26 March 2019

South Africa: Dormant Company Used to Increase Bosasa's Costs, State Capture Inquiry Hears

The commission of inquiry into state capture on Tuesday heard how the Bosasa group, now known as Global African Operations, used a dormant company to increase its costs and to address the assessed loss of millions of rands, for tax purposes.

This was done through the use of three parties; Tax Risk Management Services (TRM), Miotto Trading and Advisory Holdings and Bosasa.

"I advised Bosasa to make use of TRM. They were concerned because its owner (Daniel Erasmus) was a well-known tax litigator. I was told to contract TRM myself to the benefit of Bosasa," former Bosasa auditor Peet Venter told the inquiry.

"TRM would then invoice Miotto (dormant company) and they would then invoice Bosasa. I would go to (former chief operations officer) (Angelo) Agrizzi and (former chief financial officer Andries) van Tonder introducing a new invoice to Bosasa, which would depend on the wording dictated to me by Mr Van Tonder," Venter said.

This comes as the commission of inquiry delves into alleged state capture by shining a light on the Bosasa group which has been embroiled in countless allegations of corruption involving senior government officials.

Venter explained how the group used the dormant company to address the assessed loss by Miotto through issuing invoices to Bosasa at an inflated rate.

Undetectable fraud

"TRM is providing the services, Miotto is not providing any services to Bosasa.

"TRM then invoices Miotto which is invoicing (Bosasa) at a higher inflated rate than TRM for the purposes of a commission which is shared?" advocate Refilwe Molefe asked the witness.

"That is correct," Venter, who considered himself as the financial manager, said in response.

Venter further explained how an auditor would not be able to pick this up as the payments were documented in the form of an invoice.

"Would they have checked the business function of Miotto?" Molefe asked.

"No, they would not have as long as they see a payment was made," Venter responded.

"How does an auditor test if it is fraudulent or not?" Molefe further probed.

"I would not be able to explain that," Venter replied.

Alleged front for Ramaphosa donation

This process at the company was only in operation for two years. It was later terminated by Venter once Agrizzi left the Bosasa group in December 2016.

Miotto is the same company which was used to front the alleged Ramaphosa R500 000 donation towards his presidential campaign leading up to the 54th ANC national elective conference.

Venter, in a sworn statement signed in December 2017, states that Bosasa CEO Gavin Watson told him the funds were for the benefit of Ramaphosa's son (Andile).

Ramaphosa later revealed during a question and answer session in Parliament that this payment was for his campaign, which he had been unaware of, News24 earlier reported.

The inquiry continues.

Source: News24

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