A dictator’s playbook: Funnelling funds into South African property

You wouldn’t think of Joburg’s leafy suburb of Bryanston as ground zero for African dictators looking to stash what they’ve looted from their country’s national fiscus. With its high whitewashed walls, brush-cut lawns and country club veneer, Bryanston has an air of aristocratic mining opulence, rather than of a grimy cash laundrette.

Yet there would seem to be a straight line connecting mineral wealth allegedly looted by the political elite in the Democratic Republic of Congo (DRC) – a country ritually abused by everyone from Belgian King Leopold to Mobutu Sese Seko – to Bryanston.

In April 2017, a relatively anonymous company called Garvelli paid R4.5m for a 377m² mansion in Bryanston at 7 Clonmore Road, with the almost de rigueur swimming pool and tennis court. The names of the people behind Garvelli – Francis Selemani and Aneth Lutale – would not have necessarily raised red flags either.

Unless, of course, you happened to be one of the estimated 300,000 Congolese nationals in South Africa, many of whom had fled to the continent’s most industrialised country to escape life in one of the five poorest countries in the world, virtually ceaseless civil war, and “impunity for human rights abuses”, according to Amnesty International.          

They would have instantly identified Selemani as the brother of the DRC’s former president Joseph Kabila, and the adopted son of Laurent Kabila; Selemani is a man who had suddenly come into millions of dollars, which he had busily recycled into 17 properties in South Africa and Maryland in the US within a few months.

Lutale, from Tanzania, is Selemani’s wife, and both used a busy smorgasbord of aliases, shelf companies, and different accounts to mask their property dealings, according to court documents lodged in the US.

For instance, even on the documents to incorporate Garvelli, Lutale is referred to as “Aneth Dorah SF Mtwale”, while Selemani also used the name “Adian Selemani” and “Francis Mtwale”. The last of these, conveniently, is the alias that his father, Laurent Kabila, used when he was exiled in Tanzania, before he came back to take power.

Even if the fictitious names didn’t raise red flags, what happened next should have.

Within one year, Garvelli went on a home-buying spree that would have made most oligarchs blush, according to deeds office records. Over two years, Garvelli and Selemani bought 13 properties in South Africa, splashing out R30.6m to do so.

Many of these would be described, even among Joburg’s notoriously wealthy elite, as mansions – including a sprawling 8,600m² estate near Fourways for R5m.

But they added a sprinkling of townhouses in the fast-growing area north of Joburg, including four homes for nearly R1m each in the Ihita complex, described as an “oasis for nature lovers” with its lapa, pool and “tranquil walking trails”; and R3m for two townhouses in the Cedar Acres Estate which, realtors gushed, included “a plethora of exclusive amenities” including tennis courts, and a “delightful kiddies play area”.

For good measure, Garvelli added a slew of standalone houses in the prestigious neighbourhood of Dainfern. This included a R7.5m double-storey Italian-style mansion in April 2019, and a R5.5m home inside the Dainfern Golf Estate, billed as a “premier residential estate”, with its own country club and a Gary Player-designed golf course.

For a country like the DRC, where three out of every four people live on less than R40 a day, such numbers are alien.         

But what none of the estate agents who fell over themselves to cash in their commission asked was: where did all Selemani’s money come from?

Had they bothered, they might have come to believe that Selemani was front and centre to the kleptocratic regime of his brother Joseph Kabila, who first stepped into office 10 days after his father was assassinated, and ruled for 18 years until 2019.

For years, Selemani had been the managing director of BGFIBank, the allegedly corrupt Congolese subsidiary of the Gabon-based bank. It was set up in 2010 and grew to become the country’s sixth largest bank, with deposits of more than $200m. About 40% of the shares in the DRC bank were held by Kabila’s sister, Gloria Mteyu, at the time.

Court documents, as well as reports by investigative journalists from Mediapart, The Sentry, and the NGO Platform to Protect Whistleblowers in Africa (PPLAAF) based on the biggest data leak in Africa of 3.5-million documents from BGFIBank, spell out precisely how money was siphoned out of the country.

