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Point of View: Unpacking erf 575, City of Johannesburg’s ‘irregular’ R280-million real estate deal

Kaya 959 Reporter

In 2008, the city had awarded erf 575 – three hectares of prime land above the Sandton Gautrain station – to the well-connected Regiments Kgoro consortium.

In its bid, Regiments had promised that a 5% stake would be given to an “Alexandra Local Community Trust” along with a share of the R1.8-billion in profit that was anticipated to flow from the development but, that promise was never fulfilled.

The story began to gain traction when then Mayor Herman Mashaba was in the process of uncovering details behind the deal, and admitted that the land on which the Sandton Gautrain station sits was irregularly acquired.

The story eventually didn’t go anywhere as Mashaba exited as Mayor.

Also Read: Kaya Drive: Worst cities to live in

Susan Comrie, the investigating Journalist from amaBhungane, has been working on this story. She recently joined Phemelo Motene on Point of View to give a background and all the ins and outs of this story.

“The city had identified this piece of land that they’d like to see developed, they put out a tender for someone to come forward and develop the piece of land, ultimately they decided to award it to the Regiments Kgoro consortium.”

“There we a lot of questions at the time. This was a newly formed consortium, they formed it as a way to hold property that they would develop. They didn’t have experience as property developers of a multi-billion rand project, but what they did have some significant political connections.”

“Ultimately the city decided that they weren’t going to rerun the process and the contract was eventually signed in 2009 with this consortium”

Also Read: Point of View: Gautrain experiences power failures, why is there load shedding

Some of the findings in the City of Johannesburg’s R280-million real estate deal ‘crime scene’: Strategic friends Part II of the report indicates the following:

  • During the bidding for erf 575, the Regiments Kgoro consortium sold itself as a broad-based black economic empowerment structure.
  • Regiments Capital, held the biggest chunk: 76.5%,
  • Another 8% was held by Vermogen Real Estate, a subsidiary of the Industrial Development Group (IDG), run by Mxolisi Mbetse and Bajabulile Swazi Tshabalala,
  • Another 5% was held by the professional team (architects and quantity surveyors) and 2.5% went to a women’s group, Loato Properties. Which left 8% for three “strategic partners” and a mysterious trust,
  • 2% would go to Sipho Twala, a businessman and the brother-in-law of Parks Tau,
  • Regiments promised: after the land and development costs were deducted, the net profit was anticipated to be R1.8-billion. That meant a modest 2.5% stake, like the one held by the Transvaal Urban Machinery Investment Trust, could one day deliver millions.
  • In June 2013, the City transferred ownership of erf 575 to the Regiments Kgoro consortium. The agreement the City had signed meant that it would not be paid the R280-million purchase price on transfer, but only when the sectional title schemes were registered.

 

Written by: Zuko

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