Government lease row hits entrepreneurs

The impact of a multi-million-rand “mistake” that saw the provincial government sign off on a lease agreement for offices it never even wound up moving into, hasn’t only been felt by the public purse.

Private business people too – some of whom invested their life savings in the building – have been left out of pocket.

The Gauteng provincial government earlier this year turned to the courts to try and set aside a lease agreement for office space at the old JSE building which it’s still waiting on, almost three years – and tens of millions of taxpayers’ rands – down the line.

In a recent interview with The CItizen, Kosta Kosmas, who’s been in the restaurant and hospitality industry for over 20 years, explained he had been in the market for a new venture in 2019, when he came upon the opportunity to take occupation of a restaurant and a bar at the old JSE building.

“The theory was that there were already 4 000 people here and the next-door annex was being refurbished for the department of human settlements so there were thousands more coming in,” he said.

He said he signed a lease directly with the landlords, Hostprops, that November, with the understanding the new state tenants were moving in the following month and worked around the clock to get the restaurant up and running in time – but they never came.

The delays were initially explained away as, for example, the results of issues with the carpet supplier and interdepartmental shuffles.

“So I carried on building – pumping money into the place – and had stocked the place up to the hilt,” Kosmas said.

“When Covid hit, all communication stopped.”

The restaurant has been standing empty for over a year now. In the interim, Kosmas says he has lost millions of rands.

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Another former tenant who asked to remain anonymous but entered into a lease for cafe premises in the building in 2019 under the same impression as Kosmas, said she ended up about R200 000 out of pocket and having to cash out her retirement annuity.

Independent financial crimes investigator Chad Thomas, of IRS Forensic Investigations, has been working on the case and has referred it to both the Special Investigating Unit and the Hawks.

“It is unfortunate that this clearly unlawful transaction has had a domino-effect on small businesses,” he said.

“The provincial government and the building owners owe an explanation to these small business owners.”

A lawyer representing the building landlord did not respond to The Citizen’s request for comment.