The Gauteng department of human settlements (GDHS) bought three land parcels on 13 March 2019, handing an instant paper profit of R158.7-million to Landworth, a company owned by real estate mogul Ralebala “Rali” Mampeule.
Landworth bought the land parcels for R86.25 million from another developer, Jordi Properties, and then charged the Department R244.95 million, including value added tax, although Landworth was later persuaded to put up a R50-million guarantee to cover the cost of improvements that Landworth had been contracted to deliver.
The 63.9-hectare land parcels are part of the farm Zuurfontein. They are proposed for the development of Eagles Nest township in Vanderbijlpark, situated in the Emfuleni Local Municipality, south of Gauteng.
Landworth disputes that it unduly inflated the price. In fact, the company’s director, Mampeule, said he gave the department a “discount.”
“We reiterate that the price that you purchase the land at has nothing to do with the price that you sell it for, if there is a willing buyer and a willing seller, and there are valuations from registered evaluators that justify your transaction,” Mampeule said. “We hold the informed view that the land was sold at a discount of 20% to 30% when compared with the prevailing price per serviced stand.”
Mr Property
Mampeule got his start at an international property group Chas Everitt and now owns a sprawling property and investment empire.
Landworth first came to amaBhungane’s attention when it emerged that Mampeule’s company picked up a fee of R44-million, described as a “commission” in the sale contract, on another property in Midvaal Local Municipality which the GDHS bought for R70-million.
Although that was over half the purchase cost, Landworth denied any wrongdoing.
That story led to a tip-off that prompted us to look more closely at the Eagles Nest sale, which also involved Landworth and the GDHS – and which also looked like a “land-flip” in which a middleman made a large profit at the expense of the GDHS.
The closer we looked the more things did not add up.
Landworth sold the property before they owned it
Looking at the deeds office documents, it appeared to us that Landworth had sold the 63.9-hectare portions of Eagles Nest to the GDHS even before they were the legal owners.
The documents appeared to show the sale to GDHS took place on 13 March 2019 at a value of R244.95 million while the previous owner, Jordi Properties, had only sold the properties to Landworth more than two months later on 31 May 2019 for the sum of R86.25 million.
When we first put this to Landworth they said we had it all wrong.
“Your information is incorrect. As part of phase one of its Eagles Nest development Landworth bought 73 hectares of land from Jordi Properties for R110 million and sold it to the department as serviced stands with rights, including all amenities – water, sewer, roads, electricity and a fence with a security gate for R244-million with the improvements.”
The R86.25-million sale that took place on 13 March, Landworth told us, was a different land for “phase two” and had nothing to do with government. So, on their version, it was 73 hectares, not 63 hectares, and they had paid R110-miilion, not R86.25-million.
Landworth also suggested we had confused sale and registration dates.
When we shared official deeds documentation showing they were wrong, Mampeule changed tack and told us the practice of selling a property you don’t yet own was “completely legal… as long as you are able to pass transfer/ownership to the buyer”.
Now they said there had been an earlier sale agreement in which Landworth had agreed to purchase both phases from Jordi Properties for R110-million on 21 February 2019.
But in March 2019, just the first phase – which was indeed only 63.9 hectares – was onsold to GDHS.
Landworth said the sale agreement with Jordi was amended on 31 May 2019 (after the GDHS transaction) to reflect that Landworth only purchased the first phase of Eagles Nest.
“This sale was for R86,25-million. Note that Phase 2, was and remains a private transaction. It therefore does not form part of the scope of the accelerated affordable housing transaction with GDHS.”
By this stage Landworth had hired a forensic investigator, Rassie Erasmus, from Alfin Legal Forensic Service, who made contact to amaBhungane saying that he was investigating a “smear campaign”, apparently perpetuated by those against transformation.
Mampeule also hired a communication specialist to handle our questions.
How did Landworth become the middleman?
When Mampeule was asked about the relationship between Landworth and Jordi Properties, he said, “It is important to note that prior to the sale of phase one to the GDHS, the seller [Jordi] had, via a mandate, authorised Landworth (PTY) LTD and its directors to find a buyer for the land.”
