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VANITY PROJECT

ANC-aligned Johannesburg Property Company rams through a multibillion-rand property deal

ANC-aligned Johannesburg Property Company rams through a multibillion-rand property deal
Johannesburg‘s Metro Centre in Braamfontein. (Photo: Wikipedia)

Treasury has asked questions about the City of Johannesburg’s plan to spend billions of rands on leasing properties while it refurbishes its offices, but the city has already approved it.

In a near-bankrupt and hobbled city where homeless people sleep in bus shelters and on the streets, the City of Johannesburg has passed a plan to spend R1.4-billion on high-cost property leases and an additional R2-billion (rising to R12-billion) to renovate the Metro Centre.

Whistle-blowers at the Johannesburg Property Company (JPC) have told DA chief whip Leah Knott that the majority of the leases are going to ANC property mogul Lonwabo Sambudla, a favoured contractor.

anc johannesburg property company

A spokesperson for his company, Bayete Capital, said they had not heard anything from the JPC and that they had tendered along with other companies. Sambudla is a longstanding ANC member and former CEO of the ANC Youth League’s Lembede Investments.

An ANC Soweto branch chairperson, Enos Sithole, chairs the JPC board, Sunday Times reported in September.

JPC spokesperson Lucky Sindane said last week: “The city is currently finalising the evaluation process of the Metro Centre office accommodation. The [executive adjudication committee] considered a report of the bid evaluation committee. The report was then recommended to the Accounting Officer (City Manager) for his approval. We are still awaiting (his) approval.”

Asked if the National Treasury had alerted it to a tender bid review because of a questionable process, Sindane said, “There was a query from the National Treasury. We responded to it on Friday 24 November 2023. There are no leases concluded.”

At the weekend, Daily Maverick confirmed that Johannesburg city manager Floyd Brink had approved the property plan. He made it subject to public participation, city oversight, a biannual review and a mechanism for the city to step in if the JPC incurs risk.

Metro Centre upgrade

For nine years and 11 months, the city plans to spend lavishly on temporary office accommodation for staff while it rebuilds the Metro Centre, which will cost between R800-million and R2-billion in the short term – and much more in the medium term, according to documents and reports. 

The Metro Centre was closed in September following a fire, the second at the building this year.

The city can refurbish in four to six years, say property experts consulted by Daily Maverick. Staff do not need to be moved out, they say. City administrators disagree, saying the centre is uninhabitable.

The Metro Centre revamp is part of a much bigger, city-wide “Office Space Optimisation Plan” conceived by the JPC and designed by Sambudla’s Bayete Capital.

It is budgeted at an additional R12-billion plus construction costs. (Bayete’s spokesperson, who does not use his name, said 50 other companies had responded to the call for design to emphasise that the party man was not favoured.)

The city’s plans to spend on its accommodations come amid a deepening collapse of its finances as well as service chaos for its residents.

“In 2021/22, the City had an unfunded budget of up to R3.8-billion. Unauthorised, irregular, fruitless and wasteful expenditure has accumulated to R21-billion. The City is only able to collect 75% of its budgeted revenue,” the Johannesburg Crisis Alliance wrote in a letter to President Cyril Ramaphosa last week. The Alliance is a network of civil society organisations representing thousands of residents.

“Johannesburg, once hailed as Africa’s richest city, is facing a deepening struggle for survival. (It) is facing massive disinvestment by business, which is aggravating the wicked challenges of unemployment, poverty and homelessness.

“The anger and frustration of residents will give way to violent protests unless something is done,” the alliance wrote.

In this context, the property plan is a questionable priority.

In a letter to Mayor Kabelo Gwamanda, Floyd Brink and the National Treasury, DA councillor Andrew Marais had questions: Was there a bid specification committee? Did it sit? Was there a bid evaluation committee? Where is its report? Was a tender briefing session held to ensure competing proposals?

“We are concerned that a recommendation report to appoint a particular service provider (Sambudla’s Bayete) may have been presented at the public adjudication meeting without an opportunity having been given to other service providers,” the letter reads.

The city council may not enter leases longer than three years without consulting the National Treasury.

But in a May memorandum to the council, the JPC said: “In terms of SCM (supply chain management) processes, all new office leases must be procured through a competitive bidding process. However, the City Manager can, in certain circumstances, deviate from this process.”

