Questions raised over sale of public park in Louis Trichardt
Municipality hands over documents after three-year battle
Documents relating to the sale of a public park by the Makhado Municipality have revealed a series of improbabilities, a deliberate lack of oversight and a veil of secrecy to avoid accountability.
They also show how the real losers, yet again, are the residents of the region.
It took three years of expensive and time-consuming legal battles by the Limpopo Mirror to force the municipality to hand over key documents, which finally shed light on the processes followed to sell off the park in Louis Trichardt.
The documents were obtained more than three years after Limpopo Mirror submitted a Promotion of Access to Information Act (PAIA) request. The municipality refused to make the information available until, finally, they had no choice. This followed a contempt of court application against the municipal manager after the municipality had ignored a court ruling ordering it to hand over the documents.
Based on the documents, as well as additional investigations and reporting by Limpopo Mirror, it is now clear that the circumstances surrounding the sale, specifically of one section of the park, are highly suspicious.
Back to the beginning
During a Council meeting on 5 July 2018, the Makhado Municipality agreed to a proposal that one of the few remaining public parks in Louis Trichardt town be sold by public auction. No public participation process preceded this decision and the Integrated Development Plan does not contain any information about a business development in that part of the town. There was no shortage of sites in town for development, with many properties standing empty in the town’s main business centre.
All indications are that the decision to sell a public park originates from municipal officials, possibly influenced by councillors.
The park comprises two erven, and the municipal evaluation for each was around R1-million. The location of the park, which is adjacent to the N1, makes it very attractive to developers.
It took more than five months for the municipality’s Bid Specification Committee to meet and decide on the requirements for bidders wanting to purchase the erven.
Finally, on 20 December, the committee, under chairperson NP Nndwakhulu, decided on the bid specifications. They were very straightforward, requiring only that bidders be situated in the jurisdiction of the Makhado Municipality.
The highest bid would be accepted, provided that it exceeded the current market value and that all the necessary documents required were included. The sites also had to be developed within a period of two years, with a possibility of a one-year extension.
On 9 January 2019 the Bid Specification Committee’s requirements were recommended by the acting manager of the Supply Chain Management Unit, MC Tshikosi and then Chief Financial Officer (CFO), Kent Nemaname. It was approved by the then Municipal Manager, Freddy Tshivhengwa, who has since died.
Deciding on the winners
The next step was the placing of advertisements in two newspapers on 18 January 2019, which specified that bids had to be submitted before 1 February 2019.
Eight bids were received for Erf 3456, the smallest part of the park, which is situated closest to the N1.
The highest bid of R1.6-million was submitted by a local company, Southern Ambition.
The bid documentation supplied by the municipality in terms of the court order is confusing and contradicts hand-written documentation on the municipality’s website. The officially supplied document indicates that Iceburg Trading offered R11.55-million for the erf, but it appears as if this was a typing error and should, in fact, be R1.15-million.
Two other bidders, C Matodzi Projects, and Banyana Enterprise, a Nelspruit-based company, each bid R1.2-million. Luke Enslin, who owns a Spar franchise next to the park, offered R1.25-million.
Eight bids were received for the second piece of land, Erf 1953. The highest bid of R2.3-million was made by Iceburg Trading. The second-highest bidder, at R1.85-million, was Trrendy Tiles and Sanitary Ware, while Muimeli Masase Construction offered R1.82-million. Banyana Enterprise offered R1.5 million and Luke Enslin bid R1.25-million.
The Bid Evaluation Committee met on 25 February 2019 to make a recommendation on the bidders. In the case of Erf 3456, seven of the eight bidders were disqualified, leaving only Banyana Enterprise’s bid of R1.2-million.
The reasons for the bidders being disqualified are interesting.
- Two bidders, HTE Construction and Bambawala Property and Investment Trust, were disqualified because a proof of residence for a director was not attached.
- One bidder was disqualified because an ID document was not attached, while another was disqualified because a CK document - proof of registration as a business at the Companies and Intellectual Property Commission (CIPC) - did not accompany the bid documents.
- Iceburg Trading was disqualified because the company apparently owed the municipality money for more than three months. (The municipality was unable to say for what it was supposedly owed).
- Luke Enslin was disqualified because he did not attach a tax status pin, which would enable the municipality to verify tax compliance.
- Southern Ambition was disqualified because no bank letter was attached.
In the case of Erf 1953, five of the eight bidders were disqualified.
Iceburg Trading, the highest bidder, Luke Enslin and Bambawala were disqualified on the same grounds as for their tender for Erf 3456. C Matodzi Projects, which was disqualified on its bid for the other property for not attaching a CK document, was now disqualified for not providing proof of residence for a director.
The Bid Evaluation Committee was chaired by Godfrey Raliphada, who is currently the acting chief financial officer (CFO) at the municipality. The other three members of the committee were L Thulare, NK Tshikosi and MC Tshikosi.
On 4 April 2019 the Bid Adjudication Committee, chaired by Kent Nemaname, gathered to approve the Bid Evaluation Committee’s recommendations. The recommendations were accepted without any queries and the two erven were sold to Banyana Enterprise (R1.2-million) and Trrendy Tiles & Sanitary Ware (R1.85-million).
You must be joking!
Limpopo Mirror contacted some of the bidders to ask whether they had been informed that they had submitted incomplete documentation. Most of them were experienced developers and had previously submitted tenders.
Cedrick Marageni, the sole director of Iceburg Trading, was surprised to hear that his company had been disqualified for owing the municipality money.
