EC company found guilty of white-collar crimes ordered to pay back millions

A company owned by Durban businessman, Poovanderen Chetty, has been fined R5 million fine after pleading guilty to white-collar crimes.

Earlier this week, the High Court in Makhanda ordered Chetty’s auditing firm Umnotho Business Consulting to pay back millions the company received from an irregularly awarded tender.

The company, which is registered as a non-profit organization (NPO), was convicted by the high court for benefitting from the proceeds of crime relating to a contract acquired fraudulently from the Eastern Cape Department of Social Development in 2015.

According to Hawks spokesperson, Captain Yolisa Mgolodela, the court ruled that the company must pay R2 million of the R5 million fine within seven days of the judgment.

“The remaining R3 million balance is to be in R250 000 tranches with effect from 1 December 2022 and the 1st of each successive month thereafter until the amount is paid up,” Mgolodela said in a statement on Monday.

The company was also ordered to pay R19 million to National Treasury’s bank account for the release of Chetty’s seized assets, which were purchased using tender money.

“The assets of Mr Chetty remain restrained until the amount is fully paid and such proof is provided,” she further said.

In 2020, the Asset Forfeiture Unit (AFU) seized Chetty’s assets – including his vehicles and properties.

Project

The provincial Department of Social Development had launched a project to establish women’s development resource centres in 2014 and 2015.

The centre was intended to serve as a hub for socio-economic empowerment for women with a focus on skills development programs.

It was also intended to be a provincial hub for marketing the products produced by women co-operatives or groups which were funded by the department.

Once the project was rolled out, more than R29 million was paid to Chetty’s company, whereas it was declared as an NPO.

“During the financial and asset forfeiture investigation it was, however, established that the bulk of the received funds were not utilised towards the deliverables, but rather to the personal benefit of Mr Chetty.

“The total amount of the undue benefit was calculated to be more than R19 million. Only R10 million was legally and appropriately utilised,” Mgolodela explained.

Bail

Chetty was arrested – alongside the late Stanley Khanyile, who was the department’s former head of department (HOD) and former chief director, advocate Vuyokazi Sangoni – in connection to the irregularly awarded tender.

Chetty, Khanyile, and Sangoni were granted bail of R50 000, R20 000, and R200 000 in August 2020.

However, Khanyile was shot dead in early October in Alberton in Gauteng while out on bail.

He was facing two counts of fraud and two counts of contravention of the Public Finance Management Act (PFMA).

Sangoni was charged with one count of fraud, while Chetty faced 16 counts of fraud, 18 counts of theft, and 15 counts of money laundering.

Their case was previously referred to the East London High Court for trial.

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