Malema, Mazzotti and Pauw spat - R1m 'crime proceeds' loan claim surfaces

A spat between author Jacques Pauw and Julius Malema has escalated, with Pauw alleging the EFF leader received a R1 million loan from a business associate of self-confessed tobacco smuggler Adriano Mazzotti and in doing so, he may have unknowingly accepted the proceeds of crime.

But Mazzotti, on behalf of his tobacco company Carnilinx and Malema, has hit back.

Mazzotti "categorically denied" that a donation by Carnilinx to the EFF involved money made as a result of crime.

Malema said Pauw should open a criminal case if the loan - used to go towards a tax matter and which he said was paid by Kyle Phillips, a co-director in Carnilinx - was indeed the proceeds of crime and that Pauw is "exaggerating his self-importance" by effectively acting as a court of law.

"If it is the proceeds of crime, let them open a case. I am not going to be judged - that's the problem with white supremacy. 

"It thinks it is so superior to a level where it can compare itself with a court of law. To come to a conclusion that people are using the proceeds of crime, only a court can make such a determination," Malema told News24 on Friday.

'If guilty, we'll return the money'

He said, if the EFF was found to be in the wrong, it would face this head on.

"If such a contribution is the proceeds of crime, let it be prosecuted and if found guilty, the EFF will be more than willing to return that money," Malema said.

He said he was sure Pauw could easily see that a criminal case was opened against the EFF because Pauw, he claimed, had connections in South Africa's intelligence networks. 

For about four years Malema has been at the centre of a protracted battle with the South African Revenue Service (SARS) over his tax affairs - at one point he was said to owe the revenue service R32m and at another point R18m.

However, on Friday, it seemed his tax woes had eased.

'Settled' tax affairs

Malema told News24 that his tax affairs were now settled in full – and he had even received a refund on his tax return.

He intimated that he had engaged SARS following the appointment of acting commissioner Mark Kingon, and he had reached a new agreement with the tax man.

Malema said both parties were in the process of withdrawing court applications against each other.

The claim that Malema received proceeds of crime, via a loan to pay the revenue service, is contained in an open letter which Pauw wrote to Malema on Friday in response to a letter Malema had written to him on Wednesday.

Pauw posted the letter to his Facebook page. Read the letter in full here.

Apology demanded for Pauw's tweet

Pauw said that Malema had written to him to demand that he apologise for a tweet he had posted on Wednesday, in which he had mentioned four people, including Malema.

In the tweet, Pauw asked why advocate Dali Mpofu, SC, who is representing suspended SARS commissioner Tom Moyane in a commission of inquiry into governance at the tax authority, was figuratively committing suicide by having taken on this job.

The tweet said: “Why is Dali Mpofu committing hara-kiri in defending Tom Moyane? Is it because they have a common friend: tobacco-man Adriano Mazzotti. Under Moyane, Mazzotti's R600m tax bill disappeared. He also paid EFF registration fee in 2014 and gave Malema a loan to help pay his SARS bill.”

This was retweeted about 1 500 times.

Mazzotti on Friday denied that his tax bill "simply disappeared".

'No untoward conduct'

"There was no untoward conduct by any members of SARS in assisting Carnilinx to make it tax compliant," he said.

"Carnilinx paid what was due to SARS, which was approximately R25m, a far cry from the R600m by Mr Pauw and other media," he said.

Mazzotti then challenged Pauw to support his "outrageous allegation".

On Friday, in his letter to Malema, Pauw said he would not apologise for the tweet.

He pointed out that during a recent press conference, Malema had said he never received a loan from Mazzotti to pay his SARS bill.

R1m loan linked to tobacco company

"You call on me to set the record straight. You are right. I was wrong in saying that you received a loan from Mazzotti to pay your tax bill.

"You, in fact, received a R1 million loan from Kyle Phillips – a business partner of Mazzotti and his co-director in Carnilinx, an independent tobacco company," Pauw alleged.

The Sunday Times reported on this in 2015.

It had reported that court papers stated Malema had admitted to SARS that Phillips had paid a R1m loan.

The Sunday Times article also said Mazzotti had previously confirmed he had donated money towards a R600 000 needed by the EFF to register as a political party, contesting the 2014 elections.

Pauw, in his letter on Friday, said Malema had never denied these reports.

"I, therefore, assume that it is safe to say that it was true that you had received a R1 million loan from Phillips," he said.

Malema on Friday told News24 that he had indeed received a loan from Phillips.

Mazzotti one of EFF's 2014 registration fee benefactors

He said that Mazzotti was one of many people that had surfaced when the EFF had previously needed the R600 000 to register as a political party contesting elections.

"A clarion call was made for all South Africans to make contributions, and Mazzotti is one of them who made such a contribution," Malema said.

