Several South African state institutions are facing allegations of misconduct, conflicts of interest, and the failure to fulfill their mandates in managing the estate of the late Black industrialist Paulos Sello Mahlangu.
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SEVERAL South African state institutions are facing allegations of misconduct, conflicts of interest, and the failure to fulfill their mandates in managing the estate of the late Black industrialist Paulos Sello Mahlangu.
These claims come from his son, Zweli Mahlangu, and are supported by numerous documents reviewed by the Sunday Independent.
At the crux of these allegations lies a shocking discrepancy: an estate with R4.77 billion in audited assets was valued at only R5 million for estate purposes, a difference Zweli argues cannot be attributed to mere error.
Institutions implicated in these claims include the Industrial Development Corporation (IDC), the Public Investment Corporation (PIC), the Competition Tribunal, the Directorate for Priority Crime Investigations (DPCI, or Hawks), the Master of the High Court, and the Information Regulator.
Concerns about the estate's administration centre on the Master of the High Court and executor Arnold Joseph. Zweli insists that Joseph submitted a liquidation and distribution account valuing the entire estate at R5m, referencing a lack of power of attorney, consent documentation, and recorded activity over a five-year period.
Correspondence provided by Zweli reveals that Joseph allegedly admitted under oath to the Legal Practice Council (LPC) his inability to instruct tax accountants to submit the deceased’s tax return by the date of death.
He was also interviewed by detectives probing a fraudulent Will. These admissions, along with the R5m valuation, fuel Zweli’s claims that the administration process failed to protect the assets of a Black industrialist who had been cleared of state capture allegations during his lifetime.
Specific allegations against the IDC relate to the central valuation issue. Zweli cites internal WhatsApp messages in which IDC staff member Titus Tshelane claims that Paulos Mahlangu was instructed by IDC superiors to misuse loan funds.
When Tshelane was asked why he did not report a bribery proposal to the police, he allegedly expressed fear for his life and that of his children due to Mahlangu’s stature.
If proven, these messages could imply that loan non-repayment was authorized rather than fraudulent, raising questions about the IDC's decision to sue the estate for R180m while allegedly withholding Know Your Customer (KYC) files that would confirm Mahlangu's ownership of Southern Palace Group (SPG).
The IDC denied requests under the Promotion of Access to Information Act (PAIA) for these documents and the WhatsApp messages, citing ongoing litigation.
The Information Regulator upheld this denial, despite Zweli’s contention that the PIC was not involved in the referenced litigation.
In its response to the Sunday Independent, the IDC addressed several allegations directly. When asked whether any employee instructed Mahlangu to misuse loan funds, the IDC stated: “This allegation was investigated and dealt with internally as guided by our governance and internal policies.”
On whether the IDC recognises Mahlangu as the beneficial owner of SPG at that time, the corporation confirmed he was. On the legal grounds for the IDC’s R180m claim against the estate, the IDC noted that it relates to debt owed due to the suretyship provided by Mahlangu.
They also claimed not to have received a PAIA request from Zweli. Tebogo Maoto’s appointment as Business Rescue Practitioner (BRP) for SPG is another point of contention. Maoto, a former IDC employee who investigated the same SPG transactions, was approved by the IDC to oversee them, according to Zweli.
The IDC, however, refuted this claim, stating that Maoto was appointed by the SPG Board, not the IDC. Zweli argues that Maoto’s BRP Plan indicates a limited investigation, no audit performed, no post-commencement funding raised, and fees backdated by 100%.
A contentious legal dispute has emerged regarding the business rescue proceedings of Southern Palace Group, with attorneys for the senior BRP rejecting demands for information from Thandiwe Mahlangu, who sought access to documents concerning the company’s assets.
The legal disagreement hinges on whether Mahlangu has legal standing to make such requests under South African corporate law. Citing Section 128 of the Companies Act 71 of 2008, the attorneys argued that only a shareholder or creditor qualifies as an “affected person” entitled to request information from business rescue proceedings.
They refuted Mahlangu’s position, asserting that the late Mr. Mahlangu did not hold shares in the company and that only the appointed executor would have standing.
Broader allegations of misconduct have been reported to media outlets.
In a letter, the attorneys stated: “Our client categorically denies being guilty of any such acts,” and warned against disseminating what they described as “false and misleading information.” They further noted threats in Mahlangu’s original email, dismissing them as unfounded.
These concerns also involve the Public Investment Corporation, which funded SPG’s R277m acquisition of the construction company Concor in 2017. In 2024, the PIC purchased a 28.12% stake in Concor for R400 000, indicating a valuation drop of over 99% from the original acquisition price.
The PIC has faced accusations of selective reporting, having referred Maoto to the Hawks for alleged misconduct in the Daybreak Foods rescue, yet not for his role in the SPG rescue.
The corporation has not responded to letters from chief executive Abel Sithole, and PAIA requests for documents related to the Concor transaction were denied.
The Competition Tribunal’s approval of two merger transactions involving these construction assets has also drawn scrutiny. A merger in 2017, where Firefly Investments, a black-owned company controlled by SPG, acquired Infrastructure and Building from Murray and Roberts, received unconditional approval.
In 2024, the Tribunal conditionally approved a GEPF acquisition of Concor Holdings from SPG, describing it as primarily a rescue transaction to avoid liquidation. Zweli questions the Tribunal's ownership record assessments, noting inconsistencies between the 2017 and 2024 filings.
He also wonders why the Tribunal approved a deal that suggested a Concor valuation of R1.42m, significantly below the original acquisition price. The Tribunal stated it maintains records according to South African legislation and that each merger is assessed based on specific evidence.
It claimed no discrepancies were identified and clarified that its mandate involves assessing competition impacts rather than valuation matters agreed upon by merging parties.
Allegations extend to private entities working with state institutions. Discovery Life paid out a R40m life insurance policy to Gladys Matitoane and Lesedi instead of the IDC, citing the Protection of Personal Information (Popi) Act in their refusal to provide metadata verifying beneficiary records.
Discovery Life responded empathetically, stating it cannot comment on individual policies due to confidentiality obligations but confirmed that access to policy information relating to deceased persons would require appropriate legal authority.
The conduct of law enforcement agencies is also questioned. Zweli opened a criminal case in September 2022 concerning a fraudulent Will and theft of estate assets, yet reports indicate delays as the case remained with the Hawks for over three years before being transferred to the Serious Organised Crime unit.
While the Hawks investigate Maoto for alleged misconduct in Daybreak Foods, questions arise about his role in SPG amidst similar allegations. Zweli presents a sworn affidavit from Huawei about improperly transferred shares, questioning why Gladys Matitoane has not been arrested for the alleged theft.
Three professional firms have come under scrutiny for potential conflicts of interest. Webber Wentzel represents SPG’s largest creditor and the BRPs while also investigating complaints against them.
Norton Rose Fulbright's Gregory Nott worked on Paulos Mahlangu’s trusts while Zweli alleges those trusts were hijacked. Deloitte audited SPG’s 2016 financials, showing R4.77bn in assets but approved the Business Rescue Plan without audited financials.
Zweli has posed specific questions to each institution, seeking clarity on the alleged misdirection of funds, the Concor valuation collapse, and delays in his criminal case.
He states he has fought alone for five years and is seeking truth rather than financial compensation. His father, Paulos Sello Mahlangu, built Southern Palace Group into an enterprise with R4.77bn in presumed assets and was cleared of state capture allegations during his lifetime.
The allegations outlined in Zweli's correspondence question whether state institutions have undermined the legacy of a black industrialist and whether processes meant to ensure accountability have instead protected those who benefited from this undermining.