EXCLUSIVE: Free State Development Corporation in fresh property scandal

2018-03-14 08:04
The Free State Development Corporation logo.

The Free State Development Corporation logo.

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Johannesburg - Lease payments of more than R2m for student apartments owned by the Free State Development Corporation (FDC), were somehow diverted away from the state-owned entity's coffers and into the pockets of a businessman linked to the FDC's chairperson.

The FDC, which in 2014 took over management of the province's Gupta-linked Vrede dairy project, owns 42 student accommodation units in The Village Square, an apartment block near Bloemfontein's business centre.

But News24 has been able to establish that the FDC stopped collecting the rent on the properties at the end of 2016, after which a company called Ithuteng Consultancy became the recipient of the lease payments. The company is currently still pocketing the lease payments.

Ithuteng Consultancy's sole director is Glen Mudau Netshivhodza, a businessman from outgoing Free State Premier Ace Magashule's hometown of Parys. Sources familiar with Netshivhodza claim that the businessman is close to Magashule.

Glen Netshivhodza from Ithuteng Consultancy. (Picture: Ithuteng Consultancy)

The premier's office did not respond to queries about Magashule's alleged ties to Netshivhodza.

This is the second dubious property deal involving the FDC that News24 has reported on this year. We revealed in January that Magashule’s daughter had pocketed R9m in a property transaction involving the FDC and fuel giant Shell. 

READ: Magashule and daughter in money-for-jam property scandal

Netshivhodza is also a former board chairperson of the Free State Tourism Authority, a government entity whose financial affairs have been labelled "disastrous" by opposition politicians in the province.

According to company records, Netshivhodza and the FDC's chairperson, Hantsi Matseke, were co-directors in a company called Silver Lake Trading 569, which was registered in 2008. Silver Lake Trading's third director was Mohlouoa Isaac "Blacky" Seoe, another businessman linked to Magashule who was recently convicted of fraud in relation to a tender from the province's Department of Education.

READ MORE: Magashule associate convicted for fraud in corrupt tender saga

FDC chairperson Hantsi Matseke and Isaac Seoe. (Pictures: FDC annual report, robsinvestment.co.za)

Matseke says she has no business relations with either Netshivhodza or Seoe, and that her position as FDC chairperson played no role in decisions regarding the entity's properties.

"In 2010, we [Matseke, Netshivhodza and Seoe] had intended to chase a business opportunity and as part of this, we incorporated Silver Lake Trading. The business opportunity never materialised and as a result Silver Lake Trading never traded," explained Matseke.

The company was deregistered in 2012, added Matseke.

According to deeds records, the FDC acquired the 42 apartments in 2004.

News24 has reliably learnt that the government-owned entity earned around R4 000 for each of the properties until the end of 2016. 

The Village Square apartment block in Bloemfontein. (Picture: Property24)

But then Ithuteng Consultancy suddenly started to collect the rental payments at the start of 2017. This means that Ithuteng has, to date, collected about R2.5m in payments that should have gone to the FDC.

The FDC did not bother to respond to queries around why Netshivhodza's company is collecting rent on properties that belong to the FDC.

A signed deed of sale document obtained by News24 shows that the FDC had agreed to sell the 42 units to Ithuteng for R6.8m - or just over R160 000 per unit - in 2016. But Ithuteng never paid for the apartments, as evidenced by the fact that the properties were never transferred to the company's name at the deeds office. 

News24 last week called the offices of Ithuteng to enquire about the properties. A female office worker at the company claimed that the properties belonged to Ithuteng's "director" (Netshivhodza). She referred us to a rental agent Ithuteng had been making use of to find tenants for the units. 

We were also able to confirm that Ithuteng, and not the FDC, is paying the monthly levies for the 42 units.

The company did not respond to queries sent to the email address listed on its website. News24 tried to phone Netshivhodza on his cellphone, but he did not answer. He also failed to respond to a text message.

Matseke says she was not aware of the fact that Ithuteng was collecting rental payments on properties owned by the FDC.

The Free State Development Corporation logo.

"In this respect, please refer the matter to CEO [Ikhraam Osman] as these are operational matters," said Matseke.

Osman could not be reached on his cellphone.

With regard to the deed of sale agreement entered into between the FDC and Ithuteng, Matseke stated: "My only involvement was at the board-level and never deal specific. The FDC took a decision to dispose of all of its none-core assets and the prospective buyers had to be, preferably, local black persons and properties had to be sold at the prevailing market value.  The process was done in accordance with applicable legislation and FDC policies."

According to Ithuteng's website, the company's name is derived from the Sesotho word for learning. 

"It is a wholly black owned and managed consulting company that was established in 1999, and is based in Parys, which is the Fezile Dabi District," according to the website

The company "provides property development and public companies in all sectors of the economy [and] has a track record of a number of projects and other construction and civil works related services," reads the website. 

About Us - Ithuteng Consultancy

Ithuteng is a Sesotho word for learning. Ithuteng Consultancy (PTY) LTD is registered company, which provides property development and public companies in all sectors of the economy.

The website also lists about 70 projects which Ithuteng are involved in or has completed. All 70 projects are for government or municipal contracts. This includes emptying of VIP toilets in Qwa-Qwa rural areas", "delivery of stationery" to the Free State Treasury and producing Integrated Development Plans (IDPs) and Performance Management Systems (PMSes) for various municipalities in the Free State and in the Northern Cape.

The FDC, on the other hand, is "the official agency responsible for driving economic development in the Free State", according to its website

"Our mandate covers various functions such as enterprise development, property portfolio management, investment promotion and facilitation as well as export promotion," the website claims.

Free State Development Corporation | Investment Opportunities

The Free State Development Corporation in Bloemfontein is the official economic development, trade and investment corporation for the Free State.

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Read more on:    ace magashule  |  bloemfontein  |  tenders  |  investigations  |  corruption

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