What these show is that $138m was transferred into accounts at BGFI from several entities owned by the DRC state. This included $46m from its banking regulator BCC, $15m from state mining arm Gécamines, $7.5m from the Central Bank of Congo, and $8.6m from the DRC’s permanent mission to the UN.

About $86m flowed into the bank account of a company named SudOil – a small company based in Kinshasa with only one employee. There was no credible reason why SudOil should have been paid so much, since it did no business with the government.

As for who owned SudOil, it might not be a surprise to learn that 80% was held by Selemani’s wife, Lutale, with his sister Mteyu owning the other 20%.

According to documents obtained by Open Secrets, SudOil transferred $9.5m of the state funds it got to an investment firm named the Ascend Trust (largest shareholder: Lutale), which promptly sent $100,000 to Selemani’s South African bank account.

The transfers kept coming, and SudOil would later dispense of the middleman entirely, transferring $2.2m directly to Garvelli in South Africa, which it used to buy those properties in Joburg, including the mansion in Bryanston.

On the face of it, this is an alarming forensic trail suggesting that a foreign president’s family stole millions of dollars from their country and laundered it into physical houses in another country.

More damningly, this was facilitated by estate agents who sold those homes, banks which transferred the money and lawyers who helped register them. And none of them so much as raised a peep.

Less than 1%

There are few cases which better illustrate the holes in South Africa’s regulatory regime that have allowed the proceeds of corruption to be so easily laundered.

Lebogang Thobakgale, an anti-money-laundering expert from KPMG, says that while there are now obligations on estate agents requiring them to report suspicious transactions to the Financial Intelligence Centre (FIC), many of these dubious deals are still falling through the cracks.

Many of them haven’t yet got a good grasp on their reporting duties, she tells Currency. “The hope to date has simply been that there will be compliance [with] simple requirements, such as submission of risk and compliance returns,” she says. But the level of overall compliance “still warrants some intervention”.

This isn’t just an academic concern: in 2023, the global anti-money-laundering authority, the Financial Action Task Force (FATF), placed South Africa on a greylist of countries with lax controls, citing 22 areas of vulnerability. It is an unwelcome tag, since greylisting discourages foreign investment and raises the cost of a country’s foreign debt – a serious disincentive in a country that pays 22c of every rand collected in tax to its lenders.             

One such vulnerability was the lack of reporting of “suspicious transactions” by non-financial accountable institutions, such as the estate agents who sell homes to people like Selemani, and the lawyers who register these deals.

In the case of the R4.5m Bryanston property, Joburg-based law firm Cliffe Dekker Hofmeyr acted for the entities that sold the properties to Garvelli.

The lawyers told Open Secrets last September that they had “done due diligence checks about Garvelli”, saying it was “common practice for foreigners to purchase property in South Africa using a shelf company” and “there was no obligation on us, in the circumstances of this transaction, to verify the source of the purchaser’s funds”.

Van Zyl Hertenberger, another law firm which processed the sale of another R5m property to Selemani, was equally defensive. It said that “any misconduct by any member of this firm is denied”, adding that “the relevant legislation was only implemented recently and did not in fact apply at the time that the transactions you are referring to were implemented by our firm”.

When Open Secrets pointed out that the Financial Intelligence Centre Act (Fica) had actually been in operation since 2001, the law firm did not reply.

If anything, this illustrates not only the confusion among “designated non-financial professionals” including lawyers and estate agents, but also the fact that in most cases, they haven’t considered it their job to act as a guardian against money-laundering.

While South Africa’s money-laundering authority, the FIC, has worked hard to educate them and close most of the gaps cited by FATF, there is clearly much work to be done when it comes to estate agents and lawyers.

“The financial institutions are well ahead of the curve, are pretty much compliant, which has given the FIC a good grasp of what is happening in the financial sector. But when it comes to reporting on property transactions, this is still very much a work in progress,” says Thobakgale.

As she suggests, keeping tabs on all the 9,593 estate agents registered as “accountable institutions” with the FIC and 17,604 lawyers is an arduous task. This is why they are largely expected to “self-report”.

