Vereeniging – A staggering R14 million a year in alleged bribes was reportedly funnelled to Emfuleni municipal employees in exchange for facilitating an illegal electricity connection and manipulating meter readings for a local metal castings firm, Yellow Star Manufacturing (YSM). The illicit scheme, allegedly orchestrated to slash YSM's power bill in half, has further crippled the already financially distressed municipality, which is grappling with an R8 billion debt to Eskom.
The startling claims were made by YSM's former CEO, Andries Marx, in a statement to police in 2023. Marx alleges that the company's owner, Hanno van Dyk, brokered the corrupt deal with municipal officials. However, Van Dyk vehemently denies any knowledge of the bribery scheme, accusing Marx of carrying it out undetected while he, Van Dyk, trusted him as CEO.
The two former colleagues have since had a major falling out, with both levelling serious accusations against the other. Marx, who is facing fraud charges for allegedly stealing more than R30 million from YSM, claims in his statement to police that Van Dyk engaged in money laundering, tax evasion, BEE fronting, and other fraudulent activities. His statement came after Van Dyk opened a case of fraud against him for allegedly stealing millions from the company.
According to Marx's statement, the monthly bribes to employees in the municipality's electricity department amounted to approximately R14 million a year. He claims that the deal was struck in 2014, when YSM was struggling to settle its R2 million debt to the municipality. Despite consuming a substantial amount of electricity to power its operations, YSM allegedly paid no more than R100,000 a month to the municipality.
The alleged scheme involved connecting YSM to a municipal substation that supplied electricity to a local police station, as well as tampering with electricity meter readings. So brazen was the operation that an Eskom transformer was allegedly stolen in the Free State and installed on the company's premises.
Marx claims that municipal employees would hand-deliver fraudulent municipal bills and issue fraudulent invoices, which the company paid in bags of cash or through electronic funds transfers (EFTs).
“Emfuleni representatives visited the offices of Yellow Star and offered to have the debt of around R2m [quashed] as well as doing modifications to the meters and cabling to reduce the electric consumption readings significantly. In return they requested R200,000 payment. Hanno van Dyk was 100% shareholder and the only director of Yellow Star. [He] transferred R200,000, which I had to draw in cash and pay the bribe in cash,” Marx stated.
He further detailed how the cash bribes were handed over: "Cash bribes were always handed over in the road at Rand Water’s entrance as you enter Vereeniging town from Vanderbijlpark. I handed money to Thabo Kanye at this location, but the rest was all handled and paid by TD Moketeli,”
Van Dyk claims he only became aware of the scheme after he fired Marx in 2022 and the municipality sent YSM a R10 million bill for accrued arrears from 2014. "I had to pay that money out of my own pocket. I then discovered a stack of fraudulent invoices in Yellow Star offices, which the bookkeeper said were given to her by Dries [Marx] and were captured as legitimate invoices when in fact they were not," said Van Dyk.
After his axing in 2023, Marx opened a case against YSM and Van Dyk over the same allegations.
The Sunday Times has reviewed both official and fraudulent municipal accounts for YSM, which are contained in Van Dyk’s forensic investigation used to open a case against Marx. Van Dyk has presented current municipal bills showing that YSM pays between R2.5 million in summer and about R3.5 million in winter.
Hawks spokesperson Brig Nomthandazo Mbambo confirmed that a case of tampering with essential infrastructure was being investigated by a team targeting Eskom-related incidents. "The case was registered after information came to the attention of the team about an Eskom transformer, which was confirmed to have been stolen from the Eskom depot in Welkom, which was found on the premises of the mentioned company [YSM]," said Mbambo. "The case was referred to the director of public prosecutions for a decision."
Eskom confirmed that it was made aware of the alleged illegal connection at YSM when an employee alerted the utility and the Hawks in 2023. "According to these claims, the company’s smelters, supplied by the Leeukuil substation in Vereeniging, were allegedly receiving power through an unauthorised underground bypass. It was further asserted that an employee of Emfuleni involved in this process was receiving a monthly payment of R400,000 from Yellow Star’s management," Eskom said in a statement. "The matter was referred to Eskom’s Gauteng cluster."
Emfuleni spokesperson Makhosonke Sangweni denied that any municipal employees were bribed, claiming that the individuals identified as having received bribes were employees of a company contracted to the municipality. He refused to name the company.
Marx has also accused Van Dyk of money laundering, fraud, tax evasion, and BEE fronting, with the alleged financial crimes said to have financed Van Dyk's pursuits in Croatia, including a fleet of luxury yachts and high-end apartments in Split.
Van Dyk's lawyer, Robert van Wyk, stated that the search and seizure warrant executed by the Hawks in 2023 was a tactic to intimidate his client. "They took transformers which were privately bought by our client and to date we have not heard of any arrests," said Van Wyk. He maintained that his client was a victim who trusted Marx to run the business with honesty, as Van Dyk had retired.
"This was in fact Mr Marx acting of his own accord and not on behalf of Yellow Star and/or Mr Van Dyk. However, what is documented and proven is that Mr Marx, through Tabgha Holdings, falsified Emfuleni invoices and misappropriated YSM funds for his personal gain," said Van Wyk. He added that YSM co-operated with the municipality, paid the outstanding bill and a R40,000 fine for tampering with essential infrastructure in order to get reconnected. "YSM continues to consume and pay for electricity as per its municipal billing statements. Any suggestion that YSM has not been paying Emfuleni municipality or that it has engaged in illegal connections is entirely false," said Van Wyk.
Marx attached to his warning statement payment proofs of EFTs which were used to bribe the officials. One such employee was Thabo Khanye, who allegedly received amounts ranging from R15,000 to R60,000 a month. Marx attached a picture of Khanye’s Capitec Bank account card and the thousands of rand in EFT payments made.
Approached by the Sunday Times, Khanye denied receiving money from YSM or Marx. “I left Emfuleni about three years ago and I don’t know what you are talking about or the people you are talking about. I have not been questioned by any police or anybody about what you are asking me,” said Khanye.
Mokoteli, who is expected to testify against Marx in the fraud case of R30m, also denied bribing municipal officials. “I can’t speak too much about this thing but Dries is not telling the truth. I did what I was asked to do as an employee,” said Mokoteli.
The Emfuleni municipality's R8 billion Eskom debt accounts for 10% of the R82 billion owed to the power utility by municipalities. Eskom has recently begun enforcing a 2023 court order compelling Emfuleni residents to pay their bills directly to it.
Marx is due to appear in court again next month along with his wife Henriette and friend Scott McIntyre. The unfolding scandal has further eroded public trust in the Emfuleni municipality and highlighted the pervasive issue of corruption that continues to plague South Africa's local governments.
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