EXCLUSIVE: Brian Molefe's mansion bonanza

2017-02-28 14:07
The property advertisement for the house that Brian Molefe bought. (Supplied)

The property advertisement for the house that Brian Molefe bought. (Supplied)

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Johannesburg - Newly sworn-in ANC MP Brian Molefe scored a stunning discount on a luxury "platinum" mansion in an upmarket Pretoria estate while he was CEO of Eskom.

News24 can reveal that Molefe bought a sprawling property in the Cornwall Hill Estate, with its own cigar lounge and gym, at a steal for R10m from his friend and former Public Investment Corporation (PIC) colleague, Tshepo Mahloele, in January last year.

The R10m sale is 41% less than the R17m the property was originally advertised for – and approximately R4m less than an offer made on the house by a prospective buyer, according to an estate agent with knowledge of the transaction. 

Mahloele told News24 the transaction was "bona fide" and "above board".

Molefe, who'd been living in another house on the same estate for several years, moved about 2 kilometres to his new house. He didn’t sell his first property.

The intriguing transaction may put the former Transnet and Eskom boss in a conflict of interest quandary if he is appointed to the finance ministry by President Jacob Zuma, as is widely speculated.

Mahloele is the CEO of Harith General Partners, a boutique fund manager started with state money by the PIC in 2007 to invest government pensions in infrastructure projects outside South Africa. Molefe, who was PIC chief executive at the time, is credited with establishing Harith.

The government-owned PIC is the main shareholder in Harith. The minister of finance represents the government in the PIC, but in recent years it has become customary for the deputy minister of finance to chair the PIC board.

As minister or deputy minister of finance, Molefe would be involved in PIC investment decisions, including transactions involving Harith. This means Molefe could be exposed to decisions that would benefit his property benefactor – Mahloele.

According to deeds office records, Molefe bought the house from Red Coral Investments 86, a shelf company whose two directors are Tshepo and Elizabeth Mahloele.

Selling for R17m

News24 has learnt that Mahloele first put the Cornwall Hill mansion on the market in the latter half of 2014. A series of advertisements by local estate agents confirm that Mahloele intended selling the house for R17 million.

An advertisement in the March 2015 edition of Interface, the official magazine of the Centurion residential estate and country club, indicates that the mansion was "under offer" in that month. The property was marketed as a “platinum home on a big stand” with five bedrooms, five bathrooms, two dining rooms, a "fabulous designer kitchen", a formal lounge, a cigar lounge, a gym, a spacious patio with braai and four garages.

According to sources familiar with the transaction, Mahloele received at least two offers for the house, the lowest of which was in the region of R14 million and the other one higher. However, towards the end of 2015, Mahloele suddenly told local estate agents that he wanted to sell the property through a private transaction.

Local estate agents were shocked when they later learnt that Mahloele had decided to let the house go for only R10 million in an estate where similar properties often reach prices of between R15 million and R20 million.

According to property records, Molefe purchased the house in January 2016. It was finally registered in his name in May last year. Molefe secured a R8.1 million bond from Investec, which means he would have had to pay R1.9 million cash to Mahloele to cover the rest of the purchase price.

Thanks to the highly favourable deal, Molefe could pocket at least R4 million in profits if he were to sell the house for an amount equal to the lowest offer Mahloele had received before he sold it to his former boss. Molefe also saved on transfer duty rates: properties sold up to R10m pay a smaller percentage than houses over R10m to the taxman. 


The property in the Cornwall Hill Estate in Pretoria (Supplied)

'Nothing improper'

In his response, Mahloele denied any impropriety and said the property was "sold above the purchase price and we made a very good return".

Mahloele’s Red Coral Investments bought the property in 2008 for R6.8m.

"It is needless to say this remains a private sale and no amount of conjecture and innuendo can turn the transaction into what it is not. Fact is, there is nothing improper about this sale. There is no connection between the private sale of the property, the PIC or Harith. I have known Brian long before our PIC days and our relationship has never been characterised by wrongdoing. This has been the case with our relationship even after I left the PIC over a decade ago," Mahloele said.

He didn't clarify why he rejected a higher offer on the house.

Molefe received News24's questions but failed to respond to them.

Mahloele's fortunes are intertwined with Molefe's tenure as CEO of the PIC – the country's largest institutional investor with assets of over R1.8 trillion under its control. 

The PIC is owned by the government, mainly through the Government Employees Pension Fund (GEPF) who owns 88.2% of the PIC. The GEPF manages the pensions of civil servants.

As CEO of the PIC, Molefe was instrumental in setting up a Pan African Infrastructure Development Fund (PAIDF) for the PIC in 2007. According to the PIC's annual reports, both Harith Fund Managers and Mahloele’s Harith General Partners are involved in managing the PAIDF’s funds.

Mahloele, who was then heading the PIC's Isibaya Fund, was moved to become CEO of Harith, a position he has held since.

The inception of Harith happened around the time of President Jacob Zuma's ascension to become ANC president at the end of 2007.

Molefe and the PIC were widely perceived as loyalists of former president Thabo Mbeki. Both Molefe and Mahloele were intimately involved in the PIC's controversial decision to "warehouse" the Elephant Consortium’s 15.1% stake in Telkom after the BEE grouping couldn’t raise the necessary funds in time.

The consortium was seen as being made up of Mbeki supporters.

After Mbeki was recalled in 2008, former deputy finance minister and PIC chair Jabu Moleketi resigned as deputy minister of finance but remained the chair of Harith – a position he still holds today.

In 2007 Mahloele benefitted richly from Capitec’s BEE deal through his 50% shareholding in Keabetsoe Holdings, which owned 31.9% of Capitec’s BEE partner Coral Lagoon. At the time Keabetsoe’s shares were estimated to be worth R303 million.

'Opaque' shareholding

Amabhungane reported in 2012 that Mahloele’s co-shareholder in Keabetsoe was ANC fundraiser Zwelibanzi "Miles" Nzama. Calling Keabetsoe's shareholding "opaque", Amabhungane reported it was unclear whether Nzama’s shareholding was for him personally or as a nominee for the ANC. Capitec denied knowledge of Nzama’s ANC link.

In 2013 the Mail & Guardian linked Mahloele to a controversial transaction involving PetroSA’s plan to buy petrol stations across the country. The M&G reported that global bank HSBC was fired as transaction advisers on the petrol station deal, which led to PetroSA paying a R19 million cancellation fee. They were replaced by Harith Fund Managers, who allegedly charged a success fee of R371 million, that was negotiated down to R187 million.

Harith commented that its appointment followed a "rigorous process" and that it conducted business "within accepted ethical standards".

In January last year UDM leader Bantu Holomisa claimed in a letter to former public protector Thuli Madonsela that R2 million had been channelled from the PIC through Harith for the benefit of the ANC. Harith’s spokesman categorically denied the claim.

* Do you have information for our investigative journalists? Send an email to tips@24.com

Read more on:    pic  |  eskom  |  brian molefe  |  pretoria  |  property

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