The directors of Jordi Properties were not helpful in explaining when and why Landworth got involved.
When we reached one director, Moshe Cohen, for a comment on 17 November last year he told us, “You are talking to the wrong guy.”
The following day, on 18 November, he admitted to his identity and responded, “I know nothing about it, sorry.”
A few days later, on 21 November, amaBhungane contacted the second director of Jordi Properties.
Isaac Rubin wasn’t pleased to be asked any questions around this transaction.
“That’s quite private. I am not in a position to give you anything. It is confidential and I am not allowed to release any information,” he said.
On 13 December Landworth’s forensic investigator Erasmus reached out to amaBhungane indicating that Mampeule would like to request for a roundtable meeting to be “transparent”.
That meeting has happened on 20 January this year.
In the meeting we asked Mampeule to elaborate on the process of acquiring the land until it was onsold to GDHS and how and when they had been able to interpose Landworth as the middleman.
We had by then seen a document signed by Cohen on 19 February 2019 in which Jordi agreed to sell Landworth both the properties (phase 1 and 2) for a price “to be agreed upon”.
Explaining that document, Mampeule said, “Essentially… that is the first document of where the relationship started… We approached them [through] somebody else they wanted to sell the land to and then we say to them… can they give us a letter to confirm that we… enter into a sale agreement with them.”
This “mandate”, Mampeule told us, was Landworth’s ammunition to sell the land to the Department.
Except it didn’t happen quite like that.
PAIA
To get to the bottom of the contradictions, amaBhungane lodged a Promotion of Access to Information Act (PAIA) request with GDHS and received documents related to the sale.
The documents released showed the Housing Development Agency (HDA), which was under administration at the time, played a primary role during the property assessment and negotiations.
“The subject properties are privately owned and registered in the name of Jordi Prop (PTY) Ltd,” noted the agency’s due diligence report compiled in January 2019. “The properties have been offered by De Klerk, Vermaak & Partners Incorporated representing the landowners.”
That indicates the HDA knew Jordi were the owners at that point.
On 1 March 2019 the HDA administrator Viwe Gqwetha sent a recommendation letter to the GDHS stating that negotiations with “the landowner were held on 13 February 2019” where the parties eventually agreed on R213m (VAT exclusive) for the acquisition of Eagle’s Nest.
But on 13 February — the time of the negotiations — Landworth was not the owner of the properties and nor had it received a written mandate to sell the properties.
By 19 February when Jordi and Landworth signed the “mandate”, the deal between the “landowner” and the HDA was already sealed.
When we pointed this out, Landworth’s story shifted, as has been the case every time new information was put forward since last November.
Landworth told us, “We must again reiterate that it is not illegal to negotiate a deal with a potential seller or buyer prior to the parties to the transaction reducing terms to writing…
“It is also important to note that in our initial negotiations with Jordi Properties we wanted to buy the company together with its assets (land). However, at a later stage we negotiated and settled to just purchase the land.
“The negotiations in this regard started weeks before we offered the land to the ultimate buyer. Landworth representatives and our attorneys were present at the negotiation meetings with the HDA and there are minutes of these meetings that prove this.”
This just begs the question: on what basis did the HDA negotiate with Landworth or their attorneys if they knew Jordi were the legal owners?
And why did Jordi accept R86.25-million if they knew Landworth had already been offered R244.95-million (R213 plus VAT) in negotiations with the HDA?
AmaBhungane asked the agency why it did not negotiate directly with the legal owners of the property? The HDA did not respond to specific questions.
In our access to information application to the HDA, we requested the agency to provide correspondence setting out the mandate given to the HDA by the GDHS to negotiate acquisition of the land.
We also asked for any correspondence with Jordi, Landworth or the attorneys, De Klerk Vermaak and Partners.
The agency refused to divulge this information.
Attorney George Roper from De Klerk, Vermaak & Partners, said: “We … decline to respond to speculative journalism conducted with malicious intent.”
