Gambling lease at R800k pm

POLOKWANE – THE Limpopo Gambling Board (LGB) is currently paying a staggering R775 106 per month to rent a building situated in Hans van Rensburg Street.

The lease agreement, undertaken in 2013 at R500 000 a month and which has an annual increase of 10%, has a lifespan of 10 years.

At a recent portfolio committee meeting of the department of economic development, environment and tourism (Ledet), the DA made note thereof that by the end of the lease agreement, taxpayers would have paid in excess of R120 million in rent.

This is R70 million more than the National Gambling Board has contracted for its national head office in Sandton, Gauteng, according to the DA.

The decision to spend R70 million more than the entire National Gambling Board head office, and to spend R40 million more than purchasing the building is a blatant abuse of public funds, the DA said through a press release.

LGB is currently unable to conduct compliance audits on Limpopo’s gambling outlets because of financial constraints.

The DA said it had pushed for the department to explore all options including the purchase of the building or the cancellation of this lease and paying of the penalty fee, as a more cost effective option.

“It appears that the gambling boards have become cash cows for greedy property renters, and the department is doing nothing to stop the waste of public money,” the DA said.

The DA planned to submit questions to Ledet MEC Sekoati to determine who the owners of the landlord company which was leasing the building to the LGB, were.

Serobi Maja, the CEO of the board, confirmed the rental amount and that the premises was leased from Blue Chameleon Pty Ltd.

“At the beginning of the lease period, the landlord indicated they would be prepared to sell the building to the board at R89 million.

“Due to budgetary constraints that provincial government had at the time, it was not possible to raise the required amount. We entered into the lease agreement before the five departments were placed under administration,” Maja said.

The tender for the building was advertised in 2008 and the lease agreement signed in 2011, Maja confirmed.

Maja said the board had saved R46,5 million towards the purchasing of the building, but the amount was surrendered to treasury as per instruction by Monde Tom, the intervention team’s chief administrator.

“The board had gone on tender to call for proposals from developers to build property, and it has never been the intention of the board to cancel the lease agreement.

“The offices were built according to specifications suitable for LGB and therefore we are not looking at relocating either,” he said.

Maja said it was true that the rental paid at the end of the lease agreement would be above the current market value of the building.

He said the board would purchase the building as soon as funds were available.

Review established that the leasing company, Blue Chameleon, was linked to property tycoon, Jimmy Kourtoumbellides, who by May was a director of Trade and Investment Limpopo, Limpopo Development Enterprise and Limpopo Business Support Agency.

Among the transactions Kourtoumbellides has benefitted from include work on the parliamentary village at R27 million, as well as offices of the department of safety and security (R18,6 million).

In 2013, a company co-owned by Kourtoumbellides was involved in the much publicised issue of Hensa Towers, of which the department of housing is an anchor tenant, after shares in the rental enterprise.

Office space in the Polokwane central business district, around Hans van Rensburg Street is between R100 and R110 per m2.

LGB pays around R270 per m2, which is more than double the current going rate.

Asked why the department of public works was yet again seemingly involved in seemingly inflated leasing transactions, spokesperson Paena Galane asked for questioned to be e-mailed before comment could be provided.

The comment will be published in next week’s Weekend Review.