SIU unveiled corrupt sale of eThekwini Municipality land to businesses, 2 years later no action taken

Two years later, and the respective authorities are yet to hold some senior eThekwini Municipality  officials and private construction companies accountable for their alleged corrupt roles in the irregular sale of 29 city-owned land sites for more than tens of millions of rands.

The supposed unholy collaborations were uncovered by the Special Investigating Unit (SIU) and documented in a report. In 2022, the SIU called for the city and the National Prosecuting Authority (NPA) to take action against three companies and city officials.

However, neither the city nor the NPA has revealed what action has been taken, in keeping with the recommendations made in the SIU report. In its final report released in March 2023, the SIU alleged that the city officials collaborated with independent property developers to illegally sell the municipality's land in Phoenix, north of Durban.

The land was divided into sites and allegedly sold illegally, rather than being used for the construction of affordable houses under the Human Settlements Infill Housing Programme (IHP). The SIU found that the city transferred the land to the companies in breach of the Municipal System Act (MSA), Supply Chain Management Regulations, and policy.

The report stated that the infill sites were previously vacant and largely municipal land, dotted in various parts of Phoenix. The purpose of disposing of the municipal land was for qualifying beneficiaries to pay towards housing bonds and obtain such financial assistance, with the view of paying off the capital asset for the acquisition of a house. In order to achieve this objective, the municipality appointed private developers to prepare vacant land for the construction of the houses that would be sold and transferred by the municipality to nominated beneficiaries of the development.

However, the report revealed the land was transferred from the municipality to Lady Brick Block Property Developments, trading as Woodglaze, Madupha Business Enterprise CC, and Ready Home CC, and those companies were allegedly appointed to the project without following proper procedures. Shireen Annamalay inherited Woodglaze from her husband, controversial Durban businessman Jay Singh, who died in May 2020. The background of people linked to Madupha and Ready Home could not be found.

When contacted, Ready Homes issued a statement denying having committed any wrongdoing and said the SIU’s investigation drew wrong conclusions. “We were not asked for our input or comment before that report was written, nor were we asked for any additional input two-and-a-half years later. It is of concern to us that this report was being presented as if it were an objective conclusion, perhaps even analogous to the weighing of evidence presented by all parties as one would see happen in a court of law,” Ready Homes said in their response.

Ready Homes said during the investigation, it gave the SIU a detailed response, which it said addressed all issues about its participation in the tender. “The matter shall be heard, and we have no doubt, then, it will become apparent to all what actually happened, but until then, we believe it is appropriate to reserve any further comment,” Ready Homes said.

Pravashkumar Inderjeeth, a manager at Woodglaze, said: “This matter is presently sub judice.” Attempts to contact Madupha Business Enterprise CC were unsuccessful as the email address found on what appeared to be the company's website was redirected, while the landline number was not operational.

Municipal officials who were implicated in the illegal transfer of the land were senior officials attached to Human Settlements, Engineering, and Transport; Social Housing; Supply Chain and Support; and Administration. These officials were not named as they could not be reached for comment. Some were apparently no longer city employees.

The SIU recommended to the municipality that the respective city officials be subjected to disciplinary processes and criminal charges be laid against them and the companies. However, when asked whether the 2022 SIU recommendations were implemented, the municipality's spokesperson Gugu Sisilana said the entity took the matters raised in the SIU report seriously and remained fully committed to cooperating with the investigation.

“To safeguard the integrity of the process, the municipality does not engage in public discussions regarding SIU investigations or related internal disciplinary matters, and communication pertaining to the SIU investigation will be directed through the appropriate channels,” she said.

SIU spokesperson, Kaizer Kganyago, said all referrals were submitted to various state institutions. “We, therefore, cannot assist other than by referring you to the final report that was released by the president,” said Kganyago.

The NPA’s KwaZulu-Natal spokesperson Natasha Ramkisson-Kara said the Specialised Commercial Crimes Unit (SCCU), which falls under the Director of Public Prosecutions in KwaZulu-Natal, received the SIU report and was pursuing it in consultation with the SIU. There were indications that the Social Housing, Human Settlements Unit head had double-dipped, as the SIU report found that the official received payments from the three companies without disclosing this to the taxman.

According to the report, instead of developing the land, the companies sold it to individuals and family trusts at a price far exceeding their monetary value. For instance, the site at Herrencroft Drive had a purchase price of R34,200 when the municipality transferred it to Madupha, but Madupha sold it for R900,000 in 2019. The site at 45 Rainham Road had a purchase price of R34,200 when it was transferred to Ready Homes and was sold for R1,100,000. A site on 155 Canehaven Drive was worth R21,090 when transferred to Woodglaze in 2011, but it was subdivided into four sites, which Woodglaze sold for R67.92 million in total during 2013, 2018, and 2019.

The municipality transferred the 37 Whetstone Avenue site worth R34,200 to Woodglaze, which was later sold for R12 million. The SIU indicated that all the land was sold for profit and not used for IHP. It accused the four officials of being deliberately grossly negligent by permitting irregular processes and/or expenditure through allocating sites to the service providers who were not appointed through SCM processes.

The SIU had, on August 2, 2022, submitted the names of the officials and companies to the NPA for criminal prosecution. Its investigation identified financial benefits by way of cash deposit(s) that were paid into the bank account of the Social Housing, Human Settlements official by the companies.

“The SIU has finalised its internal processes to refer the matter for civil litigation in the Special Tribunal. The SIU will seek to recover losses suffered by the municipality by instituting civil proceedings in the Special Tribunal,” read the final report signed by Advocate Andy Mothibi on March 13, 2023.

Advocate Kuben Sarmie represented a group of Phoenix residents opposed to the construction of the houses on vacant land in their neighbourhoods. “You get the land from the municipality at a very cheap rate. Instead of developing the property, it was sold at a higher price. The land was sold to family trusts, companies, or to churches; that's where the illegality comes in.” Sarmie said the contents of the report only became public when an individual from Phoenix obtained it via a Promotion of Access to Information Act application.