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Capitec caught in the middle of possible scandal

The Public Protector, Mr.Thuli Madonsela is beginning to investigate a R1-billion Capitec BEE deal that  involves members off the ANC in a consortium of investors called Coral Lagoon – who own shares in Capitec.

The Controversy partially revolves around the involvement of certain consortium members awarding  large tenders to other consortium members. It seems that 20%  of Coral Lagoon is held by Batho Batho Trust which was founded by ANC leaders in ’92. Batho Batho is a major sponsor of the ANC. Other consortium members are Keabetsoe Holdings (32% share) and Regiments Capital (18% share), who also appear to have strong links to the ANC . Regiments Capital recently won a large tender in JHB worth 2 Billion Rand even though their price was highest. At the time another consortium member sat on the board which influenced the choice of the company.

In Feb 2012 Coral Lagoon sold off shares to the Public Investment Corporation (PIC)  to pay off all their origional debts. This was possible  due to the recent strong growth in the Capitec stock price in which they had invested in 06. Coral Lagoon have said: “This transaction can be seen as one of the most successful BEE transactions in South Africa as Coral Lagoon now has an unencumbered holding in Capitec that pays regular dividends.”

Capitec said it has found both the IDC (who gave the consortium a R285-million loan to buy shares) and PIC (who sold Capitec shares to Coral Lagoon) “professional” in their dealings and that it had been unaware the ANC might benefit in some way.