The JPC said, “Decanting the Metro Centre and finding alternative rentals will cost the City about R120-million per annum based on the 70,000m2 needed. For a ‘plug-and-play’ facility (recommended due to urgency), rentals should cost the City approximately R135-million (per annum).”

The estimated gross lease cost should be R6-million to R7.8-million monthly (R72-million to R93.6-million a year).

The JPC issued the request for proposals (RFP) without a public tender briefing; it will not make a copy of its bid evaluation committee report public.

The first JPC memorandum said it would take five years to refurbish the Metro Centre at an estimated cost of R800-million. However, in six months it has doubled both the spending and the time it will take to fix the Metro Centre.

The JPC’s Sindane denied the refurbishment was a vanity project and said a 2019 report concluded that the Metro Centre was “uninhabitable”, “meaning it is unsafe for use and occupation”.

“Further to that, early this year, the Department of Employment and Labour served the city through the Johannesburg Property Company with the confirmatory notice that needs urgent action,” said Sindane.

Read more in Daily Maverick: Joburg coalition plans to blow R2-billion on tarting up its own offices as city services collapse

No Metro Centre for 10 years

Director of Intaprop, Carollyn Mitchell, speaking in her personal capacity, said the property lease specs were a “blank cheque” for contractors or brokers.

It was, for example, for a total space (75,000m2) larger than the sprawling Metro Centre (65,000m2), which raised concerns. A nine year, 11 month lease does not need to be registered against the title deeds – only if the lease is 10+ years does it get registered on title deeds.

The estimated gross lease value/cost was R6-million to R7.8-million monthly. Mitchell said the tender document provided that “the landlord may agree to contribute a larger tenant installation cost”, and that this was open to manipulation.

“This will have the effect of further raising the rental above prevailing market rates. This is a blank cheque. JPC’s complete failure to maintain the iconic Metropolitan Centre, which is the home of the city, has collapsed the city,” said Mitchell.

She said the closure of the Metro Centre had created mayhem.

Plans can’t be passed to allow for the city’s development. And there is no clear way for residents to access city departments for the many vital local services its people need.

“The city is not going to have a home for 10 years. This is unacceptable,” said Mitchell. 

The market cost for building a brand new 75 000 square metre building should be between R1.4-billion to 1.8-billion.” 

A second property manager in the city says several companies expressed an interest in the RFP.

The property manager, who requested anonymity, said the city had considered a deal with Transnet. This was cheaper because the leases would be between two state entities.

The Carlton Centre, now owned by Transnet, has many empty floors. Asked for an assessment of the planned deals, he said, “Ten years is excessive (for the temporary leasing) and the current price tag of R2-billion to fix the 60,000m2 Metro Centre is considerable.”

He said a good contractor could do it for R600-million at current property renovation rates. But he said that R1.4-billion was within the realm of possibility in the private sector.

JPC’s chequered record

“The proposed leases and the plan to renovate Metro Centre was brought by the CEO of the Johannesburg Property Company, Helen Botes, who has long been directly implicated in corrupt deals in the city,” Knott wrote in an article.

The SIU implicated the JPC in a R470-million Covid fogging deal it said was corrupt. The previous coalition in charge of the city brought charges against Botes, but they were dropped when the ANC/EFF coalition regained office this year. (See Mark Heywood’s report below.)

Read more in Daily Maverick: The great Covid-19 swindle (Part Three): Johannesburg City Council – ‘It’s a free-for-all’

In August, Daily Maverick reported that MMC Nomoya Mnisi had instructed the JPC to pay an ANC Youth League conference invoice. Action SA has laid criminal charges against her. 

The Commission of Inquiry into State Capture heard evidence of how Johannesburg property deals were used to round-trip funds to the ANC by the late mayor Geoff Makhubo.

The property plan suggests it is being rushed ahead of the election to boost party coffers, especially as the ANC has stacked the JPC board with cadres and the party needs help to pay its debts. DM

Gallery

Comments - Please in order to comment.

  • maphongwanen says:

    Round and aRound as we go-for the past 30 years the only thing that I have read is corruption.

  • Cachunk Cachunk says:

    They don’t even bother trying to hide it anymore, every anc cadre “needs to eat a little bit”.

  • Jayce Moodley says:

    What a pity that residents once again are faced with a situation to accept decisions made by Politicians but in some way or another Residents are impacted negatively. Perhaps it’s time to put the best interests of citizens first.

