To enjoy the full Mail & Guardian online experience: please upgrade your browser
18 Nov 2011 01:04
Roux Shabangu. (Gallo)
Parliament’s scrutiny of businessman Roux Shabangu’s lease agreement with the police’s Independent Complaints Directorate (ICD) has flushed out new evidence to suggest the public works department “blind signed” the ICD and bundled into a building it could not afford.
It also appears that the department blew more than R13-million on this building while it stood empty for 18 months.
Just 10 months before public works signed the lease with Shabangu it approved a lease with another company—Mati Properties—for the same building for substantially less than Shabangu received.
This suggests Shabangu’s lease could have been inflated, although his business partner, Japie van Niekerk, has denied this.
South African businessmen and dodgy officials are making hundreds of millions of rands from leasing scams. But how does it work? Watch our dummy’s guide.
In terms of value per square metre, the Mati Properties lease was worth 40% less than that awarded to Shabangu.
And Shabangu’s lease was set to escalate at the top-end rate of 10% a year, compared with 8% for Mati.
Over a 10-year period, this difference in escalation will substantially affect the overall lease cost.
As it happened, Mati did not buy the building as originally planned and the lease agreement was not concluded.
The seller, Sayed Mia, said Mati could not come up with the money by the agreed date. But Mati director Calvin Mojapelo said Mia reneged on its sale agreement specifically so that he could sell to Shabangu, who ultimately won a more lucrative lease.
On Thursday, public protector Thuli Madonsela confirmed she would investigate the ICD lease, which is already under investigation by the Special Investigating Unit.
Under fireThe ICD has come under close scrutiny from Parliament’s police committee twice this month. MPs demanded that the directorate explain why its rental expenditure ballooned fourfold in one year, from R4.2-million to R15.6-million.
Part of the ICD’s explanation was that the lease with Shabangu was way over its budget, a point public works, which manages state leases, allegedly failed to disclose.
In turn, MPs demanded that the ICD explain why it then agreed to move into the building without clarity on how the lease would affect its budget.
Chastising the directorate, police portfolio committee chairperson Sindi Chikunga cut Tuesday’s meeting short: “I don’t believe continuing with this meeting will take us anywhere. We need to invite the department of public works and treasury to be part of the meeting when we discuss this matter again,” she said. “It is clear that you took matters for granted when dealing with this matter. I can’t understand why.”
The committee will reconsider the matter next Tuesday.
‘We had no choice’The ICD’s representations to Parliament, interviews with directorate spokesperson Moses Dlamini and independently sourced documents suggest a shambolic operation by public works that ultimately forced the ICD’s hand, a full three years after it applied to the department for a new building.
Public works has not responded to Dlamini’s claim that the ICD had no choice, but the timeline of events is suggestive:
Pressed on why the ICD had moved in without considering other options and without having seen a copy of the lease, as it had demanded, Dlamini said: “We were pressured. We were basically bulldozed. We were dealing with a government department in good faith and we did not expect anything untoward.
“We had been looking for accommodation since October 2007. Our staff had grown from 46 to 99. Public works led us to believe this was the only option. We didn’t have any other choice, but we didn’t know we’d have to pay such a huge amount.”
Public works did not respond to questions.
* Got a tip-off for us about this story? Email email@example.com
The M&G Centre for Investigative Journalism, a non-profit initiative to develop investigative journalism in the public interest, produced this story. All views are ours. See www.amabhungane.co.za for all our stories, activities and sources of funding.
Read more from Craig McKune
Create Account | Lost Your Password?