The rise of a R500m empire

2012-04-28 16:35

A property company co-owned by Limpopo Premier Cassel Mathale and Parliament’s finance portfolio head, Thaba Mufamadi, has scored at least R520 million in government lease contracts.

Three of these contracts were awarded without being put out to public tender.

Although Mathale resigned as a director of Manaka Property Investments in March last year, he was a director throughout the period that Manaka brokered these state contracts and remains a shareholder.

Now the company’s dealings with the state will form part of a probe into 4 000 state leases being reviewed by the department of public works.

Using public records and information from the department, City Press has established the scale of Manaka Property Investments’ empire, which exploded out of the starting blocks in 2007 when it was founded.

Mufamadi and Mathale are two of the company’s four owners.

Over the past five years, Manaka has built up a portfolio of at least six large commercial properties, mostly in the Pretoria CBD. Public records indicate the company purchased properties for R340 million in the CBD.

Manaka’s good fortune has seen four of these buildings score long-term leases with several government departments worth at least R520 million.

But it also has a 20% stake in the trust that owns a R500 million office development in Centurion, housing the new national head office of the Independent Electoral Commission. That lease alone is worth almost R320 million over its 10-year duration.

David Lewis, head of Corruption Watch, said: “There can be little doubt that these dealings reasonably appear to constitute a serious conflict of interest. I’m confident the rest of the South African public will share Corruption Watch’s acute discomfort at these dealings.”

According to the department of public works, Manaka holds the following contracts:

» An eight-year lease to the department of water affairs worth R3.5 million a year, escalating at 8% a year. Manaka will earn about R36.8 million from the deal;

» An eight-year lease to the department of home affairs worth R24.7 million a year, escalating at 10% a year, for 25 388m² in office space and 300 parking bays. Manaka will earn R283 million from this;

» An eight-year lease to Stats SA worth R18.2 million a year, escalating at 8% annually, for 15 621m² of office space and 167 parking bays; and

» Manaka also owns another building in the Pretoria CBD, which houses Gauteng’s department of health and social development, but the national department of public works did not respond to questions about these leases.

Public Works confirmed to City Press that the Stats SA, water affairs and home affairs contracts were not secured through public tender.

Manaka is also set to score another deal in Limpopo, housing the department of water affairs’ Polokwane office for five years, which will net it R6.7 million a year.

This deal is subject to approval by public works, the department said.

Manaka Property Investments bought this Polokwane building from the Moolman Group, with which it shares a director, former Limpopo Tender Board chairperson Jannie Moolman.

This week, Minister of Public Works Thulas Nxesi revealed that the department of water affairs’ lease with Manaka in the Manaka Continental building, signed in September 2007, did not follow the prescribed tender process.

The department of home affairs’ lease of the Hallmark Building in Pretoria will cost the department about R7 million a year more to rent than its previous premises did.

Manaka’s executive director, Joe Mathebula said: “As the minister has stated, Manaka deals (have) been according to (Public Works’) procurement strategies and we have no further comments,” he said.

Public works spokesperson Bukiwe Mgobozi responded: “Our understanding is that all leases are under scrutiny, so yes, we believe all leases with Manaka will form part of this.”

Lewis said the relationships created uneasy perceptions.

“The first question is about the perception that is created when a commercial property company involving a provincial premier, the head of a senior parliamentary committee, and the head of an important statutory body is involved in major commercial dealings with the state.

“Our public servants have to stop hiding behind the ‘innocent until proven guilty beyond a reasonable doubt’ mantra. Nor can they take refuge behind the technical question of whether or not there is an actual conflict of interest.”

Mathale referred questions to Manaka management and Mufamadi said that as the company chairperson he had no involvement in the day-to-day running of the company.

He referred questions to Mathebula.

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