When the Western Cape provincial government sold the 22-hectare Conradie Hospital site in Cape Town in 2006, the department of transport and public works claimed it had gone to the “highest bidder” for R80-million. But a Mail & Guardian investigation has established that there were three higher bids, including one of R145-million.
According to official records of the provincial department of transport and public works, the three higher tender bids came from Uthanda Trading 19 (Pty) Ltd (R85-million), Ridwaan Abrahams (R90-million) and Pedal Trading 162, trading as Integrated Living Solutions, (R145-million). But the land was sold by tender to Iliza Elitsha Investments, a consortium of 25 companies.
Abrahams, a Cape Town businessperson, said he put in a bid for the site and was initially awarded the deal in the first tender round. “I was granted the deal and we raised a R20-million guaranteed deposit, which was put on the table,” he said. “But the land wasn’t bankable without zoning rights, so we asked the province to sit with us and the city to talk. Suddenly the deal was cancelled.
“I haven’t got evidence but I suspected that, while our processes were going on, others suddenly saw the value of the site.” An official at public works who has documentation on the deal said Abrahams won the first tender with an offer of R125-million in 2005 but he alleged Abrahams could not come up with the money. Abrahams put his name forward for the second tender round but was not considered again, the official said. The other two higher bids were not compliant in the second round, he alleged.
A visit to the sprawling site in Pinelands by the M&G this month revealed that, six years on, the promise of an integrated housing scheme, office park and industrial unit is still a dream on paper. Apart from a provincial health unit operating on site with the private healthcare group, Life Esidimeni, the vast property resembles a wasteland. It is dotted with derelict pre-war buildings, which are being stripped by gangs of thieves.
To date Iliza Elitsha Investments has paid only R8-million of the R80-million for this site, according to Robin Carlisle, the Democratic Alliance’s provincial minister of transport and public works. As a result, the land is still registered in the name of the provincial government.
Legal advice
Carlisle said he had taken extensive legal advice on the contract. The only barrier to the province either annulling the deal or being paid the money owed was that the property had to be vacant, he said.
The consortium had previously argued that it was waiting for zoning and planning permissions to justify not paying the rest of the money owed to the province, Carlisle said. It was not known how long this would take because bulk infrastructure in the area was operating at “absolute capacity”, he said.
But the provincial government’s legal teams had now rejected the consortium’s argument. “I am not sure if the developers are going to be able to pay up, in which case we will hold half their deposit and boot them out,” Carlisle said.
“When I discovered that the developers were saying they still did not have vacant possession of the property, I put huge pressure on the department of health urgently to move the health unit off the site,” Carlisle said.
The provincial health department said the unit would relocate to Lentegeur Hospital in Mitchells Plain by April 1 this year. Gustav Gouws, the Iliza Elitsha Investments’ spokesperson, said one of the terms of its sale agreement was a 10% deposit and it was a condition that the land had to be vacant. “It is a tender obligation to deliver the specific mixed-use developments,” he said.
“The required rights are not in place and the rights will not be awarded until there is sufficient bulk sewer capacity available and the traffic issues have been resolved,” Gouws said.
Asked what sort of housing would be put up on site, Gouws said the tender document obliged the buyer to provide a social housing component and affordable housing units would consist of at least 13% of all houses built. “The balance of the property will be mixed use — offices, retail and industrial,” he said.
The death of Conradie Hospital
In 2002 the ANC-led Western Cape provincial government announced it would “restructure” the health department and close the Conradie Hospital, which had won acclaim for treating spinal injuries. This led to a public outcry.
“The Conradie Hospital was not closed down — it was relocated in part to Eerste River Hospital and in part to the purpose-built Western Cape Rehabilitation Centre on the Lentegeur [Hospital] site,” Faiza Steyn, spokesperson for the provincial health department, told the M&G.
Steyn said that the provincial cabinet had agreed at the time to proceed with the purchase of the Eerste River Hospital, on condition that another health facility was closed down and the site sold to generate revenue.
Marius Fransman, then the provincial minister of transport and public works, signed off the contract with Iliza Elitsha Investments for the purchase of the Conradie Hospital site in 2006.
Fransman, who is now deputy minister of international relations and cooperation and the new leader of the ANC in the Western Cape, said at a press conference six years ago that the development of the prime site would focus on the “spatial integration of societies”. Iliza Elitsha Investments would spearhead the development, which would consist of more than a 1 000 housing units, a small office park and an industrial unit, he said.
A further R10-million would be earmarked for low-cost housing and the relocation of the health units left on the site, the department of transport and public works said at the time.
Fransman said last week that all bids during his tenure had gone through strict committee vetting, which involved complicated weighting processes. “My only involvement was in signing that contract,” he said.
Last year Robin Carlisle, Western Cape minister of transport and public works, told the provincial legislature that the contract allowed the purchaser to “park” the property until planning permission was granted.
Mcebisi Skwatsha, an ANC provincial legislature member, asked Carlisle in December if he would charge interest on the R72-million the developers owed the provincial government.
“Unfortunately it will not be charged on the outstanding amount, which is a matter of considerable surprise to me because that is very unusual in a transaction of this nature,” replied Carlisle in the legislature. “It appears to have been fairly deliberately left out of the sale contract.”