The department acted as a guarantor for Moosa's company.
THE GAUTENG legislature's financial watchdog committee has questioned why taxpayers' money was used to finance a private diamond deal of former ANC parliamentarian Valli Mohseen Moosa's that went awry.
The standing committee on public accounts (Scopa), led by chairman Sipho Makama, recently reprimanded economic development department officials for agreeing to use public money to back Moosa's company to the tune of R55-million.
Sowetan has seen a copy of the report in which the department provided financial assistance to the diamond company in the form of an overdraft facility that the company had applied for with Absa Bank.
The department acted as a guarantor for Moosa's company.
The company approached the department for financial assistance in January 2007 and the guarantee was "revised and provided on August 15 2007 at R50-million".
The report further shows that in addition to the R50-million loan settlement, the department agreed to pay an extra R5-million "to provide additional funding and support to the company in order to support its immediate needs until the restructuring is complete".
According to a memorandum from the department the then chief director of legal advisory services noted that African Romance began trading in November 2007 after receiving funding from Absa, but in 2008 had the loan recalled when it defaulted.
The department had to fulfil the guarantee obligation. According to the memo "the loan was repaid by (the department) directly to Absa on August 15 2008 in exchange for 1020 cumulative redeemable preference shares ..."
Makama said: "The government has no right to play the role of a guarantor to a private company. It is illegal to do that. They've contributed money (that is) unauthorised."
Department funded ex-ANC MP's business venture
The department acted as a guarantor for Moosa's company.
THE GAUTENG legislature's financial watchdog committee has questioned why taxpayers' money was used to finance a private diamond deal of former ANC parliamentarian Valli Mohseen Moosa's that went awry.
The standing committee on public accounts (Scopa), led by chairman Sipho Makama, recently reprimanded economic development department officials for agreeing to use public money to back Moosa's company to the tune of R55-million.
Sowetan has seen a copy of the report in which the department provided financial assistance to the diamond company in the form of an overdraft facility that the company had applied for with Absa Bank.
The department acted as a guarantor for Moosa's company.
The company approached the department for financial assistance in January 2007 and the guarantee was "revised and provided on August 15 2007 at R50-million".
The report further shows that in addition to the R50-million loan settlement, the department agreed to pay an extra R5-million "to provide additional funding and support to the company in order to support its immediate needs until the restructuring is complete".
According to a memorandum from the department the then chief director of legal advisory services noted that African Romance began trading in November 2007 after receiving funding from Absa, but in 2008 had the loan recalled when it defaulted.
The department had to fulfil the guarantee obligation. According to the memo "the loan was repaid by (the department) directly to Absa on August 15 2008 in exchange for 1020 cumulative redeemable preference shares ..."
Makama said: "The government has no right to play the role of a guarantor to a private company. It is illegal to do that. They've contributed money (that is) unauthorised."
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