/ 17 December 2010

Block’s ‘free guesthouse makeover’

Embattled ANC Northern Cape chair John Block’s Upington guesthouse allegedly received a make­over worth at least R650 000 courtesy of property company ­Trifecta Holdings, a senior source within Trifecta, and the subcontractor who did the work told the Mail & Guardian. This happened at a time when Trifecta was negotiating a series of multimillion­rand property rental agreements with government departments and agencies in the province.

The renovation was in addition to the R2,2-million Block received from the property group and associated entities as remuneration for “consultation” services.

The M&G reported last week that Block was employed as a consultant to Trifecta between 2006 and 2008 — at the insistence of Block’s former friend and confidant, Sarel Breda, who died in a 2009 plane crash. Block was not in government at the time, but held a powerful position as the ANC’s Northern Cape chairperson.

Trifecta paid Block a basic salary of R60 000 a month for two years, amounting to R1,4-million, while he also received a total of R800 000, from Breda’s other companies, Shosholoza Trust and Dataforce Trading.

According to Trifecta the funds from Shosholoza and Dataforce were used to pay Block’s legal costs during his 2006 corruption trial. He was acquitted.

Last month Block, also the Northern Cape minister of finance, economy and tourism, was arrested with Intaka businessman Gaston Savoi and charged with corruption and fraud relating to the purchase of water purification equipment. He is due to appear in court again next year.

After Breda’s death, his 55% stake in Trifecta was acquired by his long-term Trifecta partner and co-director, Christo Scholtz.

Scholtz denied this week that Trifecta had paid for the renovations.

“We can’t find documentation or postings on the general ledger of payments made towards renovations of Block’s guesthouse in Upington, or anywhere else,” he said, asking to be shown proof.

“We also telephonically contacted the project manager and area building manager in Upington to inquire about such works and they deny such allegations or statement categorically.”

But David Myles, a former subcontractor to Trifecta who worked on the renovations, confirmed that he quoted Trifecta R650 000 to convert a funeral parlour into an eight-room guesthouse for Block in the Upington township of Paballelo in September 2006. Myles has kept the documentation showing this.

Myles said an adjacent property had already been converted for Block into a restaurant with two guest rooms, to be included in the guesthouse complex. “I was told to keep it hush-hush, because it was for John Block and Breda was paying for it,” he told the M&G.

At the time Myles, who was used regularly by Trifecta, was also converting the Oranje Hotel in Upington into an office block for Trifecta to rent out to the South African Social Security Agency (Sassa).

“All the work we did on the guesthouse was invoiced under the Oranje Hotel job so nobody could place the payments and say it was for the guesthouse,” he said.

In May 2007 relations soured between Myles, Breda and Block and Myles was fired from the guesthouse project. Trifecta allegedly owes him R470 000 for the project.

“During this time people were catching on to the links between Breda and Block. It was getting too hot and Breda wanted to disentangle himself from Block business-wise,” he said .

Last week Scholtz denied that Trifecta paid Block for “facilitating” rental agreements between it and Northern Cape government departments. He claimed that Block was employed as a consultant to Trifecta Resources and Trifecta Diamonds, which were attempting to establish a mining division in the Trifecta group. But Block’s mining consultancy for Trifecta was said to be a fiasco. The only deal he tried to facilitate was an attempt by Trifecta Diamonds to acquire Vernon Diamonds and its exclusive mining right.

This degenerated into a three-year court battle which culminated in Trifecta relinquishing its mining right.

Despite this, Block received at least R2,8-million from Trifecta during that time. Scholtz explained that Block, with Breda, would have negotiated BEE participation or investment in the mining deals in which Trifecta was interested.

“Block had successes in the mining sector with other resources and mining companies while the acquisition of such investments for Trifecta Resources did not materialise to the extent it was anticipated,” he said.

Scholtz acknowledged that “from a cold, clinical investment perspective”, the investment was not a good one at all, taking into consideration the drama that erupted.
A source close to Trifecta’s top management said the argument that Block was a consultant to Trifecta Diamonds “is a lie”.

“You don’t pay millions to someone for consulting work when nothing came out of it,” the source said. “The money Block received was to facilitate the Sassa and department of agriculture rental agreements.”

Between 2005 and 2008 Trifecta signed leases worth R300-million for several properties with Sassa in the Northern Cape.

Last week other sources told the M&G that the buildings are unsuitably large for Sassa. A Sassa spokesperson confirmed that the agency is investigating the circumstances in which the leases with Trifecta were signed.

Trifecta also leased two Kimberley buildings to the provincial department of agriculture, one in 2005, the other in 2006. Sources in the department say they are trying to end the arrangement because the buildings are so expensive.

Deon du Preez, who was hired by Scholtz as acting financial controller at Trifecta Holdings from January 2007 until May 2009, shortly after Breda’s death, confirmed that Block had received a salary, but said he did not know what Block did for Trifecta. “There was an issue with a guesthouse and Block presented invoices to us for renovations, but we did not pay these,” Du Preez said.

However, he said that Trifecta employed subcontractors to renovate properties, who would then submit invoices to Trifecta for work completed.

“If work was done on his guesthouse we might not know because it would have been presented as an invoice from the subcontractor,” he said. Block, through his lawyer, Dali Mjila, again declined to comment this week.