  • Denise Smit says:

    And the EFF is helping them continuing the corrupt deals. Malema said he will expose and clean the country of corruption? What a brilliant start

  • Vincent Britz says:

    Their we go, nothing new! Just the corrupt ANC government doing what it does best.. The words ANC and corruption together is the most common word used in the world at the moment!!

  • Francoise Phillips says:

    Let us not forget Bheki Cele’s criminal charge of fraud for manipulating rentals for police buildings… a convicted fraudster that is now police minister. This is just another ANC scam to rob the nation and people of South Africa and fatten the cadre’s bottomless pockets while the people starve. Here we go again, ANC = gluttonous criminals.

  • Grumpy Old Man says:

    Carte Blanche did an expose on the Johannesburg Property Company fairly recently. This entity has been used as a Bank by the ANC for years. You want money to buy Councillors votes & unseat the DA in the Metro – go speak to Helen Botes. You want money to help pay for an ANC Youth League Conference – make an application to Helen.
    I am not sure whether the situation has changed but at one point one of the Board Members was previously a toll gate cashier who was parachuted into the entity to ‘vote’ through projects of this nature.
    The whole set-up is a joke (just not a funny one) I cannot see that this project is not going to be legally challenged. It is just so obviously corrupt

  • Art Gee says:

    And the corruption continues… Unabated!!!
    Sadly, our justice authorities are avoiding investigations at all costs!!

  • Heinrich Holt says:

    The master plan is clear. The best and most ethical and competent people appointed at SARS to ensure the revenue stream remains intact. Criminals and incompetent puppets deployed where those hard earned taxes are redistributed for personal gain and enrichment. And those who should really benefit, the poor, are too blind to see it. They just look at their kings and queens in awe and get to be manipulated to vote for them election after election.

  • Dave Wilson says:

    When I started working at Eskom (1976) I found that there existed a passion for excellence. This was a passion to be as good as you could at what you did.
    Some of us enrolled at Technicon to complete night classes.
    The same passion existed at other State Owned Enterprises (we met one another at Technicon).
    But management dropped the ball, becoming totally obsessed with what they needed to do to preserve their own jobs during the transition that happened around 1994.
    But they didn’t succeed, because your skin was black or it wasn’t (simple as that).
    So those with the passion left to start their own companies, while some emigrated.
    And those working at the State Owned Enterprises became focused on money, and nothing will change until you can again inspire the passion for excellence.

    • Frans Flippo says:

      This is the problem: nearly everyone working for state or municipality is morally corrupt, caring only about money. The passion for excellence you describe is completely missing and they don’t even seem to think that’s a problem. What a sad, shallow way to live. Especially when you’re supposed to be a public *servant*.

  • George 007 says:

    Joburg’s tag line “A world class African city” is of course not true anymore. But in addition, the punctuation is wrong. It should be a world-class with a hyphen. If Joburg can’t get the little things right the big ones don’t stand a chance.

    • Craig A says:

      Was it ever a true tagline? Most government buildings are filthy, paint is peeling off the walls, posters that are a decade old hanging in reception, toilets smelling, shady characters hanging around trying to get you to use their “services”. No, we have never been world class.

      There are definitely pockets of first world excellence, but the ANC haven’t got their sticky fingers into that pie yet.

    • Geoff Coles says:

      The phrase relates solely to Africa so Johannesburg probably fits well…… but compared to elsewhere in the world, it’s perhaps how Trump described!

  • Richard Bryant says:

    The real problem for Jhb city is collapsing property prices. Rates are based on market value and as they have started on a downward spiral, so will revenue. That together with people who actually pay rates semigrating and leaving the city all together. The city will be bankrupt within a few short years.

    • Dee Bee says:

      I have a small property I’m trying to sell that has a municipal rates value of R1.25 million. It’s in a very central, affluent suburb, with great access to transport, shopping centres, sports facilities and much else besides – I can’t even get R950k for it at the moment. There is no market, no interest, a couple of speculative offers well below what we’re asking and no end in sight. At some point I’ll probably just have to accept one of these offers so that I don’t just keep on shelling out for rates, taxes and maintenance (the last, something the city of Joburg has never done to the Metro Centre).

    • James Arktos says:

      Not 100% correct. The council keeps increasing the estimated value of properties and therefore increasing rates. Despite the actual property value remaining stagnant or decreasing. And if one appeals the new valuation, it’s never changed.

      • Con Tester says:

        You can thank the DA for that specific subterfuge. You can also thank them for another little property-related scam, which is to change the rates structure so that, on average, you also pay more but without the benefit of an increased municipal valuation.

