South Africa

AMABHUNGANE

Property mogul flips R86m land parcel to Gauteng housing department for R244m

Property mogul flips R86m land parcel to Gauteng housing department for R244m
Adobe Stock | Ralebala ‘Rali’ Mampeule. (Photo: Wikipedia) | Part of Eagle's Nest development. (Image: Supplied)

Was it just property mogul Ralebala ‘Rali’ Mampeule’s nose for a deal that saw him buy a property for R86.25-million and offload it to the Gauteng Department of Human Settlements for R244.95-million? He says the department actually got a discount, but things don’t quite add up.

The Gauteng Department of Human Settlements (GDHS) bought three land parcels on 13 March 2019, handing an instant paper profit of R158.7-million to Landworth, a company owned by real estate mogul Ralebala “Rali” Mampeule.

Landworth bought the land parcels for R86.25-million from another developer, Jordi Properties, and then charged the department R244.95-million, including VAT, although Landworth was later persuaded to put up a R50-million guarantee to cover the cost of improvements that Landworth had been contracted to deliver. 

The 63.9 hectare land parcels are part of the farm Zuurfontein. They are proposed for the development of Eagles Nest township in Vanderbijlpark, situated in the Emfuleni Local Municipality in southern Gauteng.

Landworth disputes unduly inflating the price. In fact, the company’s director, Mampeule, said he gave the department a “discount”.

“We reiterate that the price that you purchase the land at has nothing to do with the price that you sell it for, if there is a willing buyer and a willing seller, and there are valuations from registered evaluators that justify your transaction,” Mampeule said. 

“We hold the informed view that the land was sold at a discount of 20% to 30% when compared with the prevailing price per serviced stand.”

‘Mr Property’

Mampeule got his start at international property group Chas Everitt and now owns a sprawling property and investment empire.

Landworth first came to amaBhungane’s attention when it emerged that Mampeule’s company picked up a fee of R44-million, described as a “commission” in the sale contract, on another property in Midvaal Local Municipality which the GDHS bought for R70-million.

Although that “commission” was over half the purchase cost, Landworth denied any wrongdoing.

That story led to a tip-off that prompted us to look more closely at the Eagles Nest sale, which also involved Landworth and the GDHS – and which also looked like a “land-flip” in which a middleman made a large profit at the expense of the GDHS. 

The closer we looked, the more things did not add up.

Landworth sold the property before they owned it

Looking at the deeds office documents, it appeared to us that Landworth had sold the 63.9 hectare portions of Eagles Nest to the GDHS even before they were the legal owners.

The documents appeared to show the sale to GDHS took place on 13 March 2019 at a value of R244.95-million, while the previous owner, Jordi Properties, had only sold the properties to Landworth over two months later, on 31 May 2019, for the sum of R86.25-million.

When we first put this to Landworth, they said we had it all wrong. 

“Your information is incorrect. As part of phase one of its Eagles Nest development, Landworth bought 73 hectares of land from Jordi Properties for R110-million and sold it to the department as serviced stands with rights, including all amenities – water, sewer, roads, electricity and a fence with a security gate – for R244-million with the improvements.”

The R86.25-million sale that took place on 13 March, Landworth told us, was different land for “phase two” and had nothing to do with government. So, on their version, it was 73 hectares, not 63 hectares, and they had paid R110-million, not R86.25-million. 

Landworth also suggested we had confused sale and registration dates. 

When we shared official deeds documentation showing they were wrong, Mampeule changed tack and told us the practice of selling a property you don’t yet own was “completely legal … as long as you are able to pass transfer/ownership to the buyer”.

Now they said there had been an earlier sale agreement in which Landworth had agreed to purchase both phases from Jordi Properties for R110-million on 21 February 2019.

But in March 2019, just the first phase – which was indeed only 63.9 hectares – was sold to GDHS. 

Landworth said the sale agreement with Jordi was amended on 31 May 2019 (after the GDHS transaction) to reflect that Landworth only purchased the first phase of Eagles Nest. 

“This sale was for R86.25-million. Note that Phase 2 was and remains a private transaction. It therefore does not form part of the scope of the accelerated affordable housing transaction with GDHS.”

By this stage, Landworth had hired a forensic investigator, Rassie Erasmus from Alfin Legal Forensic Service, who made contact with amaBhungane, saying he was investigating a “smear campaign”, apparently perpetuated by those against transformation.

Mampeule also hired a communication specialist to handle our questions. 


Visit Daily Maverick’s home page for more news, analysis and investigations


How did Landworth become the middleman?

