Black consortium cries foul

2012-05-19 15:02

Property group wants Public Protector to probe how white businessman scored prime land without a tender process

A group of black property developers has asked Public Protector Thuli Madonsela to investigate how a white businessman scored 77 hectares of prime Gauteng land without going through a tender process.

Baagi Ba Mo Gae Investments alleges that it has been sidelined in the deal after being awarded a tender to purchase 77ha of land in Ga-Rankuwa, west of Pretoria.

More than 1 000 RDP houses and 2 000 bonded properties are now being built on the land – and Baagi Ba Mo Gae is asking Madonsela to urgently halt construction.

Mighty Raseroka, a director of Baagi Ba Mo Gae, claims his consortium won the tender to purchase the land from the North West Housing Corporation in 2007 for R34 million.

The land originally belonged to the North West Housing Corporation, but after a shifting of provincial boundaries in 2007, it became the property of the City of Tshwane.

The city then signed over the rights to the property to the North West Housing Corporation.

After the consortium failed to provide guarantees for the payment, the tender was awarded to the second-highest bidder, a company that also did not have the funds to pay for the land.

In 2008, Baagi Ba Mo Gae took the corporation to court and won back the land.

It was later introduced by an estate agent to Dawie Maree, a Centurion-based developer, Raseroka said.
They agreed Maree would buy the land from Raseroka’s consortium for R40 million and would also get involved in the construction on the site.

Raseroka said the consortium would have paid R34 million to the North West Housing Corporation and then shared the remaining R6 million among its eight directors.

But Maree said the agreement was voided when his company, New Century Homes (NCH), could not come up with the money to pay Baagi Ba Mo Gae.

Maree said when his deal with the consortium fell through, he found an investor, Rainbow Place Properties.

The investor then went directly to the North West Housing Corporation and agreed to develop the land, Maree told City Press.

Maree conceded that there was a stalemate between his company and the consortium, but blamed the latter for the impasse.

“Baagi Ba Mo Gae was given the opportunity to negotiate before construction commenced.

It is up to Baagi to negotiate a settlement with NCH. To date, they have proven to be highly aggressive and non-cooperative,” said Maree.

“We signed a purchase agreement with Baagi to purchase the land for R40 million, subject to procurement of bank finance.

“The purchase agreement became void when we did not obtain property financing. We tried the banks and various private capital sources,” Maree said.

The shifting of the land’s ownership from the City of Tshwane to the North West Housing Corporation contributed to a huge amount of confusion.

“We spent months on end trying to negotiate an alternative agreement with North West Housing Corporation,” Maree said.

“At that stage, we were approached by Rainbow Place Properties, which had seen this property on a City of Tshwane-owned list of properties that was available for development,” he explained.

He said that after his company entered into an agreement with Rainbow Place Properties, it discovered that the North West Housing Corporation did not have the right to sell the land.

It then approached the City of Tshwane and signed a land availability agreement with the council.

Maree said that after signing the land availability agreement, Baagi Ba Mo Gae declined to enter into any negotiations and demanded that the initial agreement of R40 million be revived.

“The renegotiation took place, as New Century Homes was no longer the developer and therefore had a much-reduced profit margin from the project. Rainbow Place Properties had no connection with Baagi and therefore did not have to involve itself with the matter,” said Mareee.

Simon Mmope, the spokesperson for the provincial department of human settlements, said there were no records showing that the corporation – which is being absorbed into the department – had awarded any tender to the consortium.

However, City Press has copies of all the bid documents proving that Baagi Ba Mo Gae received the tender.
Tshwane spokesperson Brenda Mpitsang said the council was not aware of any agreements between Maree and Baagi Ba Mo Gae Investments.

“It seems to us that there was a process via North West Housing Corporation and that process was to sell the land. Surely that was not in the best interest of the city. Hence we opted to go through the proposed development by New Century Homes and see if it is in line with city’s strategies,” said Mpitsang, who referred other questions to the North West Housing Corporation.

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