In 2019, when he heard that the tender had been awarded to another company, he phoned the municipality to try and establish the reasons, Marageni said. After being unable to get reasons from the officials, Marageni asked his lawyers to follow up with letters to the municipality, but they got no response. “The lawyers advised that we should go to court,” he said during an interview at the time.
He had decided not to litigate, Marageni said last week during a telephone interview, but said he was “still very upset” about what had happened. The practice of the Makhado municipality of “losing” documents, leading to the disqualification of bidders, is nothing new, he said. He now keeps duplicates of all documentation submitted and even numbers the pages so that it is more difficult for officials to remove pages.
Luke Enslin also confirmed that he was never informed of the reasons why he was disqualified. He found it hard to believe that the necessary tax documents were not attached to the bid, but to prove this, three years later, is near impossible, he said.
Asim Patel, director of Southern Ambition, was also not told why his bid was not accepted. “I didn’t even bother to ask for reasons,” he said.
The immediate disqualification of seven of the bidders may not be in line with the municipality’s Supply Chain Management Policy (SCMP). Section 24 of the policy allows the municipality to enter into a discussion with a preferred bidder. In this case it might have been the highest bidder and the municipality could have requested that the missing document be supplied. This is allowed, as long as the bidder does not get an unfair advantage over other bidders.
The disqualification of a bidder because a “valid tax compliance status pin issued [was] not attached”, can also be contested. The municipality’s SCMP deals extensively with tax compliance in Section 43, which specifies that bidders may also opt to provide a Central Supplier Database number. This number can be used by the officials to verify tax compliance. In a case where bidders are judged to be non-compliant, they must be notified and given seven days to rectify the situation and provide proof to the municipality.
“No one complained”
Questions were sent last week to both the municipal manager, Kent Nemaname and the acting CFO, Godfrey Raliphada, asking them why Section 24 or Section 43 of the SCMP were not applied during the bid adjudication process. On Tuesday they responded via the municipality’s spokesperson, Louis Bobodi.
“We are adamant that the municipality complied with all internal policies and statutes that govern the municipality, hence we didn’t receive any complaints from bidders,” said Bobodi. “Both transactions have been audited in the past financial years without any findings,” he added.
Yet in the 2018/19 financial year Makhado received a qualified opinion from the Auditor-General. One of the matters highlighted was that proper procurement processes were not always followed. The fact that the municipality did not adhere to its SCMP, was raised again in the 2019/20 A-G report.
“Persons in service of the municipality whose close family members had a private or business interest in contracts awarded by the municipality failed to disclose such interest, in contravention of SCM regulation 46(2)(e),” the A-G reported.
Both Nemaname, the current municipal manager, and Raliphada, its acting CFO, were asked what measures were in place to protect the integrity of the process and ensure that bidders are not deliberately (and fraudulently) eliminated. They did not respond to the question.
An outside bid?
Interestingly, one requirement of the municipality was that bidders must be local residents or businesses. In the case of Erf 1953, the successful bidder was Trrendy Tiles & Sanitary Ware. This company belonged to the late Abu Bakr Akoo from Louis Trichardt and it provided a local address. (Akoo died in a vehicle accident in August this year.)
The buyer of Erf 3456, Banyana Enterprise, has its registered address as Van der Merwe Street, Nelspruit. The only director at the time was Esther Nunu Mhlongo. She is a politically well-connected businesswoman, holding numerous directorships, especially in farming related enterprises. Banyana Enterprise was registered on 2 March 2018, four months before the Makhado Council decided to dispose of the public park.
Mhlongo is not a stranger to the Makhado Municipality. In April 2018 she resigned as a director of a company called Moda Women Projects. Her daughter became a director in her place. In December 2018 Moda Women Projects was awarded a R28.1 million tender to rebuild the Tshikwarani road.
The documentation provided by the Makhado Municipality in terms of the court order states that the address of Banyana Enterprise is 241 Tshikodobo Village, Kutama. This is also the address that the municipality used in correspondence with Moda Women Projects.
Limpopo Mirror attempted to verify that the address is that of Banyana Enterprise and Moda Women Projects. Instead, we found that the house at that address belongs to someone else and also serves as a small tuckshop. There appears to be no relationship with Mhlongo and Banyana and Moda.
Nemaname and Raliphada were asked whether the local address supplied by Banyana Enterprise had been verified. They did not respond to the question.
Mhlongo was also contacted and asked about the address. She requested that questions be sent via WhatsApp but she had not responded by Tuesday.
What happens now?
Currently both sections of the park belong to one developer. Abu Bakr Akoo, who bought Erf 1953 for R1.85-million, registered it in the name of Kenworth Investments. His partner in this company is Asim Patel, who is also a director of Southern Ambition, one of the unsuccessful bidders. Southern Ambition offered R1.6-million for Erf 3456, but was disqualified because of allegedly not attaching a bank letter.
Not long after buying the property from the municipality, Banyana Enterprise sold Erf 3456 to Kenworth Investments for R3-million, making a quick R1.8-million profit in the process. The transaction was registered in April last year.
In an interview in June last year before his death, Akoo said he was enthusiastic about the plans for the property. He said that they were contemplating various options and were in the process of conducting further market research.
Initially, plans were made to turn the whole area into a residential estate, similar to Bergview Estate at the eastern entrance to Louis Trichardt. Another idea that they were toying with, he said, was to perhaps develop an area where restaurants could be accommodated. “Whatever it is we bring to town, it will be something different and unique,” he said.
The process to rezone the property is currently underway.
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