When Mampeule was asked about the relationship between Landworth and Jordi Properties, he said, “It is important to note that prior to the sale of phase one to the GDHS, the seller [Jordi] had, via a mandate, authorised Landworth (PTY) LTD and its directors to find a buyer for the land.”

The directors of Jordi Properties were not helpful in explaining when and why Landworth got involved. 

When we reached one director, Moshe Cohen, for a comment on 17 November last year, he told us, “You are talking to the wrong guy.” 

The following day, on 18 November, he admitted to his identity and responded, “I know nothing about it, sorry.”

A few days later, on 21 November, amaBhungane contacted the second director of Jordi Properties. Isaac Rubin wasn’t pleased to be asked any questions around this transaction.

“That’s quite private. I am not in a position to give you anything. It is confidential and I am not allowed to release any information,” he said.

On 13 December, Landworth’s forensic investigator, Erasmus, reached out to amaBhungane indicating Mampeule would like to request a roundtable meeting to be “transparent”. 

That meeting happened on 20 January this year. 

In the meeting, we asked Mampeule to elaborate on the process of acquiring the land until it was sold to GDHS and how and when they had been able to interpose Landworth as the middleman.

We had by then seen a document signed by Cohen on 19 February 2019 in which Jordi agreed to sell Landworth both the properties (phase 1 and 2) for a price “to be agreed upon”.

Explaining that document, Mampeule said, “Essentially … that is the first document of where the relationship started … We approached them [through] somebody else they wanted to sell the land to and then we say to them … can they give us a letter to confirm that we … enter into a sale agreement with them.”   

This “mandate”, Mampeule told us, was Landworth’s ammunition to sell the land to the department.

Except, it didn’t happen quite like that.

Promotion of Access to Information Act

To get to the bottom of the contradictions, amaBhungane lodged a Promotion of Access to Information Act (Paia) request with GDHS and received documents related to the sale.

The documents released showed the Housing Development Agency (HDA), which was under administration at the time, played a primary role during the property assessment and negotiations.

“The subject properties are privately owned and registered in the name of Jordi Prop (PTY) Ltd,” noted the agency’s due diligence report compiled in January 2019. “The properties have been offered by De Klerk, Vermaak & Partners Incorporated representing the landowners.”

That indicates the HDA knew Jordi were the owners at that point.

On 1 March 2019, HDA administrator Viwe Gqwetha sent a recommendation letter to the GDHS stating that negotiations with “the landowner were held on 13 February 2019” where the parties eventually agreed on R213m (VAT exclusive) for the acquisition of Eagles Nest.

But on 13 February — the time of the negotiations — Landworth was neither the owner of the properties, nor did it have a written mandate to sell the properties. 

By 19 February, when Jordi and Landworth signed the “mandate”, the deal between the “landowner” and the HDA was already sealed. When we pointed this out, Landworth’s story shifted, as has been the case every time new information was put forward since last November.

Landworth told us, “We must again reiterate that it is not illegal to negotiate a deal with a potential seller or buyer prior to the parties to the transaction reducing terms to writing…

“It is also important to note that in our initial negotiations with Jordi Properties we wanted to buy the company together with its assets (land). However, at a later stage we negotiated and settled to just purchase the land. 

“The negotiations in this regard started weeks before we offered the land to the ultimate buyer. Landworth representatives and our attorneys were present at the negotiation meetings with the HDA and there are minutes of these meetings that prove this.”

This just raises the question: On what basis did the HDA negotiate with Landworth or their attorneys if they knew Jordi were the legal owners? 

And why did Jordi accept R86.25-million if they knew Landworth had already been offered R244.95-million (R213 plus VAT) in negotiations with the HDA? 

amaBhungane asked the agency why it did not negotiate directly with the legal owners of the property? The HDA did not respond to specific questions. 

In our access to information application to the HDA, we requested the agency to provide correspondence setting out the mandate given to the HDA by the GDHS to negotiate acquisition of the land. We also asked for any correspondence with Jordi, Landworth or the attorneys, De Klerk Vermaak & Partners. 

The agency refused to divulge this information.

Attorney George Roper from De Klerk Vermaak & Partners, said: “We … decline to respond to speculative journalism conducted with malicious intent.”

But Mampeule said that during negotiations on 13 February 2019 between the agency and the landowners, the attorneys had represented Landworth, not Jordi. 

“The attorneys … represented Landworth as the sellers of the land, either in our capacity as the yet-to-be-appointed new directors of Jordi Properties and/or as Landworth who was buying the land outright,” said Mampeule.