He said that the R600 000 fee was "still haunting the EFF today" because some had hoped the EFF would not be able to raise the necessary money because they "knew what the EFF would be today".

"If they have a problem with Mazzotti, if they have a problem with the money that the EFF got from Mazzotti  - if they have a problem with the money I got from Kyle [Phillips], let them open a case," Malema said.

In his letter to Malema on Friday, Pauw said he would not apologise to Malema for his tweet and that this was because of his dealings with Mazzotti and Phillips.

'Partners in crime'

"No, because I believe it is irrelevant whether you took a loan from Mazzotti or Phillips because - as I will show you - they are partners-in-crime in Carnilinx," he alleged.

"I will provide you with information that that in accepting a loan from Phillips, you might unwittingly have accepted the proceeds of crime. This also goes for the R200 000 that Carnilinx paid in 2014 for the registration of the EFF as a political party." 

Pauw said when he and Malema had talked around the time Pauw's critically-acclaimed book The President’s Keepers was published towards the end of October in 2017, Malema had described Mazzotti as a "brother".

In his letter, Pauw referred Malema to a 52-page affidavit by Mazzotti to SARS, dated May 6, 2014.

Pauw said a section of the affidavit read: "In its drive to promote its business, Carnilinx entered into a host of transactions, some of which were lawful and others corrupt and unlawful."

'Unlawfully-acquired tobacco'

Another section of Mazzotti's affidavit, according to Pauw, said that Carnilinx "accepts that it acquired tobacco unlawfully and wrongfully of two tons per week over a period of some 40 weeks". 

Pauw said Mazzotti, in his affidavit, had said the cash received was used to pay people, but the balance was kept by "the three of us". Pauw said the three were Mazzotti, Phillips and another Carnilinx director, Mohammadh Sayed.

"I point out, however, that a substantial amount of this money was used by the three of us as company expenses, engaging in expensive dinners, entertaining business people, politicians and other people," Mazzotti's affidavit said.

News24 was previously provided with an undated photograph of a group of men sitting together - among them are Malema, Mazzotti, Phillips and Sayed - at a table on which a bottle and several glasses of what appears to be alcohol are placed.

Self-confessed killer of former mining magnate Brett Kebble, Mikey Schultz with Carnilinx directors (from left) Adriano Mazzotti with EFF leader Julius Malema, Mohammadh Sayed and Kyle Phillips in an undated photograph. The men with the blurred out faces are unknown. (Supplied)

Pauw, in his letter, told Malema that it was possible that from "these proceeds" - the money made from illicit tobacco dealings - that Mazzotti paid R200 000 to the EFF to register for the 2014 elections.

On Friday, Mazzotti confirmed he had penned the affidavit which Pauw referred to in his letter to Malema.

"The ongoing allegations of corruption, cigarette smuggling and funds arising from the proceeds of crime are outright false, defamatory and unlawful. Mr Mazzotti did make a donation of R200 000 to the EFF prior to its registration. This has always been in the public domain and he has always been transparent about the payment," Mazzotti's response said.

In Pauw's letter to Malema, he also referred to Mazzotti's new mining venture Dithabeng in Limpopo, saying the mine had run into trouble and mining was reportedly halted when residents there had turned to a court for an interdict in the matter.

Mazzotti said the reference to Dithabeng was incorrect and its legal representatives were in the process of instituting action against various media for false publications.

He said court papers in the case were publicly available and "anyone who investigates properly would understand that this is a dispute between the communities and has nothing to do with Dithabeng".

'Unsavoury characters'

Pauw, in his letter, said Malema must be aware that Mazzotti and Phillips were "no choir boys".

He ended the letter to Malema with: "You must know that Mazzotti mingles with unsavoury characters. Do you know that apartheid assassin Craig Williamson was one of his business partners? And that you have been photographed with Mazzotti in the presence of self-confessed killer and gangster Mikey Schultz?"

Schultz was among those pictured in the photograph previously provided to News24 showing Mazzotti, Malema, Phillips and others sitting together.

Malema, talking to News24 on Friday, said he had nothing to do with Mazzotti's business dealings and that, if Mazzotti was acting illegally, the law should deal with him.

'We don't talk about his business'

"Me and him… we engage on political issues, national topics, not about his business. If he is messing up, they must lock him up and he must go to jail and rot in jail for a very long time, Malema said.

He explained that he knew Mazzotti from his days in the ANC Youth League – and when he was expelled from it, Mazzotti was one of a few people who stayed in touch with him.

"If Mazzotti is engaged in shenanigans, criminal activities… I don't know Mazzotti's business. I read them with interest every time Jacques Pauw writes about them," Malema said.

"Mazzotti doesn't know anything about the EFF, he reads about it like any other person."