Business

Safa's long-overdue debt finally picked up by you

Lloyd Gedye

Affidavits reveal how taxpayers helped to settle Safa's debt for the upgrading of Soccer city in preparation for the 2010 soccer World Cup.

An affidavit claims Grinaker-LTA had a pre-emptive right to redevelop Soccer City because of an unpaid debt. (Lisa Hnatowicz/Gallo Images)

South African taxpayers forked out R16-million to settle the South African Football Association's (Safa's) bad debt for the original construction of Soccer City, according to a leaked affidavit regarding cartels in the construction industry.

This emerges from an account about upgrading Soccer City for the 2010 World Cup, which is at the heart of one of the more interesting revelations included in affidavits that were leaked to the Mail & Guardian.

Directors of the construction company Stefanutti Stocks originally handed them to the National Prosecuting Authority and the Hawks in 2011.

The tale involves Safa, the city of Johannesburg, the national department of public works and the construction company Grinaker-LTA.

According to the affidavit of Schalk Ackerman, a director of Stefanutti Stocks and a former managing director of Grinaker-LTA, Safa did not pay the full amount of the contract when the original Soccer City was built. But the understanding was that Grinaker-LTA would be given first option on any future work on the stadium.

"Grinaker-LTA had the pre-emptive right to build Soccer City and it, accordingly, remained anxious to explore the potential opportunities, which this pre-emptive right afforded it," Ackerman stated in his affidavit. "The pre-emptive right came about as the result of an agreement reached between the then Grinaker and Safa that, due to non-payment of part of the contract value during the construction of the original Soccer City (FNB) stadium, Grinaker would be granted the exclusive right to be the contractor for any future major upgrade.

"As the World Cup process started to unfold and it became known that Soccer City would be upgraded to become a venue, I was tasked by the exco [executive committee] of Grinaker-LTA to pursue this agreement.

"I attempted on various occasions and had a number of meetings with Safa on the issue, but they remained very noncommittal and even avoided me."

When the M&G contacted Safa this week with Ackerman's version of events, it said questions should be directed to Grinaker-LTA.

"It became known that Safa would not be the client for the upgrade of Soccer City but that the City of Johannesburg [CoJ] would," Ackerman stated. "I then redirected my efforts to CoJ but met with an equally unsympathetic response. Despite letters to the city manager, I was unable to even secure a meeting with [the] CoJ.

"I, therefore, was only able to record our agreement to build Soccer City under cover of correspondence."

When the M&G contacted the city with Ackerman's version of events, it said that the department of public works owned the land that Soccer City was built on.

"The city does not own the stadium," said Gabu Tugwana, the city's director of communications. "It is owned by the department of public works. The City of Johannesburg metropolitan municipality has possession and control of the stadium through a 99-year lease agreement between itself and the department of public works.

"The city of Johannesburg paid a nominal amount of R1 for the possession, control and use of the stadium," Tugwana said.

Asked about the pre-emptive right given to Grianker-LTA, he said: "As far as Jo'burg city is concerned, Grinaker-LTA was not given a pre-emptive right.

"In terms of the Municipal Finance Management Act, the city went and placed this project on tender for a service provider to build the stadium."

Tugwana directed further questions about the pre-emptive right to Safa. Ackerman's affidavit refers to the involvement of the department of public works.

"I became aware that another problem existed," Ackerman stated. "The original Soccer City was built on land owned by the national department of public works and which was never paid for and, therefore, never transferred into the name of Safa.

"I engaged with the department of public works, who eventually arranged a meeting between their attorneys and me.

"If my memory serves me correctly, I was accompanied by the corporate lawyers of Grinaker-LTA.

"The department of public works recognised the agreement but informed us that, for various reasons, [it] would not be able to honour it. After a few meetings, it was agreed that the department would pay Grinaker-LTA to nullify the agreement. To my best recollection the amount was R16-million.

"I cannot confirm this amount and I cannot recollect whether this was actually paid by the time I left Grinaker-LTA.

"There was, however, a written settlement agreement between the department and Grinaker-LTA regarding this.

"To my best recollection, the agreement was reached during November 2006 and early December 2006."

The M&G tried to get comment from Ackerman, but his lawyer said that he was prevented about talking to anyone about the contents of his affidavit.

The department of public works had not responded to the M&G by the time of going to print.


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