        As if Joburg was like Cape Town where the wealthier segment pays dollars, euros, or pounds.

        But they will never acknowledge their dodgy little deceptions. In point of fact, they’re exactly like ANC cadres in that respect. I know, because I have challenged them on it on several occasions.

  • phophi says:

    What do you expect from ANC/EFF/PA coalition? Their coalition is designed for this purpose and nothing else.

  • Ian Gwilt says:

    We bring you , Fire

  • Peter Pallister says:

    It is about time the Residents of Johannesburg stopped paying rates and taxes, until we get the right people in council and stop the misuse of our money.

    • Mario de Abreu says:

      yes, about time someone suggested that.

    • Frans Flippo says:

      The property transfer attorneys need to take their moral responsibility and stop blocking property transfers when municipal accounts haven’t been paid, especially in Johannesburg. It’s the attorneys keeping the corruption going because they are the ones strong-arming people to keep paying their rates and taxes.

  • Craig A says:

    In the shadows of the Metro building, people are starving and living on the street. “Let them eat cake” I hear someone say?

  • Ayanda Nonkwelo says:

    Again, the ANC i involved in looting the Municipality funds by awarding tenders to its cronies. No regard for governance processes!!!

  • Geoff Coles says:

    Did Floyd Brink with Helen Botes get knobbled or do the knobbling? So much wrong but hey, Johannesburg

  • Rob Scott says:

    Why do people in Jhb actually pay rates – this is fraud – nothing more nothing less.

  • Beyond Fedup says:

    All this is happening whilst the rates are being increased to levels way above inflation. It is pretty obvious that they need more money to fund these corrupt, incestuous and criminal projects as elaborated in this article. The vile anc is nothing but a putrid and disgusting party with no morals, ethics and integrity – just rapacious greed is the order of the day.

  • Dee Bee says:

    JPC has a receptionist, a tollgate cashier and someone with Grade 11 on its board. We have a Mayor who doesn’t have a matric (with an alleged shady past running a funeral ponzi scheme), who replaced a Mayor from the same obscure party who was financially illiterate running a city with a R90bn budget. We have a convicted ponzi scheme operator as Transport MMC, another with charges laid against her for billing ANC events to the JPC, and to this lot, it’s business as usual. Sambundla is a surname I’m familiar with from the 2021 riots, if I’m not mistaken – any connection? Bottom line is that this is a heist: by deliberately making the deals 1 month short of proper accountability it cannot be anything other than that. It’s immoral, it’s criminal, in a city literally falling apart on a daily basis, and all involved must be chucked in prison for at least 20 years. No bail, no Stalingrad, no parole for good behaviour.

  • Brian Doyle says:

    How much more corruption can the country stand before there is a blowback from the people. The ANC & EFF are the worst for lining their pockets at the expense of ordinary South Africans, and the sooner they are removed form ruling this country, the better it will be for the country.

  • LLOYD MACKLIN says:

    the citizens have only themselves to blame. The DA had a good record in Johannesburg until Mashaba’s ego got in the way. Instead of voter coming out strongly in favour of the DA they allowed themselves to be deceived by numerous small political groups that have betrayed the voters.
    Next time give the DA the strength to control Gauteng and you can put your plans on moving to the Cape on hold.

  • Alley Cat says:

    Is OUTA the right organisation to mount a legal challenge to this? If so, I am willing to donate some cash to this cause.
    Or maybe time to start paying our rates into a trust as they have done in KZN? Not sure what happened to that court case?

  • Middle aged Mike says:

    Couldn’t bear to read the article. The sooner jhb goes bankrupt and collapses the better as at least it will stop the filthy thieves in ramaphosa’s gang from feasting on our rates, water bills and the margin they scoop off our electricity bills. Wake up 71 IQ voters, you’ve done this to us.

  • jaqueso says:

    Is Metro Centre owned by a private person. Then they must maintain it. We should not pay for maintenance (or now major upgrades) and still pay high leasing costs.

  • Penny Philip says:

    They are prepared to spend billions for an utterly useless city council, rather than spending it on the derelict apartment blocks & making them livable.

  • Elizabeth van der Merwe says:

    Time for a rates boycott?

  • Michael Evans says:

    This sort of corruption and ineptitude is hardly surprising. The mayoral committee member for economic development was guilty of classic cadre deployment when appointing the JPC board. She included 3 ANC buddies, one a tollgate cashier, another a receptionist and the third with only grade 11. None of them has the skills and experience required to be on a property company board. So we should definitely expect more of the corrution and ineptitude we have seen.

