There is an old cliché about banking: If you owe your bank a million, it’s your problem. If you owe the bank a billion, it becomes their problem.
Nearly a decade ago, after funding Zunaid Moti’s empire for several years, Investec found itself in precisely this position, leaked documents from the #Motifiles show.
A letter from Investec states as at June 2014 Moti owed the bank over R2 billion.
“The level of exposure makes us extremely uncomfortable, and urgent steps need to be taken to reduce it urgently,” the bank wrote to Moti.
By 2016 it was recorded that Investec was now exposed to Moti’s South African operations to the tune of R2,8 billion, with an additional R592 million owed by Zimbabwean projects.
Investec twice dragged Moti to the negotiating table to hash out complex restructuring plans.
Once in 2016, and once in 2019.
However, while the first restructuring was being negotiated, the Moti Group concluded a secret loan agreement.
Signed on 30 April 2015, it provided Jonathan Maurice Epstein with “bridging finance” of R2,5 million to fund a social media start-up in which he had an interest.
But Epstein was part of the Investec team meant to be pinning down a mega-debtor.
The agreement and related documents form part of a massive leak from within the Moti Group which has sparked an intense legal and public relations fightback campaign by Moti, including criminal charges against the alleged whistle-blower and legal threats against amaBhungane and its partner in this investigation, The Sentry.
Moti denies any wrongdoing, and claims the documents are “stolen”.
The documents show Epstein continuing to enjoy the Moti Group’s financial support well into the negotiation of the second major debt restructuring – ultimately receiving more than R14 million in loans for the benefit of the start-up during the remainder of his career at Investec.
Along the way Epstein was assigned a specific oversight role at Moti’s Ferro Chrome Furnaces (FCF) operations on the bank’s behalf.
The long relationship between Investec and Moti was seemingly unaffected even after the bank discovered the loan, and launched an investigation.
Investec told us: “Jonathan Epstein was an independent contractor to Investec from 2014 to 2016, and a full-time employee from 2016 to 2018. We were not aware of the loan agreement with Waleed Investment Holdings, a part of the Moti Group.
“Once we became aware of the loan agreement, we immediately began an investigation into the matter. Mr Epstein ceased to be employed by Investec prior to the conclusion of the investigation.”
Epstein says he “formally resigned from Investec on 31 July 2018” when he took up a new job – with his benefactor Moti.
Epstein said although his departure was “abrupt”, no objections were raised by the bank.
“At the time I joined Investec in 2014, I disclosed my interest in the development of a new social media app with other individuals,” he said at the time.
“I received no financial benefits from the Moti Group,” he said.
He denied that the alleged financial relationship between himself and the Moti Group was intended to buy improper influence and leverage with the bank.
“At no time did I have any authority or decision-making powers, and I reported back to the bank on a virtually daily basis.
“I was also subject to all the bank’s and the Moti Group’s normal confidentiality and non-disclosure policies,” he told amaBhungane.
Epstein explained he had mentioned to Moti he was involved with others in a planned new social media app, then called Hubblez.
“I had been funding Hubblez up to that stage and commented to him that further seed capital was needed to progress the development. Mr Moti was interested in the concept, and we came to an agreement that he would provide a loan for this purpose.
“As a prudent businessman, Mr Moti required security, which I agreed to provide for the R2,5 million loan.”
Moti said: “The only reason why I employed Mr Epstein after he left Investec was that he had institutional knowledge on the group’s business.
“Mr Epstein had a business opportunity which he declared to Investec. Investec always acted in good faith, and our interactions with them were always fair.”
The original loan was followed by a number of further credits up to April 2018 when Epstein’s total indebtedness to the Moti Group reached R16,92 million, including interest.
Handwritten notes from April 2015 contained in the leaked documents show that Moti would fund the banker, who would in turn fund the development of an “ambient intelligence application” dubbed ‘Hubblez’, the creation of app developer Eben Greyling.
This coincided with one of the many debt-restructuring negotiations between Investec and Moti, this time relating to a R550 million loan he originally obtained from the bank in 2012.
The notes suggest the deal would see Moti and Epstein control the new venture through two trusts owning a special purpose company in Dubai.
On 28 April Epstein sent Moti staffers materials they needed to draft a contract.
Greyling would get an initial R1 million, but subsequent payments would go to private equity firm Gerber Goldschmidt Group.
This does not indicate that Gerber Goldschmidt was doing anything wrong, merely that Epstein wanted his money sent there, instead of, for instance, to his own bank account.
“As I was not personally benefiting from any of the payments, I directed that the payments be made to a third party/ies. Hubblez was not incorporated at the time, as it was in its conceptual and development stages,” Epstein said.
