The Unemployment Insurance Fund (UIF) is currently checking whether anything is left of the R1.7-billion it invested in Bounty Brands, a group that distributes global apparel brands Vans and Diesel in South Africa. 

A new report has also linked former Health Minister Zweli Mkhize to the embattled company, alleging that he received millions from a suspect transaction via a trust. 

The UIF, which provides short-term financial assistance to workers who have lost their jobs, bought significant stakes in two companies that invested almost exclusively in Bounty Brands in 2016 and 2018.   

Two years ago, the fund's R1.7-billion investment was almost fully impaired after the consumer group's auditors were unable to say whether it was a going concern. 

A R1.7-billion loss? 

The Daily Maverick reported on Monday that a company owned by businessman Lawrence Mulaudzi received a R47.5-million advisory fee for helping to clinch the 2018 investment. The report stated that the day after the fee was paid over, Mulaudzi's company paid R5.9-million into a transfer attorney’s account for a townhouse bought by Mkhize's ZLM Trust. 

Daily Maverick quoted Mulaudzi as saying the payment was for a "legitimate business transaction". He said there was no evidence that the former health minister was part of the ZLM trust."

Bounty Brands is a South African consumer goods company whose portfolio includes pasta-maker Serena and canning company Liberty Select. It also owns the licence to distribute shoes and clothes by Vans and Diesel in South Africa. 

While the UIF invested a combined R1.77-billion in companies to buy stakes in Bounty Brands, the fair value of the investments had fallen to just R2.7-million by March 2020. Fair value describes what the fund would get if it sold its investments today.  

According to the UIF's most recent annual report, Bounty Brands auditors had been unable to say whether the company was a going concern, as the group had not finalised its 2019 financial statements. 

But Bounty Brands CEO Stefan Rabe said this week that the group had finalised its financial statements after the UIF's most recent annual report had been published. While Rabe declined to say what the UIF's investments would be worth today, he said Bounty Brands' financial statements for 2019 and 2020 had been signed off on the going concern basis in the second half of 2021.  

The UIF, meanwhile, said it was unable to say what the investments are worth today, as its financials are currently being audited.  

Two investments 

Bounty Brands' founder and former owner, private equity group Coast2Coast, planned to list it on the JSE in 2017 or 2018.

But while the promised listing never materialised, the UIF twice bought stakes in special purpose vehicles set up to invest in the consumer goods group. The fund bought its first stake in Bounty Brands in December 2016, via the Public Investment Corporation, which paid R406-million for 50% stake in Kefolile Consumer Brands Holdings. Kefolile owns 8.64% of Bounty Brands. 

In May 2018, the UIF spent another R1.37-billion for a 40% stake in Bright Glacier Trading, which owns 36.2% of Bounty Brands' shares via its holding company. 

Both investments were made via state-run asset manager the Public Investment Corporation, which invests on behalf of the UIF and the Government Employees' Pension Fund.

But just two years after the UIF spent R1.37-billion on its Bright Glacier stake, the investment had been fully impaired and was worth zero, according to the UIF's annual report. The report found that the fund's earlier R406-million investment in Kefolile was worth just R2.7-million. 

Advisory fee 

The Bright Glacier and Kefolile deals were linked to Mulaudzi. Mulaudzi is a director and shareholder of Kefolile, which received the R406-million investment in 2016. 

According to the Daily Maverick, Mulaudzi acted as a "dealmaker" for the R1.37-billion investment in 2018. His company Blackgold Oil and Gas received a R47.5-million advisory fee from Bounty Brands, the report said.