  • Stuart Hulley-Miller says:

    Have a heart guys, haven’t you heard the ANC is about to go into liquidation and needs cash flow very urgently.
    Maybe someone can grow a pair and take them on about this and follow the money…. Closely.

  • Gary De Sousa says:

    Based on this report it seems that money is going to flow to the chosen ones,how can municipalities spend the taxpayers money like this?

  • Glyn Morgan says:

    “Knock knock, any ANC voters out there? Please stand up!”

    “No?”

    “Heck, in a few years we will not be able to find a single ANC supporter!”

  • Dee Bee says:

    Stand up comedy the ANC way:

    A tollgate cashier, a receptionist and a school drop out walk into a boardroom….. and score R2bn in contracts.

    No, I didn’t think it was very funny either.

  • Dermot Quinn says:

    They need to pay for the banners before they are liquidated…gotta be done quick.

  • Rudd van Deventer says:

    Bayete Capital was involved in another scheme for Johannesburg City Council in 2016. It appears that they have been working on the sidelines since then.
    Creating a crisis for which you have a solution so buddies can get at the trough is typical!

  • Henry Coppens says:

    Thgis probably criminal to suggest, but is it not time to start a movement to not pay the rates? Pay water (when you get it) light (when you get it) sewerage and refuse, but not rates. Put this money into a credibly organised and mananged trust, to be held until such time as things come right.

  • R U says:

    Why spend that money while the water pipes are leaking everywhere and the roads are full of potholes?

  • Betsy Kuhn says:

    more corruption – what can we say…When is this going to stop

  • Rod H MacLeod says:

    And somewhere in the murky depths of this “finance structure” lurks the red right hand of Sergeants Capital.

  • Rod H MacLeod says:

    And somewhere in the murky depths of this “finance structure” lurks the red right hand of Sergeants Capital.

  • Nonnie Oelofse says:

    This anc gov is the ABSOLUTE WORST THIEVING GOVERMENT ON THE FACE OF THIS EARTH!!! THE CITY IS VIRTUALLY BANCKRUPT, BUT THEY KEEP ON STEALING….🫣🫣🤬🤬🤬🤬

  • David Katz says:

    The ANC leadership needs someone to fund its 2024 election campaign. They have found their guy.

  • Mike Schroeder says:

    Well weren’t those fires convenient … just as someone needed a tender.
    Has the cause or source of the fires ever been investigated and made known publicly?

  • James Webster says:

    The brazen way these people steal from the city and the ratepayers never ceases to amaze, they have no shame and quite clearly, no morality either. South Africa is doomed if they continue to govern. When will the majority of citizens in SA stop voting the corrupt and immoral ANC into power over and over again, how much corruption is enough for them ? One questions whether these people understand and value democracy, do they ? While it’s clear the present rulers should never have been allowed to govern, it’s appears as if the majority in SA should not be allowed to govern either, they are only capable of being ruled, not ruling – that much is obvious from their behaviour. Prediction: the masses will vote the ANC back into power in the 2024 elections, with a reduced majority yes, but they will remain in power and nothing will stop SA’s slide into becoming a failed and typical pathetic African state.

  • Anton Lamberti says:

    RIP Johannesburg.

  • Bruce Haralambous says:

    When exactly Mrs Haffajee, will the Daily Marxist finally admit that project Socialism has failed, (Despite over 100 years now of painfull data) and that the corrupt, racist, race nationalist socialists, i.e. the ANC… need to go, and that it is time to let the free market, capatalist adults, i.e. the DA into the room?

    What would it finally take for the editorial team at the Daily Marxist to embrace free markets and capatalism…???

    Look around, it is not working….

  • Just Me says:

    When the JPC put out this Office Space Optimisation (OSO) tender, it was pre-destined to go the the ANC property mogul Lonwabo Sambudla, the favoured contractor, as he was Zuma’s Son-in-law at the time, which should have immediately disqualified him and his legibility for winning this tender .

    The other thing is that this OSO tender was ‘cut into pieces’ to hide how huge it was.

    There is not much wrong the Metro Centre building in Braamfontein, and all it needed was some in-situ upgrading, not the unnecessary type of intervention that is practiced now.

    That this Zuma son-in-law gets to keep this ill gotten gain is just plain wrong.

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