Unlawful: The housing complex in Eastbury, which the SIU plans to seize as part of proceedings against companies owned by the late Jay Singh. Photo: Rogan Ward
Companies belonging to controversial property developer and ANC blesser Jay Singh are among those targeted by the Special Investigating Unit (SIU) probe into corruption in the eThekwini municipality’s social housing projects in the Phoenix area.
The SIU aims to recover more than R400-million paid to Singh’s companies — Gralio Precast and Woodglaze Trading — in subsidies they claimed from the department of human settlements and the Social Housing Regulatory Authority (SHRA).
The flats were transferred to a Section 21 company owned by Singh’s ex-wife and son who would then collect subsidies from the housing authority. But they also collected about R3-million a month in rents on them. Some of the flats were also sold on the open market.
The SIU is understood to be preparing to send out subpoenas to a number of former eThekwini human settlement division officials, as well as officials of the human settlements department and of the housing authority as it tries to unravel the web of unlawful transactions that benefited Singh’s companies.
The SIU wants to recover payments made by the housing authority to the companies, which were not accredited to build social housing, and which they were not entitled to receive because they did not own the land they were building on.
The matter was also referred to the Hawks for investigation.
Singh died in May last year. Singh’s son, Ravi Jagadasan, his ex-wife Shireen Annamalay and an associate now run the companies, which have built 21 council complexes on council land since 2009 as part of the city’s programme to provide housing for people earning between R3 500 and R7 000 a month.
The programme, which is aimed at helping residents whose earnings are too low to qualify for a bond from the commercial banks but who earned above the cut-off for RDP housing, is still ongoing. Several blocks of flat are understood to have recently been sold to another Section 21 company, KZN Social Housing, of which Jagadasan is a director, by Gralio.
At the centre of the SIU probe is the transfer of four blocks of flats in Stanmore, Eastbury, Treehaven and Rydalvale to Section 21 companies — First Metro and Moko Rental Housing Projects — which collected rentals from tenants and subsides from the housing authority.
Singh founded Moko but resigned as a director in 2009. Jagadasan, Annamalay and associate Pradeep Inderjeeth are now its directors.
In 2014, after a court application by the Phoenix Residents and Tenants Association, formed by flat residents who were evicted by First Metro and Moko, which had increased their rents, the Asset Forfeiture Unit (AFU) seized R400-million in Singh’s assets and froze R100-million, which Woodglaze Trading has transferred into First Metro’s bank account.
The flats were placed under curatorship, with Moko continuing to collect rental from tenants. At the time, the AFU said in court papers that the housing authority paid R236-million to Woodglaze Trading unlawfully, as the company did not have accreditation to build social housing, did not have building plans and were planning to build on land owned by the municipality.
But the AFU failed to secure an extension of the preservation order, which lapsed after a month. The AFU was ordered to return the flats to Woodglaze Trading, which earned R3-million a month from the flats. Mervyn Govender, chairperson of the tenants association, who began blowing the whistle over the housing project in 2010, said this week that he was “very pleased” that the SIU had decided to probe the transactions.
His organisation went to court in 2011 to oppose evictions by Moko and First Metro and in the process uncovered the unlawful payments from the housing authority, and irregular transfers of flats from Woodglaze Trading to the section 21 companies.
“We have been fighting to get intervention here for 10 years and it now appears that there is finally going to be action. This was a very complex, very technical defrauding of the state which required having people in the city, in the department and in the SHRA,” Govender said.
“There are so many authorities involved in a development like this and for them to have avoided oversight people had to have been operating together in the various entities.”
The flats, which were to have been sold to tenants for R120 000 each through a rent-to-own system, are now being rented out on a commercial basis by the section 21 companies.
“These flats were meant to have been for the benefit of poor people who can’t afford bonds to allow them to eventually own the flats they have been paying rent for,” Govender said.
SIU spokesperson Kaizer Kganyago said the proclamation, issued on 1 April, relates to allegations involving the unlawful “disposal and alienation of immovable property” in the city’s infill housing programme. The programme made use of vacant council land to extend and augment existing housing developments.
Durban businessman Jay Singh testifies at the Tongaat mall commission of inquiry on 2 March 2015 in Durban. (Photo by Gallo Images/The Times/ Tebogo Letsie)
He said the investigation aimed to establish if the land — earmarked for gap housing — was used for the purpose for which it was sold. Gap housing was meant to have benefitted people earning between R3 000 and R15 000 a month.
SHRA spokesperson Lesego Diale said the entity — which was aiming to recover R105-million — was aware of the investigation by the SIU, which was already underway.
Diale said none of the companies under investigation were still receiving funding from the SHRA, which would consider what further action to take once the investigation had been completed.
Diale said that “more rigorous contract and project management capabilities have been enhanced internally to avert any potential lapses in the grant disbursement process”.
These included ensuring companies were legally compliant before disbursing funds to them and releasing funds in tranches and only after milestones in the construction schedule had been reached.
The eThekwini municipality did not respond to emailed questions.
Attempts to secure comment from Jagadasen were not successful by the time of publication.
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