Decisions: The coalitions the ANC choose to form seem likely to shape which way the South African economy will go. (Waldo Swiegers/Bloomberg via Getty Images)
Residents living in social housing in Phoenix, Durban, will protest on 27 April to try to force the presidency to release a Special Investigating Unit (SIU) report into alleged corruption totalling R400 million by the contractors who built the units.
The SIU began its investigation into social housing projects in Phoenix in April 2021 in terms of a proclamation issued by President Cyril Ramaphosa, following years of litigation by the Phoenix Tenants and Residents’ Association against companies owned by ANC-linked tenderpreneur Jay Singh.
Singh’s companies, Gralio Precast and Woodglaze Trading, allegedly received subsidies totalling R400 million from the department of human settlements and the Social Housing Regulatory Authority (SHRA) for the flats, built unlawfully on infill sites provided by the eThekwini municipality.
The more than 20 complexes, built after 2009, were then transferred to Section 21 companies owned by Singh — since deceased — his former wife, Shireen Annamalay, and his son, Ravi Jagadasan, including the KZN Social Housing Company and rented out for more than R3 million a month.
The flats were built as part of a city programme, run with the SHRA and the housing ministry, to provide housing for people earning from R3 500 to R7 000 a month who earned too much to receive RDP (Reconstruction and Development Programme) housing, but too little to qualify for a bond with a bank.
But some have been paying higher rentals while others have been sold to third parties, and residents in several complexes have been evicted for failing to keep up with rent increases, which are unlawful, according to the tenants’ association, chairperson Mervyn Govender.
In 2014, the Asset Forfeiture Unit (AFU) seized four complexes owned by Woodglaze in Treehaven, Stanmore, Eastbury and Rydalvale over R236 million paid to the company unlawfully by the SHRA as it was not accredited for social housing and did not have building plans. The flats were placed under curatorship, but the AFU was unable to secure an extension of the preservation order and the flats were returned to Woodglaze.
The SIU’s mandate for the investigation dates back to 2012, when eThekwini began its infill housing programme to provide land for social housing, and includes the four complexes and a number of others built at the time.
It includes probing alleged “maladministration” by the city in releasing the land to Singh and others “contrary to the objectives of the municipality’s housing programme”.
Govender said the tenants’ association was planning the march out of frustration over the delay in releasing the SIU report into corruption in social housing in the city and implementing its findings.
“The SIU’s report has been sitting with the president and the [eThekwini] municipal manager since last year, but it has still not been released. The presidency saw that the situation was serious enough to issue the SIU proclamation, so why continue to sit on it and not to act on its findings?” he said.
The tenants’ association’s court battles with Woodglaze and other companies led to the seizure of several blocks of flats by the AFU — and to the issuing of the proclamation into the R400 million deal by Ramaphosa.
Govender’s association also provided the SIU with information and affidavits regarding the movement of flats between entities.
“The SIU report was meant to have been made available some time ago. We are very concerned about the lack of action. By now we would have expected the city, the human settlements ministry and SHRA to have acted, but nothing has happened,” he said.
The SIU is understood to have subpoenaed a number of officials from human settlements, the city and the SHRA in its attempts to recover the subsidy payments.
SIU spokesperson Kaizer Kganyago said the investigation had been completed and that the final version of the report had been handed to the presidency on 14 March.
Kganyago said the SIU had referred disciplinary matters to the municipality and that these were currently before eThekwini’s disciplinary board.
Several criminal matters had been referred to the National Prosecuting Authority, which was still considering them.
A single referral had been made to the SIU’s civil litigation unit for action, Kganyago said.
Govender said their protest would also focus on ongoing abuses in social housing in Phoenix, which included arbitrary rental increases, evictions and the sale of complexes and individual flats to new owners.
“The infill programme was meant to have benefitted poor people living in Phoenix and elsewhere and to have given them homes at a subsidised rate, but we have ended up in a situation where they are being charged market related rentals by owners who have collected subsidies from the SHRA,” Govender said.
“These complexes were built with subsidies, but the agreements with tenants are being changed unilaterally to charge what suits them, which is far higher than what is gazetted.”
The tenants’ association is preparing to approach the high court to challenge rent increases on behalf of its members who are living in 11 complexes that have been affected.
Govender said rentals were capped at R2 250 a month, with pensioners and other low income tenants accommodated with the lowest rental, R350 a month, until recently.
“Rents are calculated at 20% to 25% of the tenants income, with the landlord receiving large discounts on costs in the form of heavily subsidised bulk infrastructure; rates subsidies and free land from the municipality. In Phoenix, people are now being charged R4 000 and R4 500 a month, far more than they can afford,” he said.
In a letter to the SHRA last month, Govender asked the entity to investigate the transfer of 50 units in one of the complexes, Cardham Mews, by the KZN Social Housing Company to the Akonjee Family, owners of the Tradeport Group, who took over the units in January 2022.
That month, rents were increased to R4 000, with a second increase to R4 500 being levied on tenants in January this year and the rentals being collected by a third company, R&O Distributors.
“In a short space of time we have seen rentals almost double. Woodglaze sold the houses without consulting the tenants and offering ownership first to the tenants,” Govender said.
SHRA communications manager Lesego Diale said Cardham Mews was not a social housing project and had not been sold or transferred. Diale said there was no gazetted maximum rental.
“The SHRA has developed a rent setting guideline based on the recent increase in the income threshold for social housing beneficiaries from R15 000 to R22 000 which will allow an SHI (social housing institution) to charge a rental of up to R7 700,” Diale said.
“This is dependent on total household income and unit typology and will differ from project to project. Cardham Mews is not a social housing project and therefore under SAHRA’s regulation.”
Social housing institutions were monitored by SHRA, whose compliance unit also monitored rental increases.
“In instances where rental increases are not in line with CPI, social housing institutions are required to provide reasons why, which must then be approved by the compliance unit,” he said.
Diale said that the SHRA did not have information from the SIU regarding the eThekwini investigation.
Presidency spokesperson Vincent Magwenya said the SIU would be writing to eThekwini giving them 30 days to respond to the report, after which it would be made public.
eThekwini spokesperson Lindiwe Khuzwayo said the municipality was “still engaging with the report and will advise on the next steps in due course”.
This story has been updated since it was first published online to include comments from the presidency.