Metro under the microscope for paying huge amounts for land in transactions that generate massive profits for speculators
THE MONTHS BEFORE THE 2016 LOCAL ELECTION WERE BUSY times for the City of Tshwane Metro Municipality. It acquired huge swathes of land that saw a few people smiling all the way to the bank. One lucky guy pocketed more than R94 million.
The property deals were all done back-to-back, meaning there were original owners as well as an intermediate owner or middleman who had only acquired the land for a few minutes on paper before transferring it at a much higher price to a third party; the City of Tshwane. The metro used taxpayers’ money to finance the sequence of deals right from the start.
The land that was purchased in one of the deals consisted of 20 portions of the farms Strydfontein 306 and 307 on the north-western outskirts of the capital, near the Rosslyn Hub industrial development. Deed searches show that Tshwane bought the 20 agriculture smallholdings, covering 226 hectares on 16 March 2016 for around R211m. The properties were transferred and registered into the metro’s name on various dates later that year.
Significantly, on registration, each of the 20 title deeds received consecutive deed numbers for Proco Management (Pty) Ltd (the owner and seller) and Tshwane (the buyer and new owner). This indicates that the registration into Tshwane’s name happened directly after the property was registered into Proco’s name. For example, portion 6 of Strydfontein 307 was registered to Proco with deed number T63281/2016 and to Tshwane with deed number T63282/2016 on 15 August 2016. Another example is portion 37 of Strydfontein 306, which was registered with deed number T56393/2016 to Proco and to Tshwane with deed number T56394/2016 on 21 July 2016. And so it went on: all 20 registrations followed the same pattern at the Deeds Office in Pretoria.
Pretoria lawyer, Hannelie van Tonder of Fuchs Roux Inc, told Noseweek she had been the conveyancing attorney for the back-to-back deals. Upon receipt of the money from Tshwane Metro’s lawyers, Kunene Ramapala Inc, Van Tonder paid out the original owners as well as the intermediate owner, Proco. She also paid out Nungu Trading 691(Pty) Ltd who was Proco’s silent partner.
Van Tonder assured Noseweek that the original owners had known all along they were part of back-to-back deals, which are apparently legal and are transacted quite often.
The mind-boggling question is: why did Tshwane willingly pay R94m more to Proco than Proco had paid the original owners? Why not buy directly from them? It appears this was all part of a plan that began to take shape long before the back-to-back registrations occurred in 2016.
Some years ago Nungu Trading (Pty) Ltd became interested in developing parts of Strydfontein as a future megacity. During a recent conference call with attorney Van Tonder and Nungu’s sole director Izak de Villiers, she told Noseweek that the owners of the smallholdings had signed so-called land-availability agreements with Nungu. These agreements enabled Nungu to go ahead and obtain the necessary authorisations to support its application to establish a town on part of the Strydfontein smallholdings. If Nungu later decided to buy the smallholdings, she said, the agreements would automatically become Nungu’s offers-to-purchase. But Nungu was nowhere to be seen when those properties reached the Deeds Office. The buyer was suddenly a new player, Proco Management, which had never been part of the negotiations with the original owners.
Noseweek was able to track down one of the original owners, Louise Honiball, who has since emigrated and now lives in Australia. She signed a land availability agreement with Nungu’s representative at the end of May 2015. It was valid for six months and stated that the developer was obliged to obtain approval from the Department of Human Settlements for their housing project. It did not specify whether this was the national, provincial or municipal Department of Human Settlements.
Six weeks later Honiball received an email informing her and the other owners who were ready to sell that the proposed Mamapo development had been submitted to the national Housing Development Agency. The correspondence came from Pieter Smith who told Noseweek recently that he had worked for Nungu at the time. Smith sent another email in October 2015 telling the owners that the biggest challenge for the planned megacity was to obtain external municipal and other services before they could start developing the town.
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