/ 29 May 2009

‘Secret agent’ Vivian Reddy

President Jacob Zuma's sponsor is cagey about his company's middleman activities and offshore account payments. Sam Sole reports.

A prominent benefactor of President Jacob Zuma, Durban businessman Vivian Reddy, has been drawn into a row about commissions paid by an Australian bank-note company to its agents around the world.

The Age newspaper reported last week that Securency, a Melbourne-based company half-owned by the Reserve Bank of Australia (RBA), was involved in the payment of commissions to what it called ‘shady middlemen” to win banknote printing deals with foreign governments.

The article gave examples of agency payments in respect of Uganda, Vietnam and India, but also raised the issue of Securency’s South African partnership with Reddy — and its payments to a former employee of Reddy’s Edison Corporation, Don McArthur.

McArthur is the former managing director of Macmed, the listed medical group that crashed in 1999 amid charges of management fraud in what was then South Africa’s largest corporate collapse.

Last year McArthur pleaded guilty to a contravention of the Companies Act involving reckless trading. He was fined R20 000 and had to pay R1.96-million into the Criminal Assets Recovery Account.

In the civil case brought by liquidators he settled in the amount of R14-million.

Securency, which produces synthetic polymer not paper notes, has said it a undertook due diligence process when appointing agents. It added that they had signed agreements forbidding payments to foreign officials and politicians.

Nonetheless, the RBA board has referred the allegations to the Australian federal police for investigation.

No allegations of bribery have been levelled at Reddy or McArthur, but what is unclear is how and when Reddy, McArthur and Securency were involved — and why they are being so cagey about their relationship.

Securency confirmed to The Age that Reddy and McArthur ‘have been or are agents for Securency”.

Edison Corporation said: ‘It has been many years since Edison has had a relationship with Securency,” but declined to say when the relationship began or ended, citing ‘confidentiality”.

Securency chair Robert Rankin also declined to provide these details, citing the police investigation.

However, the Mail & Guardian has established that in promotional material published as recently as 2007 Edison Corporation is quoted as claiming: ‘Polymer-based notes are a technological breakthrough taking the world by storm and already embraced by 22 countries.

‘The group has brought this technology to Africa from Securency, an Australian company. Edison has secured the rights for the introduction of polymer technology into Africa.”

In a written response to the M&G Reddy also declined to elaborate, noting: ‘On the matter of Securency, we have referred it to our legal advisers. I am advised that as the press article in Australia is now a matter of litigation it would not be appropriate to make any comments at this stage.”

The status of McArthur is even more mysterious. According to The Age, he denied any links with Securency, despite their confirming him as an agent.

The M&G put detailed allegations to McArthur via his attorney, including that he or companies linked to him had received in the region of A$90 000 (about R500 000) from Securency over the past six years, some of it paid into an offshore account.

He failed to respond to questions.

Reddy stated: ‘On the issue of the Edison relationship with Don McArthur, I am informed that he had a relationship with Edison some eight to 10 years ago on a matter relating to HIV/Aids advisory services.”

However, according to South African Reserve Bank head of currency management, Rashid Aboobaker Ismail, Reddy and his consortium approached the Reserve Bank in about 2004 or 2005 to promote Securency.

The proposal was for the synthetic ‘substrate” to be used in new upgraded notes, but the Reserve Bank opted to stay with its cotton-based material.

Ismail said he thought that a Don McArthur, whom he understood was based in Australia, had accompanied the delegation.

Online documentation suggests that McArthur gave his employer as Edison Health in 2005.

Reddy said: ‘It is important to note that The Age newspaper has not suggested Securency has engaged in bribery, but it seems like many typical stereotype racists’ attitude towards Africa and all things not European.

‘It’s implied that any business transaction, even if it is legitimate, has to be a corrupt relationship. My message to him and others with similar views of Africa is that they can continue to choke on their venom and hatred.”