Another document shows that by early 2018, Epstein had received in total R14,4 million from the Moti Group while employed by Investec, a seemingly significant conflict of interest.
Epstein told us there was to his knowledge “no [Investec] strategy regarding the Moti Group’s debts” that he might be suspected of disclosing to Moti after he swopped sides.
He told us his interest in the Hubblez app was declared to Investec.
He seemingly just omitted to disclose later that it was being indirectly funded by Moti.
SECRET SHARE ALLOCATION?
An additional piece of evidence from the documents suggests that Epstein was seemingly pencilled to receive a shareholding in African Chrome Fields (ACF), the Moti Group’s core operation in Zimbabwe.
A spreadsheet, which according to its metadata was authored by Moti finance boss Salim Bobat or someone using his computer, sets out the “unofficial” shareholding of a company called Paveridge. Paveridge in turn owned 50% of another company, called Spincash.
Spincash owned 30% of ACF at the time.
According to the spreadsheet, a number of individuals had been ‘allocated’, but not issued, shareholding.
In response to previous questions Moti called the spreadsheet a “discussion document” for a transaction that never went ahead.
Among these prospective shareholders are Moti himself and people from his inner circle – and Epstein who is allocated an effective indirect stake in ACF of 0,45%.
This would have been worth around $1,8 million, or well over R20 million at the time, based on the concurrent sale of ACF shares dealt with in our previous reporting on Moti.
Epstein said he had absolutely no knowledge of this supposed allocation.
Moti said: “Once again, I must protest your continued insistence on referring to ‘the leak’. The documents you use to fuel your narrative and assumptions were stolen and most likely forged.
“This stolen document was provided to you in Excel format and would probably have been updated to include reference to Mr Epstein after he started his employment with the Moti Group,” he said.
However, by the time Epstein joined the Moti Group the shareholding in ACF of Spincash had already been sold to another party, making this hypothetical allocation of shares a pointless exercise.
The admitted facts of Epstein’s financial relationship with the Moti Group seem especially problematic due to the role he was ultimately given in the 2016 debt-restructuring agreement between Investec and its client.
Among the many agreements that collectively constituted the restructuring is a “management support agreement” that gave Investec the right to “nominate and appoint a representative to attend to and, on a full-time basis, co-manage the business, operations and affairs (including financial affairs) of FCF”.
FCF was part of the Moti Group and central to its debt problems with Investec.
The representative Investec seconded to FCF to be its eyes and ears was Jonathan Epstein.
This seems to be at odds with responses amaBhungane received from both Moti and Epstein.
Epstein said: “It is pertinent to note that I never participated in the management of FCF as it ceased operations, as I recall, during 2016.”
Epstein explains his overnight shift from Investec to the Moti Group as follows: “Owing to my close working relationship with Mr Moti, I advised him immediately after I resigned from the bank. We discussed whether I had future plans and agreed my employment with the Moti Group with responsibilities for other operations which had no relationship with the bank.”
A “trip record” of a Moti Group visit to Zimbabwe between 31 July and Epstein’s appointment date reads that “Jonathan Epstein accompanied us on this trip as a new and official employee of the Moti Group”.
Moti, like Epstein, told us the Investec man’s employment with the Moti Group would not provide any “inside knowledge” from the bank’s side.
Nonetheless, the leaked documents suggest that by October 2018 Epstein had helped produce a Moti counter-proposal to the settlement proposal put together by Investec when he was still working there.
Moti was, however, seemingly not entirely sold on Epstein’s loyalty.
The leaks suggest that while detained in Germany between late 2018 and early 2019, Moti sent constant instructions to his team in South Africa.
In one of several purported notes from prison Moti warns right-hand man Ashruf Kaka:
“Watch JE. He did it to IBL [Investec Bank Limited]. He can do it to you.”
But Moti insists the prison letters were forged.
“Some, if not all of these purported letters from prison were forged to drive your, or your ‘sources’’ “narrative against me.”
But what happened to the app Moti was funding – and the enormous debt Epstein had accumulated since 2015, now totalling R16,92 million?
Moti told us Epstein “arranged for the debt to be purchased by someone else on terms discussed between him and Red Pine Trust”.
Greyling, the app developer, told us he became ultimately liable for the R16,92 million that was owed to Red Pine Trust.
He declined to disclose who sat behind the trust.
The app itself seems to have met an untimely end.
“It is my understanding that Yizoot [the app’s new name] was eventually abandoned after mid-2018 some time after I ceased to be involved,” said Epstein.
– This is an edited version of an article that was first published by amabhungane.org