But what’s clear is that had GDHS directly bought the land from Jordi, this could have saved the department millions of rand. 

“The Department had no knowledge of the transaction between Landworth and Jodi Properties … The Department therefore cannot comment on any other transactions beyond Landworth,” said GDHS spokesperson Tahir Sema.

A conditional sale

The HDA recommendation letter to the GDHS acting head of department, Daniel Molokomme, explicitly said this was a conditional sale and GDHS should pay the agreed amount subject to the conditions being “fulfilled prior to the transfer of the development”.

These conditions, among others, included that Landworth must finalise the subdivision processes, connect new proposed stands with internal reticulation and relocate a power line running through the property.

Molokomme signed the offer to purchase on 15 March 2019, but the suspensive conditions were gone. Instead, normal transfer to the GDHS would take place as soon as the sale was registered and Landworth merely undertook to fulfil these conditions “even after the land has been transferred”.  

Essentially, the GDHS disregarded the agency’s advice. 

The department failed to answer why they ignored the agency’s recommendations that the land parcels should be transferred to it once Landworth had met all the stipulated conditions.

It must have occurred to the GDHS soon after they bought the property for R244.95-million that the sale contract provided little leverage to ensure that Landworth completed the agreed extra service infrastructure.

So, the GDHS documents obtained by amaBhungane show, in late May 2019, Landworth and GDHS signed an addendum to the sale agreement, which provided that Landworth lodge a R50-million performance guarantee to ensure the improvements were carried out. 

Both sides agreed that R50-million was a “fair and reasonable cost” for Landworth to comply with the contractual improvements, meaning that on its own assessment Landworth would make about R108-million (or nearly 80%) profit on the deal.

‘This sale [has] adverse effects’

But almost four years later, Landworth is yet to finalise the requisite upgrades on the property.

On 26 April 2022, the GDHS current head of department, Phindile Mbanjwa, wrote to Landworth’s legal representative, Roper, that “the Department is yet to receive notification from [Landworth] that the said undertakings have been fulfilled, despite having fully paid the purchase price of the land”.

Mbanjwa attempted to call in the R50-million guarantee, telling Landworth the delays were having an adverse effect on service delivery and objectives of the Rapid Land Release Programme of the department.

Roper, Landworth’s legal representative, hit back, telling Mbanjwa that claiming the R50-million would be a breach of the sale agreement, as the delays were as a result of circumstances which Landworth had no control of, including no less than 500 objections to the proposed development from neighbouring residents.

Mampeule has claimed the objections and what he called a “media smear campaign” against Landworth had their origin in racist opposition to transformation in the area – including local political figures – which was why he hired a private investigator. 

Beyond the objection process, Mampeule said they were also delayed by numerous issues raised by the Emfuleni Local Municipality, but these had now been resolved. 

“We are now ready to proceed with construction despite this smear campaign,” he said.

Yet in the end, all that is promised is the delivery of serviced stands.

Between 2009 and 2016, GDHS spent more than R1-billion acquiring land in Gauteng that could be turned into housing units. 

Despite this, Lebogang Maile, then MEC for Cooperative Governance and Traditional Affairs, told Parliament in 2020 that Gauteng was experiencing a “housing crisis” with 1.2 million people looking for housing via the National Housing Register. 

Eagles Nest, just like the R70-million Langkuil sale in 2020, has joined the queue of land parcels GDHS has acquired but failed to fully develop. 

In Sedibeng, the region where Eagles Nest and Langkuil are situated, GDHS bought more than 1,300 hectares of land between 2011 and 2020. As of August 2021, almost all the projects are listed as facing “challenges”. DM

Gallery

Comments - Please in order to comment.

  • L Dennis says:

    When will the theft stop when?dishonesty dishonesty. Ill gotten gains.

  • David A says:

    But what is the plans they’ve purchased (taking into account the upgrades that are supposed to be effected to it) actually worth? Is R244 million a heavily inflated figure? Our was the R86 million paid by Landworth far below market value?

  • Charles Geffen says:

    … the orange overalls will gather dust instead of bodies…

  • Ian Gwilt says:

    Another day another expose
    file it in, sod all will happen file

  • TherealMalcolm x says:

    There they go again, our SA Entrepreneurs – parasites that add no value to the economy only to enrich themselves at the expense of the state.

  • Glynis Williams says:

    Reading this I visualise a feeding frenzy at the pigs trough while the poor on the peripheral watch on confused! Thank you for caring enough to investigate this, one hopes there will come a time when the greed is replaced by decency.

