The sale of a prime Telkom-owned property, apparently at a fire-sale price, has the telecommunications minister lambasting his officials, reports Stefaans
Posts and Telecommunications Minister Pallo Jordan has questioned Telkom’s sale of a prestigious Cape Town Waterfront property, suggesting that the deal lost the state-owned company millions or rand.
Documents in possession of the Mail & Guardian reveal how an explanation given by Telkom for the sale was flatly rejected by Jordan with the words: “Crap. Totally unacceptable.”
Telkom, though no longer state-run, is still 100 percent-owned by the state and ultimately answerable to Jordan and the Cabinet.
Jordan last week confirmed the veracity of the documents, saying: “My concern was that the property had been sold below the price it could have fetched, given its location. I have heard nothing thus far that has reduced my apprehension.”
The property, the disused Gallows Hill telephone exchange site and building drily referred to in the documentation as “Erf 14501”, is now better known as Victoria Junction, one of Cape Town’s most prestigious developments. The documentation — mailed anonymously to the M&G — shows Jordan writing to Telkom chairman Dikgang Moseneke last November, and again in February, asking for clarity on the R12-million deal between Telkom and the directors of developers Newport Property Group, clinched on October 13 last year.
In the first letter, Jordan said: “From appearances, and I stress, appearance, this was a deal that could have brought the company much more money … I don’t want you to start making enemies in the management board, but if the allegations here are true, this is a matter that needs looking into.”
In February, Jordan wrote to Moseneke urging an investigation and asking to be informed of the facts. “In the context of the demands that will be placed on Telkom to realise universal service, I cannot take lightly the disposal of state assets at low prices.”
He told Moseneke that from his own inquiries it appeared the market value was “far greater” than the R12-million (including VAT) paid for it; that there was no tendering; that “a leading property developer in this city, who operates in that precise area … had not heard about the transaction until it appeared in the press”; and that it appeared the property might have been sold via another party, realising a profit for a third party.
Jordan told the M&G he had not had final word from Moseneke. “I have to remind him, but he has had other fish to fry.”
Jordan’s suspicions appear to have been raised initially by Cape Town businesswoman Cathy Murat, who had approached Telkom in the middle of last year for the partial donation of the property in terms of the company’s social investment programme. Her plan was to set up an interactive children’s museum on the site.
She wrote to Jordan in November, and soon after that Jordan first wrote to Moseneke for an explanation.
He got that explanation — ostensibly from Moseneke — in mid-December. “I am satisfied there was nothing irregular in the selling of the property and the selling price of R12-million is market-related and well in excess of the sworn valuation of R10,4-million,” a letter in the name of Moseneke, but signed on his behalf by Telkom’s then-managing director Danie du Toit, informed Jordan.
Three days later Du Toit, who left Telkom in March this year, told Jordan that the letter in Moseneke’s name had “been released by me” in the absence of Moseneke and “in view of the urgency of the matter” — but that it was being withdrawn.
In February, before his second letter to Moseneke, Jordan was confronted with a response to Murat’s objection in the form of a letter, in his name, which he was supposed to sign. It appears to have been drafted partly by Pieter Feenstra, general manager of Telkom properties. Jordan went to the extraordinary length of crossing out all three pages of it, appending a note: “Crap!!! Totally unacceptable.”
The letter would have had Jordan telling Murat: “A full report has now been made available to me and, quite frankly, it is clear that Telkom acted strictly within their sphere of responsibilities.”
Feenstra this week stood by the explanation, saying Telkom had had “as many as” four valuations done on the property. An independent valuation had shown it to be worth R10,4-million, including VAT. He defended the decision not to put the property out to tender, saying experience had taught “that with prime property, we often get worse offers (by tender) than by
Feenstra said Telkom and its brokers had negotiated with some 40 clients over a period of more than a year, and the Newport directors’ offer had been the best. “We had the valuation, and we used that as our barometer … At the stage we did the transaction, there is no doubt in my mind, we achieved a price independently determined to be above market value.”
Jordan’s fears the property had passed from the original buyer for an extra profit — which should have been Telkom’s rather than a third party’s — appear to be unfounded, although based in fact.
Cape Town deeds office records show that in fact three legal entities now own shares in the property, whereas only one of them, the 406 Fairweather Trust, had made the deal with Telkom. But all three entities are owned by the directors of Newport, suggesting the passing on of the property had been a technicality and making it unlikely that further profit would have accrued.
As for Jordan’s main apprehension, that the property had been sold for a song, perhaps only Moseneke’s inquiry — when he gets around to it — will tell.