But Mampeule said that during the negotiations on 13 February 2019 between the agency and the landowners, the attorneys had always represented Landworth, not Jordi.
“The attorneys… represented Landworth as the sellers of the land, either in our capacity as the-yet-to-be-appointed new directors of Jordi Properties and/or as Landworth who was buying the land outright,” said Mampeule.
But what’s clear is that had GDHS directly bought the land from Jordi, this could have saved the department millions of rand.
“The Department had no knowledge of the transaction between Landworth and Jodi Properties… The Department therefore cannot comment on any other transactions beyond Landworth,” said GDHS spokesperson Tahir Sema.
A conditional sale
The HDA recommendation letter to the GDHS acting head of department, Daniel Molokomme, explicitly said that this was a conditional sale and GDHS should pay the agreed amount subject to the conditions being “fulfilled prior to the transfer of the development.”
These conditions, among others, included that Landworth must finalise the subdivision processes, connects new proposed stands with internal reticulation and relocates a powerline running through the property.
Molokomme signed the offer to purchase on 15 March 2019, but the suspensive conditions were gone.
Instead, normal transfer to the GDHS would take place as soon as the sale was registered and Landworth merely undertook to fulfil these conditions “even after the land has been transferred”.
Essentially, the GDHS disregarded the agency’s advice.
The department failed to answer why they ignored the agency’s recommendations that the land parcels should be transferred to it once Landworth has met all the stipulated conditions.
It must have occurred to the GDHS soon after they had bought the property for R244.95-million that the sale contract provided little leverage to ensure that Landworth completed the agreed extra service infrastructure.
So, the GDHS documents obtained by amaBhungane show, in late May 2019, Landworth and GDHS signed an addendum to the sale agreement, which provided that Landworth lodge a R50-million performance guarantee to ensure the improvements were carried out.
Both sides agreed that R50-million was a “fair and reasonable cost” for Landworth to comply with the contractual improvements, meaning that on its own assessment Landworth would make about R108-million (or nearly 80%) profit on the deal.
‘This sale [has] adverse effects’
But almost four years later, Landworth is yet to finalise the requisite upgrades on the property.
On 26 April 2022, the GDHS current head of department, Phindile Mbanjwa, wrote to Landworth’s legal representative, Roper, that “the Department is yet to receive notification from [Landworth] that the said undertakings have been fulfilled, despite having fully paid the purchase price of the land”.
Mbanjwa attempted to call in the R50-million guarantee, telling Landworth that the delays were having an adverse effect on service delivery and objectives of the Rapid Land Release Programme of the department.
Landworth’s legal representative, Roper, hit back telling Mbanjwa claiming the R50-million would be a breach of the sale agreement as the delays were as a result of circumstances which Landworth had no control of, including no less than 500 objections to the proposed development from neighbouring residents.
Mampeule has claimed the objections and what he called a “media smear campaign” against Landworth had their origin in racist opposition to transformation in the area – including local political figures – which was why he hired a private investigator.
Beyond the objection process, Mampeule said they were also delayed by numerous issues raised by the Emfuleni Local Municipality, but these had now been resolved.
“We are now ready to proceed with construction despite this smear campaign,” he said.
Yet in the end all that is promised is the delivery of serviced stands.
Between 2009 and 2016, GDHS spent over R1-billion acquiring land in Gauteng that could be turned into housing units.
Despite this, Lebogang Maile, then MEC for Co-operative Governance and Traditional Affairs, told Parliament in 2020 that Gauteng was experiencing a “housing crisis” with 1.2-million people looking for housing via the National Housing Register.
Eagles Nest, just like the R70-million Langkuil sale in 2020, has joined the long queue of the land parcels that GDHS has acquired but failed to fully develop.
In Sedibeng, the region where Eagles Nest and Langkuil are situated, GDHS bought over 1 300 hectares of land between 2011 and 2020. As of August 2021, almost all the projects are listed as facing “challenges”.
