MORE evidence has emerged that Spoornet undervalued the Port Alfred riverfront house sold to its CEO, Zandile Jakavula.
The Mail & Guardian last week exposed how Jakavula bought the exclusive property from the rail parastatal he heads at a fraction of its value – and then had Spoornet officials renovate it, initially using public money.
Reacting to the article last Friday, Transnet, Spoornet’s parent company, launched a probe into the transaction. The Transnet board, chaired by Bongani Khumalo, announced that an external firm of auditors, Gobodo Incorporated, would conduct an interim investigation.
”An external firm will work together with the Transnet group’s internal auditors and report back on the initial investigation by next Friday [May 10]. After studying the report, the board will determine the way forward,” the Transnet board said.
The M&G has learned that Transnet investigators had already started collecting information this week from Port Alfred estate agents.
Meanwhile, the M&G has also found more evidence that Spoornet was advised of the ”realistic market price” of the former railway house, on the banks of the scenic Kowie River. The advice appears to have been ignored.
Transnet would not respond this week. Spokesperson Thami Didiza said: ”We do not want to pre-empt the issues. We have engaged external auditors, and the board will announce the steps to be taken after a report has been received.”
Jakavula bought the property last June for about R83000. The house was not valued at the time, and Spoornet based the price on the ”book value”.
Subsequent renovations – by Spoornet Property Services at Jakavula’s request – cost, according to the parastatal, a further R363 000. Jakavula paid for the renovations separately in two instalments: one of R300 000 on April 11 and the other R65 000 on April 16, out of a loan from Transnet’s mortgage scheme. This brought the total he paid to nearly R450 000.
An official attached to Spoornet Property Services, Dirk Esterhuizen, at the same time valued the house at R450 000 – almost exactly the final amount paid by Jakavula. Spoornet last week said Esterhuizen had been sent to ensure no fingers could be pointed at Jakavula alleging he paid less than market value.
Correspondence in the possession of the M&G, however, shows that Esterhuizen’s R450 000 valuation was significantly lower than the ”realistic market price” given to him and Spoornet Property Services by Port Alfred estate agents.
Remax Kowie, one of the leading estate agents in Port Alfred, was asked by Esterhuizen on behalf of Spoornet Property Services to advise the parastatal on the market value of the house last month. Remax Kowie workers visited the house and spent about half an hour assessing it.
In a letter addressed to Spoornet Property Management on April 10 – the day before Jakavula paid his first instalment of the renovation costs – Remex Kowie valued the house at between R600 000 and R650 000.
”In our opinion, as estate agents, a realistic market related price for the above property would be R600 000 to R650 000 nett,” the letter reads.
The letter quoting a reference number 245/2002, also said: ”Kevin Heny, the owner and broker of Remax Kowie personally offered R550000 for this property – without even viewing it!”
One of Remax Kowie’s senior managers, who asked not to be identified, said Esterhuizen appeared to have been under pressure to value the house at R450 000, despite being advised otherwise.
”I think he was under pressure from the top. We told him what we thought the price was, but he seemed to want to hang on to the R450 000. I think he was under pressure, and was just doing his job,” the senior manager said.
The M&G last week published evidence of three separate offers made by private buyers to Spoornet or Transnet in 2000 through estate agents attached to property agency Pam Golding.
The three offers – ranging between R200 000 and R270 000 – were made before the house was renovated. They were rejected by Spoornet, which eventually sold the house to Jakavula for R83 000.
Remax Kowie’s involvement came after the house was refurbished. The renovations to the house included the building of three garages, additional rooms, and the installation of electronic gates. Plans are under way to build a jetty. Spoornet said last week Jakavula was covering the cost of the additional items, such as the jetty, on his own.