So, how are they doing on this score?

Not fabulously, is the answer. In the year to March 2024, data from the FIC shows that there were just 391 cases where estate agents provided “suspicious and unusual transaction reports, suspicious activity reports, financing of terrorism activity reports and reports on financing of terrorism transactions”.

That is less than 0.2% of the 252,700 property transfers valued at R440.6bn that took place in 2024, according to figures from the country’s deeds office.

Even compared to banks, estate agents come out looking bad. The suspicious reports lodged by realtors were equivalent to less than 1% of the 4-million “suspicious transaction reports” filed by South Africa’s banks in that same period.

All of which suggests either the banks are more diligent about flagging shady deals, or the property sector is squeaky clean. Sadly, the FIC seems to believe it’s the former.

“Lack of understanding of the money-laundering and terrorist financing risks faced by designated non-financial businesses and professions was a contributing factor to South Africa being greylisted by the Financial Action Task Force,” said the FIC in its most recent annual report.

To fix this, it sent “risk and compliance returns” to the 9,593 estate agents registered, which they were obligated to fill out – but it got just 58% back.

So, the FIC took to the field and conducted inspections of a small cross-section of estate agents. It found a number of breaches of the rules, so it dished out fines.

AZ Commercial Properties was fined R85,000 for non-compliance, for instance, Leapfrog Pretoria was fined R335,000, and Zulberg Estates was fined R500,000, according to appendices in the government reports.

Things seem to have improved, but not by much. In April, the FIC’s executive manager for compliance, Christopher Malan, said South Africa has still not fully complied with the FATF requirement to “improve risk-based supervision” of these non-financial agents.

Malan said this is because estate agents and lawyers – two “higher risk” sectors – are still not filling in these risk and compliance returns as they should. While the figure had risen closer to 70%, he said this wasn’t good enough.

“Submission rates [for these professionals] must be closer to the 100% mark over the quarter from April to June for the FIC to improve its risk classification for each sector,” he said.

The problem is, many estate agents still see these reporting requirements as bureaucratic box-ticking and an unnecessary constraint on their ability to earn commission.

“If somebody comes to an estate agent and says they can buy a house now, in cash, I don’t know how many agents would say ‘no’,” Ismail Momoniat, who is advising National Treasury on anti-money-laundering, told Currency recently.

Momoniat said that while there was greater awareness among estate agents of their duties, this was far from perfect.

“If you stand to get a big commission, many people will pretend not to know what the rules are. There is a need for a strong ethical and compliance culture – very few people will resist the temptation to break the law in South Africa,” he says.

This, perhaps, is the real challenge: changing a culture in which looking the other way is something that can be negotiated with a higher margin.

The playboy of Instagram

Joseph Kabila is not the only African leader whose family has allegedly laundered taxpayer money into properties in his name in South Africa.

Most notorious is Teodoro Obiang Nguema Mbasogo, who has been the dictator of Equatorial Guinea since he seized power from his corrupt uncle in 1979, who was the first leader of the country which gained independence from Spain in 1968.

The small West African country of 1.75-million people, nestled in the Gulf of Guinea, was largely anonymous until it struck oil, leading to Obiang becoming fabulously wealthy. A vanishingly tiny amount of this oil wealth trickled down to his people.

Described as a “tinpot tyrant” of “the North Korea of Africa”, Obiang would seem to be a cinch for any gold medal for corruption – were it not for the claim to that title from his son, Teodorin or “Teddy”.

Teodorin, in the time-honoured tradition of dictators everywhere, was named by his dad in 2016 as vice-president of Equatorial Guinea and has spent much of his time in office converting the country’s oil wealth into his personal assets.

Despite overseeing a country where less than half the population has access to clean drinking water, Teodorin’s Instagram throngs with pictures of his Harley Davidson motorcycles, Ferraris, Maseratis and a Lamborghini Veneno Roadster, which he could never have bought on a state salary.

Teodorin seems entirely unselfconscious about this. In 2023, the UK’s Daily Mail was incensed that he was bragging about his stay at the $75,000 a night Mark Penthouse in New York, which he had flown to on a private jet to beg the UN General Assembly for more aid money for Africa.