  • Jane Crankshaw says:

    Didn’t even need to read this story to know what it’s about!
    The thieving from taxpayers continues….
    And backhanders abound!
    The Revenue Service don’t mind because they get something back in the tax washing machine!
    No wonder we’ve been greylisted – money laundering at the highest level under the guise of radical economic transformation and BEE policies!
    And so it goes on ……

  • Yunus Scheepers says:

    When corruption is normal … like match fixing was in cricket a few years ago (maybe still is) … this is what happens. Thank you Daily Maverick for making the rats scramble!

  • Craig A says:

    I would really like to see all articles in the future that refer to any spending by the government as “paid for with taxpayer’s money”. Maybe at some stage, people will realize that they are getting robbed by the ANC.

  • Zed McGladdery says:

    So the Gauteng Dept of Human Settlements pays R245 Million upfront for a property worth R86 Million (the price the landowner actually sold for being undoubtedly the best valuation possible) before the developer has laid down any improvements as per the contract. Four years later, the developer has still not provided the development infrastructure and we are expected to believe this is not a corrupt transaction. Instead of having R150 Million to build houses for the poor, GDHS has effectively donated that money to a politically connected cadre. Hopefully, this cadre has given half to the ANC so that the ANC can pay its field-workers – but it seems that cadres are increasingly neglecting to display party loyalty. So the supercar dealerships continue to sell imported lamborghinis, estate agents continue to sell mansions, ANC field-workers continue to receive no money, and people on the housing list wait longer. All I can say is that I’m glad our ANC politicians no longer give speeches about “Ubuntu”. They should stumble over that word just as much as the DA politicians stumble over the word “Nkandla”. He, he, he, Nkandla – He, he, he Zuurfontein – He, he, he … When the ANC politicians land cadres augh like that they cannot hear the cries of the poor, nor (it seems) do they want to.

    • Jane Crankshaw says:

      Would be interesting to see what the Rates bill on this property has been over the last 4 years! They got Al Capone on tax evasion – maybe this can be sorted out on Rates Evasion!!!!

  • Gregory Scott says:

    Property Mogul, I think not.
    Morally bankrupt scoundrel for sure.

  • Hermann Funk says:

    What really pisses me off, every time similar scandals are brought to the fore, the defense is racism or anti-transformation. Thanks amaBhungane.

  • Esskay Esskay says:

    Follow the money

  • Robert K says:

    The feeding frenzy will exponentially gather in intensity as the deadline of Election Day 2024 approaches and they lose the election and the licence to steal. I admire Maverick’s ability to expose these criminals, but it is a futile exercise if nothing concrete is done about it. We have regressed from bearing with a bunch of light-fingered idiots to suffering under a murderous syndicate of sociopaths who present a clear and present danger to our society. In any civilised country the government would fall, but not here. We still have to wait until 2024 to get rid of these thugs. We can’t wait that long. Some agency, the private sector and/or political party or parties must get together and form alternative structures to take over the functions of government. Our taxes must be channelled to a trust. No money must go to this regime, because it is the oxygen on which it thrives.

    • Belinda Cavero says:

      Totally agree. The looting of tax payers money is beyond comprehension. I wish the ANC voters could read these reports. Heaven help us.

  • Susan Buekes says:

    What I would like to know is how does a person who
    makes such a sordid deal feel about himself? Does he feel proud of himself for getting away with doing a government department out of millions of rands to fill his own pockets? Does he think he is a really smart person who should be admired for thinking out such a scheme? Did he start off by pinching sweeties from shops when he was a young, penniless child? Does his family show him respect for carrying out such a dishonourable transaction? What is his motivation? Is he completely without empathy? I wonder about what goes on in the minds of all these people carrying out these corrupt transactions. Where has life gone wrong for them? Has honesty disa
    ppeared from their vocabulary and their upbringing?

  • Patrick O'Shea says:

    Who was the minister for human settlements at the time, surely some involvement there?

  • Anne Chappel says:

    Well done with this analysis. What a minefield – or is it a fish farm! one cannot but think that there is something very smelly and fishy with this transaction.

  • virginia crawford says:

    Similar tricks in the series, The Sopranos. Do you think the comrades sat there with notebooks taking notes on corruption?

  • Shirley Gobey says:

    This is what happens when you have cadres “working” in government depts who haven’t got a clue, but are politically connected. They seem to think that money comes from their govt who manufacturers it, not from the tax payer.

  • William Dryden says:

    What is more sickening is that It’s the taxpayers money they are squandering, this will never stop until the ANC are voted out of power in 2024.

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.