Legality of about R1.1 billion worth of property developments challenged
The Constitutional Court is expected to rule on the legality of nearly R1.1 billion worth of existing and proposed developments involving a company linked to the National Union of Mineworkers (NUM) and former president Nelson Mandela’s relative.
The NUM – through the Mineworkers’ Investment Company, its investment arm and owners of 33% of Peermont – is set to build a R302 million casino, hotel, conference and convention centre on the land that is subject to two land claims.
The NUM is the country’s largest union and an affiliate to trade union federation Cosatu.
Cape Gannet Properties 118, an Mthatha-based company in Eastern Cape, says it has concluded an agreement with Peermont for the casino development. It has already secured about R110 million from Rand Merchant Bank (RMB).
However, the two villages, Zimbane and KwaLindile (both situated just outside Mthatha), insist the land on which the casino will be built is theirs.
They argue that the King Sabata Dalindyebo Municipality, which signed 30- to 60-year leases with Cape Gannet Properties 118, Landmark Mthatha and Whirlprops 46, ignored the land claims when it concluded the long-term leases.
The communities’ land claims are twofold, with the first phase, which is not under consideration by the Constitutional Court, being compensation for developed land – where the Mthatha campus of the Walter Sisulu University and about 12 000 residential properties are built.
For the land earmarked for the multimillion-rand developments, the communities are demanding partnerships with the municipality and the developers.
Nika Mazwana, chairperson of the Zimbane Claimants’ Committee, said the partnerships would involve the employment of local residents, procurement of goods during construction and equity.
The three companies have pre-emptive (preferential) rights to buy all or some of the properties when their leases end. Landmark Mthatha, in which Mfundo Mtirara, AbaThembu chief and a relative of Mandela owns 22.5%, wants to build a shopping centre and car dealership.
Cape Gannet, which lists Eastern Cape Economic DevelopmentMEC Mcebisi Jonas among its former directors, says it has started the planning of such a casino complex. The company has concluded an agreement with Peermont, which also owns Emperors Palace in Ekurhuleni.
Cape Gannet confirmed that an amount of R107.5 million is financed by RMB. It also intends building a R556 million shopping mall, which it says will be as big as The Pavilion in Durban, KwaZulu-Natal.
Investec is financing the construction in return for Cape Gannet shares, according to court papers.
Pietermaritzburg-based company Whirlprops 46 owns an existing development – Mthatha Plaza shopping centre – on the land.
Court papers reveal that the centre cost R165 million to built and was financed by Nedbank through a R146 million mortgage.
Whirlprops say Mthatha Plaza is valued at about R240 million.
All three companies have promised to create at least 2 000 jobs.
Communities argue there was no factual basis the developments “advance the weal of the broader public”, the municipalities claim.
The court case has been set down for November.
