subsequent correspondence with "the Investor" was always "c/o Mr. Max Maisela" -- the ANC's link-man remained the link to the new funder.

Also at the first meeting in Europe was Luc Montagnier, the French co-discoverer of the HI-virus, whom the Vissers had lined up to do some in-vitro trials on their drug. He needed $2-million to pursue this, while the Vissers presented budgets as high as $24-million (about R240-million now) to complete their work.

The M&G this week established "the Investor" to have been Wafic Sa-d, a super-wealthy Syrian-born, Saudi-aligned, France-based businessman who made his fortune as intermediary in the 1980s Al Yamamah arms deals between Britain and Saudi Arabia.

Sa-d this week confirmed the initial discussions with Olga Visser, but said the deal collapsed and he did not give a cent. "Unfortunately she [decided to] work on her own, not with Montagnier. We would have worked with her if it was with Professor Montagnier ... I promise you we did not provide any investment whatsoever."

Sa-d also denied involvement with the ANC, saying he was not politically inclined. His only visit to South Africa, he said, was when he had attended Nelson Mandela's wedding.

Correspondence to "the Investor" via Maisela, however, suggests an ongoing funding relationship -- the Vissers repeatedly asked for specific amounts for specific purposes. One insider has told the M&G of large amounts arriving at Maisela's offices in dollar bills as late as mid-last year and collected by the Vissers.

Another insider claimed there was "proof" that some $20-million had been transferred by Sa-d, but also claimed that only part of this had reached the Vissers. It is not clear to the M&G whether all the money allegedly transferred by Sa-d was indeed intended for the Vissers.

But this accounting squabble seems to be part of the reason Zigi Visser and Maisela are now at loggerheads. Visser this week said there was "extremely bad blood. [Maisela] doesn't know what he's talking about, he's been no help at all, and now he wants a share [of the company]. I have no sympathy for the man; he's a total cabbage."

M&G reported last week that Maisela had claimed at a meeting earlier this year to have provided or channeled $3,5-million to the Vissers and to have angrily demanded to know the whereabouts of VPH's equity. Most of the shares still appear to be held by the Vissers through an attorney-nominee.

Squabbles aside, Visser still shielded the ANC -- saying that while individuals were involved, it was not in a party capacity. And he refused to discuss the funders' identities: "If at the end of the day the drug succeeds and Bill Gates says he funded it, he's a hero. If it does not succeed, he looks silly. That's the problem."

- Maisela this week failed to return calls. The presidency was not available for comment. ANC spokesperson Smuts Ngonyama said the party needed time to investigate the allegations properly and that a public statement would be issued in due course.

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