How one of SA’s most valuable properties was given to Gupta-linked company for virtually nothing

A piece of prime land in Africa's richest square mile was sold for a song in a deal between the City of Johannesburg and Cedar Park, which is part of the Gupta-linked Regiments Group. Picture:
A piece of prime land in Africa's richest square mile was sold for a song in a deal between the City of Johannesburg and Cedar Park, which is part of the Gupta-linked Regiments Group. Picture:

Fall out from Gautrain station water cut dispute exposes how Regiments acquired a prime piece of land for nothing

One of the most valuable pieces of property in South Africa was practically given away to a company that has links to the Guptas.

And this latest scandal involving the Regiments Group has only come to light because the Sandton Gautrain station recently had its water supply cut due to unpaid property taxes.

The Gautrain only has use of the property under ground in terms of a servitude.

The three hectares of ground and everything above it belong to Cedar Park 39 (Pty) Ltd, which is part of the Regiments Group.

Adjacent to this prime real estate is Sandton City, the five-star Michelangelo Hotel and the Nelson Mandela Square.

Regiments is in the state capture spotlight because the company allegedly secured scores of contracts from state entities due to its ties to the Gupta family.

The directors of Cedar Park are Eric Wood; former CEO of Regiments Niven Pillay; and Litha Nyhonyha, chairperson of Regiments.

Among the state-owned enterprises that Regiments earned millions from are the Transnet Second Defined Benefit Fund, Transnet, Eskom and SAA. The City of Johannesburg has now joined that list.

Last year AmaBhungane reported that Regiments allegedly paid at least R600 million to Gupta front companies.

However, Regiments has consistently denied that its success is attributable to state capture.

City Press’ sister publication, Rapport, has reviewed the purchase agreement and documents from the deeds office, which show what an exceptional deal Cedar Park got from the city:

The deal
  • Cedar Park bought the land from the City of Johannesburg for R280 million, but with a bond from the metro itself.
  • Not a cent of the purchase price was paid and Cedar Park also wasn’t required to pay anything before they began making a profit from the development. Furthermore, it appears that Cedar Park may never have to pay any of the money back, as long as it keeps leasing living units as opposed to selling them.
  • As a bonus, the company not only got the land, but taxpayers also forked out R250 million for the construction of a platform on top of the station, which now also belongs to Cedar Park. This was so a skyscraper, that looks like Sandton’s own “twin towers”, could be constructed on the land.
  • Cedar Park has never paid property tax and argues that it is released from this obligation in terms of the purchase contract.
  • The fact that Cedar Park owns this metaphorical gold mine enabled it to obtain a R2.4 billion development bond. In 2013, Vantage Capital announced that it had already invested R150 million in Cedar Park’s Kgoro Gateway development on the property.

The development of 200 000m² was to include residential units, offices, at least one hotel and a snazzy art gallery, but nothing was to come of this.

Vantage Capital has now applied to liquidate Cedar Park, but Cedar Park shareholders want the company placed in business rescue.

Cedar Park’s attorney confirmed receipt of Rapport’s questions, but did not respond to any of them.

After receiving Rapport’s questions last Wednesday, Herman Mashaba, executive mayor of Johannesburg, announced he would launch a forensic investigation into the sale of the land.

Mashaba confirmed that Cedar Park had not yet paid any money.

“One has to ask why the city would ever finance the sale of its own land to a private company? It’s not just absurd, it is highly suspicious,” he said.

According to Mashaba, the city is considering having the sale declared invalid.

The ANC was in power in the city when the transaction took place.

One has to ask why the city would ever finance the sale of its own land to a private company? It’s not just absurd, it is highly suspicious

Mashaba, referring to an investigation conducted by amaBhungane last year, accused Geoff Makhubo, the ANC leader in Johannesburg, of having a conflict of interest in respect of the transaction.

Makhubo was the member of the mayoral committee (MMC) for finance when the bond was registered in 2013.

Mashaba claimed that Makhubo’s company delivered consultation services to Regiments at the time.

Makhubo denied any wrongdoing and said he was not involved with the Cedar Park transaction.

The Johannesburg Property Company, which sold the property, reported to the MMC for economic development at the time, not finance.

Makhubo was only appointed as the MMC for finance in 2011.

The registration of the property in 2013 was the only implementation of the 2009 agreement, said Makhubo.

The City of Johannesburg is adamant that the outstanding property taxes should be paid and has said the water supply to the Gautrain station will not be restored until Cedar Park’s debt is paid.

Court applications by Cedar Park and the Gautrain to have the water supply restored will be heard by the Johannesburg High Court next month.

If the company is liquidated and the metro takes legal steps to have the sale cancelled, a drawn-out legal battle could follow.

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