Questions asked about Dienssentrum sale
In the exchange transaction, the property that was initially valued at R810 000 was now given a value of R2-million.
The sale of the building previously known as the Ermelo Dienssentrum has raised concerns by taxpayers who are questioning the transparency of the deal and the Msukaligwa Local Council’s acceptance of the tender put forward by a local businessman.
On February 20, the Highvelder sent an e-mail to Council via the municipal spokesman, Mr Mandla Zwane, requesting the relevant municipal department to respond to and clarify allegations and uncertainties surrounding the sale of the building situated in the Oaks Centre in Kerk Street.
To date, no response has been received.
It is alleged that on 14 April 2014, the Democracy Family Trust, belonging to a local businessman, who at this stage cannot be named, submitted a written request to the Msukaligwa Local Municipality.
The Trust requested an exchange of a property in De Jager Street for the Ermelo Dienssentrum, which belonged to the municipality.
A professional evaluator was then appointed by Msukaligwa Local Municipality to value the property. This was done in May and June of 2014.
The value of the Family Trust property was put at R810 000, while the value of the Dienssentrum was put at R3 220 000, giving a difference in value of R2 410 000.
On 27 November 2014 the request was put to Council and a report of the Executive Mayor gave the shortfall as R2 100 000 and not R2 410 000.
The report was then referred back to administration.
On 31 March 2015, a report by the Mayor, called “Report on the Disposal of Capital Assets” was put to Council.
Part of this report states that the municipality may transfer ownership or otherwise dispose of a capital asset, but only after the municipal council, in a meeting open to the public, had decided on reasonable grounds that the asset was not needed to provide the minimum level of basic municipal services and had considered the fair market value of the asset as well as the economic and community value to be received in exchange for the asset.
In terms of section 14(5) of the relevant Act, any transfer of ownership of a capital asset must be fair, equitable, transparent, competitive and consistent with the supply chain management policy that the municipality must have and maintain in terms of section 111 of the Act.
An advertisement was then placed where tenders were invited for three properties, one of which was the Dienssentrum.
Although all the tender amounts are not known, it is alleged that the highest bidder offered an amount of R4-million, about R800 000 more than the valuation.
The tenders were then summarily cancelled.
On 17 July 2015, a new advertisement was placed inviting tenders for the purchase of the Dienssentrum.
On 5 April 2016, the Dienssentrum was registered in the name of the Democracy Family Trust. The purchase price was R3 520 000, which is R480 000 less than the highest bid. In the exchange transaction, the property that was initially valued at R810 000 was now given a value of R2-million.
Questions are now being asked as to why the exchanged property was then valued at R2-million and not R810 000 as valued by a professional valuator?
This has raised further questions as to why the highest bid of R4-million was not accepted.
In the light of transparency, a call has been made for the names of people or institutions who tendered and the amounts tendered to be made public.
Other questions being asked are whether the first tenders were cancelled because the Family Trust’s tender was not the highest; whether the transaction process was fair, transparent and competitive as prescribed by the Act; and whether the balance of R1 520 000 of the sale price has been paid to the municipality.
Fears are now being raised that there has been an effort to ensure that the Family Trust, headed by the businessman, became the sole owner of the Dienssentrum.
A response to these allegations is being awaited from the Msukaligwa Local Municipality.