Though he splashed his country’s oil wealth liberally around the world, Teodorin also owns prime real estate in Cape Town – homes which have been seized in South Africa, and which he is currently locked in a legal battle to retrieve.

In March 2004, Teodorin paid R26m for a villa on 35 Klaasens Road in Bishopscourt – a neighbourhood of the ultra-wealthy including billionaire Patrice Motsepe, and where author Wilbur Smith once lived. Teodorin thought nothing of splashing out an extra R58m on upgrading that home, even though, as he told a court in 2023, he has not once slept in that house.

To round out his Cape Town experience, Teodorin bought a house on Cape Town’s Atlantic Seaboard overlooking Clifton’s Fourth Beach for R23.5m at the same time.

An Open Secrets investigation in 2024 identified well-known estate agent Mike Greeff as the agent who sold the Bishopscourt house to Teodorin, while the sale was facilitated by the law firm STBB.

Greeff’s lawyers claimed he “at all times complied with [his] legal obligations”, while STBB provided a carbon copy response, saying “we have no obligation to respond to your communication and have at all times complied with our legal obligations”.

By today’s standards, that would seem unlikely to fly, particularly since courts all over the world have been clear that Teodorin’s wealth came from outright theft of the assets belonging to Equatorial Guinea’s citizens.

In 2014, the US department of justice said Teodorin had “received an official government salary of less than $100,000 but used his position and influence as a government minister to amass more than $300m worth of assets through corruption and money-laundering”.

In a settlement, Teodorin relinquished assets worth $30m to US prosecutors, including a glove worn by Michael Jackson that he had bought for $275,000.

Teodorin, the US assistant attorney-general Leslie Caldwell said, had “shamelessly looted his government and shook down businesses in his country to support his lavish lifestyle, while many of his fellow citizens lived in extreme poverty”.

It was the same story in France. In 2017, the high court of Paris found him guilty of embezzlement, issuing him with a three-year suspended sentence and a $34m fine.

Critically, the banks who had facilitated Teodorin’s corruption came in for a roasting, with the Parisian judge saying: “The attitude of Société Générale, similar to that of the Bank of France, may have led [Teodorin] to think for a long period of time that there was, in France, some kind of tolerance for these practices.”

In South Africa, there has finally been some accountability of a sort for Teodorin.

In 2017, the high court in Cape Town ordered him to pay R39.8m for “abusing his power” for arresting and “severely torturing” a South African working in Equatorial Guinea, Daniel Janse van Rensburg. Janse van Rensburg had been detained for 423 days after a business deal with one of Teodorin’s relatives fell apart.

But Teodorin, raging at the injustice of the decision, refused to pay, so the South African courts ordered that his two houses, in Bishopscourt and Clifton, as well as his super-yacht, the Blue Shadow, be attached and sold to cover the debt.

In retaliation, Teodorin lashed out at the “racist white coup plotters” of Cape Town and, two days later, two South African engineers working for Dutch oil company SBM Offshore in Equatorial Guinea – Frederik Potgieter and Peter Huxham – were arrested on trumped-up charges of possessing cocaine.

Though Janse van Rensburg quickly released the Blue Shadow, hoping that Teodorin would then release Potgieter and Huxham, it had no impact.

“We showed them that we know how to vigorously defend ourselves,” Teodorin wrote on social media. “Respect for our honour and sovereignty is not negotiable.”

Potgieter and Huxham remain in prison in Equatorial Guinea, with the inability of South Africa’s government to secure their release a dark stain on President Cyril Ramaphosa’s timid approach to diplomacy.

Nonetheless, Teodorin has discovered that South African courts are less pliable than those of Equatorial Guinea. Repeated attempts to get his villas back in Cape Town have floundered.

In the most recent case in March, Supreme Court of Appeal judge Fayeeza Kathree-Setiloane dismissed his request to overturn the attachment of his villas.

In a scathing assessment, the judge said Teodorin had been “unable to provide a cogent explanation”, upholding a ruling which had described his earlier contradictory explanations as “improbable”.

