Housing fraud massive

2014-04-21 00:00

A SENIOR auditor in the National Treasury investigating a multimillion-rand housing scandal has fingered the eThekwini Metro as being party to a litany of fraudulent transactions.

This forms part of a national investigation by the Treasury into the Social Housing Regulatory Authority (SHRA), with a money trail that starts in the Eastern Cape Department of Human Settlements and allegedly ends with embattled Phoenix businessman Jay Singh’s business empire.

The SHRA regulates affordable rental homes for households with an income between R1 500-R7 500 per month and is funded by the national Department of Human Settlements.

Last week, as part of the investigation, the Pietermaritzburg high court granted a preservation order to the Asset Forfeiture Unit (AFU) to seize 1 244 flats in four complexes that had been built and were once owned by Singh-linked companies Woodglaze Trading and Moko Rental Housing Project. Woodglaze built and owned the homes while Moko collected the rental. Both companies listed Singh’s wife Shireen Annamalay as the controlling director.

In a supporting affidavit, which forms part of a 440-page document placed before the Pietermaritzburg court last week, Levy Moshoette, director for internal control systems audit at the National Treasury, said the land parcels on which the flats were built were transferred “irregularly and fraudulently” by the eThekwini Metro to Woodglaze during 2010/11.

Asset Forfeiture Unit KZN head Motlalekhotso Molelle said in the same court papers that the state was investigating the circumstances in which the SHRA paid R236 million to Wood­glaze Trading and Moko.

In a separate but related investigation, a further R101,7 million in cash was attached by the AFU out of a bank account held by Durban-based social housing company First Metro.

First Metro was in the process of acquiring the Phoenix flats owned by Singh and had already taken transfer of the properties in March 2013. This transfer, according to Moshoette, was also illegal and the “conveyancing process followed amounts to fraud”.

The R101,7 million had been transferred to First Metro by SHRA to run the Phoenix housing project — but the money had allegedly been transferred without the consent of the KZN Department of Human Settlements.

“There are reasonable grounds to believe that the R101 million and the 1 244 units are proceeds of either theft or fraud, and are liable to forfeiture by the state,” said Moshoette.

He said in April 2013 he established that money fraudulently transferred in the Eastern Cape had made its way to KZN.

From August 2010 to November 2011, the SHRA paid in total an amount of R239 million to Moko and Wood­glaze. Of that amount, R80 million which came from the Eastern Cape had been irregularly transferred to SHRA and then to Woodglaze for the Phoenix Housing Project, said Moshoette.

He said through his investigations he had found that Woodglaze, Moko and SHRA had made “several fraudulent misrepresentations” concerning the Phoenix housing project.

First Metro is also a respondent in a Durban High Court matter in which the Phoenix Tenants Association (PTA) are challenging First Metro’s ownership of the flats. The residents are claiming that a prior agreement between the city and Woodglaze/Moko meant the tenants would eventually take ownership of the flats.

In this matter, First Metro CEO Ismail Khatib said in an affidavit in July 2013 that First Metro “cannot have its name associated with a housing project that appears to have significant irregularities”.

He said he has asked his lawyers to instruct Woodglaze Trading that the “properties … be retransferred to Woodglaze at their cost”.

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