Plans for second airport grounded

The old Durban International Airport, where an illegal tenant cut a hole in the terminal wall causing millions of rands in damage and setting back plans to revive the airport. (Rogan Ward/Reuters)

The old Durban International Airport, where an illegal tenant cut a hole in the terminal wall causing millions of rands in damage and setting back plans to revive the airport. (Rogan Ward/Reuters)

Allegations and counter­-allegations of favours, bent rules and conflicts of interest have emerged in the legal tussle between state utility Transnet and airport management company Seaworld Aviation.

A 10-year lease deal, which was signed in September 2017 and then terminated by Transnet last year, would have seen Durban get a second major airport.

Seaworld wanted to operate a “Lanseria-style” airport at the site of the old Durban International Airport. The company secured the lease from Transnet, which had bought the land from the Airports Company South Africa (Acsa) for R1.7-billion nearly a decade ago.

Pundits and a private airline operator said the proposed development would have been a game-changer, for both the microeconomy of Durban’s struggling South Coast region and for low-cost airlines.

But the parties fell out after Seaworld, according to its version of events detailed in papers before the high court in Pietermaritzburg, found illegal business tenants on the premises it intended to occupy and develop.

Seaworld director Xolani Mkhwanazi said in an affidavit that numerous pleas to Transnet for assistance fell on deaf ears and frustrated efforts to start the project.

“We found [a tiling company] had cut a large hole through the terminal building to allow direct access to a warehouse they had constructed on the apron.
We estimate the damage to be between R30-million and R50‑million,” he said.

Transnet argued that Seaworld signed the lease knowing there were illegal tenants. In fact, their presence had led to the suspension of five employees at subsidiary Transnet Property’s Durban office.

Transnet says it had agreed to evict the tenants within 18 months. Seaworld would be charged a nominal rental of R1 a month, while spending R200‑million on refurbishments.

Instead, according to the state utility, it was discovered that Seaworld had entered into separate subletting arrangements with new tenants that was bringing in more than R1-million a month. This, Transnet said, was in breach of the lease agreement, which stipulated that any subletting needed its blessing.

But Seaworld director Aaron Stanger gave the M&G a copy of the lease, including a clause that gave Seaworld the right to sublet without getting Transnet’s permission.

A new forensic investigation into the purchase from Acsa and the subsequent lease by Transnet to Seaworld has led to a report that ties Stanger to the disgraced former Transnet Property chief executive Zakhele “Thabo” Lebelo.

The Mail & Guardian has seen the final draft copy of that report. It says: “On our enquiry regarding the completion of the disclosure of interest/conflict of interest by Mr Lebelo, he advised us that he used a lawyer referred by Mr Stanger to prepare and register an antenuptial contract for him and Mrs Lebelo. Mr Stanger advised Mr Lebelo that he has settled his invoice for legal fees in cash, effectively paying for Mr Lebelo.

“Mr Lebelo did not disclose this amount as required in terms of the Lease Out policy. The details of this said lawyer have not been supplied to us by Mr Lebelo, despite reminders,” said the report.

Stanger refuted allegations he paid for Lebelo’s legal fees, saying he only referred him to a lawyer. Lebelo could not be reached for comment.

The audit highlighted other mild-to-serious anomalies in processes followed in the conclusion of the lease agreement. Among these are:

  • Lebelo was involved in all aspects of the work on the lease, from negotiating it and doing the amortisation schedules to concluding the lease on his own;
  • Lebelo allowed the deal to go through with no detailed project proposal, no feasibility study, no due diligence and no letters of commitment from anchor tenants;
  • The deal should have been approved by Transnet’s board acquisition and disposals committee, instead of former chief executive Siyabonga Gama, because of a clause that gave the option of extending the contract from 10 to 20 years;
  • The clause giving Seaworld an option to extend after the first 10 years was not originally negotiated and was inserted only at approval stage; and
  • Lebelo was found to have met Stanger at Inanda Club, where Stanger is a member, several times to discuss the lease.

The forensic investigators, from Johannesburg property law specialists Ntlangula Incorporated, noted that an attempt to establish the shareholding of Seaworld Investment Holdings and Seaworld Management Services was met with resistance from the company’s auditors, allegedly at Stanger’s instruction.

Stanger told the M&G the forensic investigation was a malicious attempt by Transnet’s legal team, after Seaworld escalated the issue between them to Transnet’s board.

“We have learnt that this was initiated by [the] legal [department] without the knowledge of the acting CEO and the board, all because we had the temerity to suggest that Transnet legal was either corrupt or incompetent. Or both,” he said.

On Thursday, Transnet confirmed the forensic investigation, saying it was pending finalisation. It said it could not divulge any further details because the matter was the subject of “a number of litigation issues”.

The M&G understands from several Transnet insiders independent of each other that the initial agreement was that the first 18 months, which were effectively rent-free, were to allow Transnet an opportunity to evict illegal tenants, and Seaworld to develop and refurbish the area and also find tenants in an effort to boost revenue for the operators.

But Mkhwanazi said: “Lebelo dilly-dallied after we told them about the illegal tenants … Can Transnet explain why they are still there today after more than two years?”

A source at the utility hit back: “These guys were not supposed to bring in people and start charging them rental and making money when they were not paying us anything. Think about it, having people there meant water and power were being used up and Transnet was responsible for the bill for all of that.

“This matter was initiated as far back as 2010 by the [eThekwini municipality] and the province because they wanted to rejuvenate the fortunes of the South Coast, which waned after the airport was moved to the north,” said a source with historic knowledge of the issue.

Although the report noted that Stanger informed Transnet that the Public Investment Corporation (PIC) and Harith Fund Managers would put up the R200-million for the airport project, the parties this week said no agreements were reached.

The PIC’s head of corporate affairs, Deon Botha, refuted this, saying it was not involved.

Harith managing director for business development and stakeholder management, Pule Molebeledi, said the company was approached by Seaworld but did not reach “a commercially acceptable investment case. Harith did not complete its due diligence process or take the investment for approval to its investment committee and no Harith funds were made available to Seaworld”.

If you have further information relating to this story, please contact the author at SabeloS@mg.co.za. All correspondence treated in complete confidence.

Sabelo Skiti

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