‘Not our job’

The case of Teodorin is perhaps the most blatant case of a despot stealing heavily from his country’s fiscus, and that money being channelled effortlessly into assets in a foreign country.

But even if the 2022 rule requiring estate agents to report suspicious transactions had been in place when Teodorin channelled those illicit funds into Cape Town’s property market in 2004, it is debatable whether this would have even made a difference.

This is because, even if it had lodged a “suspicious transaction report” with the FIC, there is no guarantee this would have gone anywhere.

Last year, all the organisations – including the banks and lawyers – submitted 4.3-million reports of “suspicious transactions” to the FIC. This then produced 3,924 “intelligence reports” – but hardly any of these were successfully prosecuted.

Pieter Smit, the FIC’s acting director, said that in the previous year, it blocked R295.8m “as suspected proceeds of crime” and “contributed to the recovery of R98.5m in criminal proceeds” by providing “financial intelligence to law enforcement”.

Yet, data from South Africa’s National Prosecuting Authority (NPA) suggests there has been some progress in the courts, but not a huge amount.

The number of finalised cases involving money-laundering reached 98 in the year to March 2024 – up from 89 the year before and 72 in the year to March 2020. And for this coming year, the NPA said in its annual report it had “instituted 84 new money-laundering prosecutions”.

But it says a priority is “a sustained increase in the prosecution of serious and complex money-laundering cases, particularly money-laundering networks, professional enablers, third-party laundering and foreign predicate offenders”.

In one notable case, an Absa Bank employee in Limpopo province, Matlape Mphahlele, was sentenced to six years in jail for allowing fraudsters to use his accounts to receive R1.9m in the proceeds of crime. Another accused in that case, Edgen Gundane, transferred R2.5m from the Lesotho Ministry account to various other accounts.

But, as Momoniat mentioned, it is about shifting the culture. And it’s clear there is a huge amount to do on this front, with everyone seeking to dodge responsibility.

Craig Hutchison, the joint CEO of Southern Africa at estate agency Engel & Völkers, says the ultimate responsibility for blocking suspicious deals should lie with the deeds office, where a specialised unit dedicated to flagging money-laundering should sit.

“The belts and braces would be the deeds office,” he says. “If the government is serious about it – that’s actually where all the information is collated – then they’d very quickly be able to pick up who the parties involved in the transactions are.”

Hutchison argues that regulators have focused too much on estate agents to “close the loopholes” and not on the supply chain of a transaction, as it moves from the estate agent to the conveyancing attorneys, to the banks and then to the deeds office.                 

Real estate agents “should never have been a reporting institution for money laundering and [the] FIC”, he says.

“The majority of our industry is made up of family businesses, small businesses, that are sales-oriented. They don’t have the depth to deal with complex risk management, compliance programmes and the like.”

But lawyers, like conveyancing attorneys, do have the training and administrative depth to deal with this. As do the banks, he says. “The banks should know their clients more than anyone else in these industries. They are supposed to be checking where the money is coming in and going out.”        

Estate agents should be responsible for verifying buyers and sellers, collecting Fica documents, doing targeted financial sanctions checks, and ensuring there is no physical cash changing hands, he adds.

Hutchison contends that if he were the government chasing after money-launderers and they were going to get caught, he would be grateful if the schemers put their money into property, rather than cryptocurrencies, gold or other assets that are easily moved.

But critics will see Hutchison’s response as a desire to shift responsibility to someone else. Which discounts the real-world impact of letting dictators move into the neighbourhood and use the country’s financial architecture to facilitate looting.

While estate agents might see this as a “victimless crime”, it is anything but: it is a central reason why South Africa remains on the greylist, contributing to a weaker currency, less investment and higher borrowing costs.

And that’s before the often-intangible social costs. In 2004, residents of Clifton were alarmed that Teodorin had moved in next door. “It sickens me,” Joan Brown, a secretary in the area, told the Independent at the time. “The money which he uses to buy this house is gained by letting his own people suffer.”

When this happens, everyone loses.

This story was supported by Code for Africa, and funded by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).