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12 Oct 2012 00:00
The department of public works wants to nullify its R137-million lease for the City Forum building in Pretoria. (Oupa Nkosi, M&G)
New evidence before the North Gauteng High Court in Pretoria has reinforced claims that businessperson Roux Shabangu is the face of an elaborate black economic empowerment (BEE) leasing front, something he and former business partner Japie van Niekerk vigorously deny.
The department of public works recently applied to the high court to nullify the state's lease with Shabangu's former company, Majestic Silver Trading 275, now owned by Van Niekerk. The application is based on two claims: that the 10-year lease was procured irregularly and Shabangu acted as a BEE "front" for Van Niekerk to win the R137-million lease tender.
Majestic Silver owns the building, situated at 114 Madiba Street, Pretoria.
Last year, the Mail & Guardian exposed how the lease was awarded to Shabangu's company in 2009 at a rate much higher than the directorate could afford and for a building twice as large as it needed. Later, the newspaper revealed that Shabangu signed the lease after he had claimed to have resigned from the company, earning R10.5-million for himself.
Shabangu shot to notoriety in 2010 as the owner of the building that was destined to be leased as police headquarters. A subsequent dispute led to the dismissal of former police commissioner Bheki Cele.
The department's latest high court application is based on an investigation by the government's Special Investigating Unit.
In an affidavit, the department's acting director general, Mandisa Fatyela-Lindie, said officials had negotiated with Majestic Silver "without authorisation" and thus "the lease was concluded without compliance with an authorised procurement procedure".
She said that just four days before Majestic Silver was nominated for the lease, officials had rejected a cheaper offer from a different company for the same building, because this company did not own it. But when Shabangu signed the lease on behalf of Majestic Silver in April 2009, the company did not own the building either. By that point, it was owned by Van Niekerk's company HMKL3.
Fatyela-Lindie referred to August 2008 records that list both Shabangu and Van Niekerk as "signing authorities" for Majestic Silver's bank account, "with both parties designated directors of Majestic". Thus, she alleged, Van Niekerk already had a "financial interest" in Majestic. In other words, the company was not a 100% black-owned one. "This was a fraud perpetrated by Majestic and Shabangu," she said.
According to department policy, 10-year leases can be awarded only to 100% black-owned companies.
Van Niekerk denied he was a director of Majestic until long after this series of events. He said he was a signatory on Majestic's account because he had loaned Shabangu the money to buy the building.
Read more from Craig McKune
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