Nicole Johnson, wife of suspected organised crime boss Ralph Stanfield and herself accused of racketeering and helping run a violent criminal enterprise, bought an unbonded R5-million flat on the Atlantic Seaboard from a renowned Cape Town property developer.
The transaction raises questions about the extent to which property deals remain vulnerable to money laundering, especially in a time of increased focus on estate agents and lawyers meeting anti-money laundering obligations.
Investigations by amaBhungane have highlighted a legal loophole whereby developers who make direct sales without using estate agents as intermediaries seemingly do not have to be registered with the Financial Intelligence Centre (FIC) as accountable institutions.
These developers therefore have no obligation to perform any due diligence on clients, although they do still need to report transactions they have reason to believe are suspicious.
While the criminal reputation of Stanfield and Johnson precedes them, neither the conveyancers, Smith Tabata Buchanan Boyes (STBB), nor the property developer, Blok, who was directly involved in last year’s sale, appear to have been put off by the couple’s notoriety or the fact that Johnson purchased her Sea Point flat while in prison awaiting trial.
Johnson and Stanfield, who have been charged under the Prevention of Organised Crime Act, have been held in Cape Town’s Pollsmoor and Brandvlei prisons respectively since their highly publicised arrest in September 2023.
They were arrested at their multi-million-rand Constantia home in Cape Town on suspicion of running a criminal enterprise that has allegedly ensnared several senior local government officials.
Collectively they face over a hundred criminal charges, including racketeering, money laundering, corruption, fraud, theft, extortion, murder, attempted murder and the illegal possession of firearms and ammunition.
Some of the charges relate to their alleged involvement in a R1-billion social housing development tender fraud scheme for the construction of homes in some of Cape Town’s poorest communities. Johnson runs numerous companies, including Glomix House Brokers (GHB), which the couple allegedly used to secure contracts linked to the tender.
In March 2024 the National Treasury blacklisted GHB from doing business with government for 10 years. The blacklisting was loudly trumpeted by the City of Cape Town as a major success in its fightback campaign against the construction mafia, which for years has laid siege to its infrastructure development projects.
AmaBhungane has learnt that six months later, on 2 September 2024, Johnson bought a two-bedroom apartment in Sea Point from Blok, one of Cape Town’s most renowned urban renewal property developers.
She was able to do this while sitting in Pollsmoor as a prisoner awaiting trial.
While amaBhungane is not suggesting that STBB or Blok did not comply with any Financial Intelligence Centre Act (FICA) money laundering reporting obligations, or that the money Johnson used to buy her flat was from the proceeds of crime, the sale shines a light on estate agents’ – and potentially property developers’ – compliance levels with laws to combat money laundering and terrorism financing, as well as the current difficulties the FIC faces in ensuring such compliance and the gaps in legislation specifically designed to combat these crimes.
The source of the money, as well as whether it was paid directly by Johnson from her bank account or instead via a third party, is unknown.
Her lawyer Luzuko Guma ignored amaBhungane’s email and WhatsApp requests for comment.
Blok and STBB would not discuss any details of the transaction, citing client confidentiality and FIC secrecy provisions while insisting that they had complied with their obligations.
As we’ll see, however, what these were in the case of Blok may be somewhat unclear.
The sale
Since its founding in 2014 by father and son Marco and Jacques van Embdem, Blok has become known for its award-winning projects, with the company specialising in high-end compact apartment developments in Cape Town’s City Bowl and Sea Point.
Of the company’s 20 developments, it was its Eighty2 on M apartment building that caught Johnson’s eye.
According to the company’s website, the block on Sea Point’s Main Road is an “apartment hotel… where luxury meets sustainability” and offers “bold architectural design, energy-efficient living spaces, and community-oriented features”. The majority of the apartments in the building are rented out as short-term stays.
While the exact details of the transaction through which Johnson purchased her eighth-floor unit facing out onto Lion’s Head and Signal Hill are unknown, what amaBhungane has gleaned is that she paid R5 016 000for the 77m2 flat, that the purchase was unbonded and made through a cash transfer, and that the unit was registered in her name on 20 November 2024.
Property records show that Johnson bought the unit from Blok’s Urban Living 4, which is registered as a separate business entity and which developed the Eighty2 on M apartment building.
When developing apartments, Blok appears to register separate business entities.
The company’s registered estate agency business, Blok Urban Apartment Living (UAL), is responsible for marketing and facilitating the sale of units in the group’s different developments.
In trying to unpack the transaction and determine whether the financial reporting legislation was complied with, amaBhungane looked at whether Blok is registered with the FIC as an accountable institution.
Accountable?
The FICA compels accountable institutions to carry out in-depth Know-Your-Client analyses, understand the nature of their clients’ different business relationships, alert the FIC to any suspicious transactions and, importantly, assess, mitigate and report potential money laundering or terror financing risks their businesses may face from transactions.
Compliance is crucial in the government’s effort to remove SA from the global Financial Action Task Force (FATF) grey list.
The FATF grey list identifies countries that have deficiencies in their legislative systems that hamper the combating of money laundering and terror financing. SA was placed on the grey list in February 2023 and in February of this year, the National Treasury announced that it aimed to have SA removed from the list by October.
One of the biggest stumbling blocks in removing SA from the list is the lack of successful prosecutions of money laundering cases, as well as poor FICA compliance by certain accountable institutions.
In April, the FIC complained in a press release that it was struggling to get estate agents and lawyers to comply with all important FICA risk and compliance reporting obligations.
The problem is compounded by a gap in the legislation.
Under FICA, estate agencies are “accountable institutions” but property developers who sell units directly to buyers without using estate agents as intermediaries fall outside the current definitions.
That gap was partially closed with the repealing of the former Estate Agency Affairs Act (EAA Act) and its replacement in February 2022 with the Property Practitioners Act (PP Act), which includes property developers who perform estate agency activities by directly selling their developments.
The FICA, however, still needs to be amended to include the wider definition of “property practitioners”.
Back to Blok
This legal blurriness was evident in our attempts to get clarity from Blok as to what extent they had considered – or even recognised – the potential red flags of a cash sale to Johnson, a prisoner awaiting trial.
STBB and Blok sidestepped detailed questions, citing FICA non-disclosure provisions and the Protection of Personal Information Act (POPIA).
STBB director Steven Borwick, responding on behalf of Blok, said that “in the event that our client had incurred an obligation to report an activity associated with Ms Johnson to the FIC, it will any event, be precluded … by the FIC Act from disclosing such a fact to anyone. To do so constitutes a criminal offence …”
Questioned on whether Blok had any FICA responsibilities, Borwick said the specific development company, Blok Urban Living 4, was “not an accountable institution in terms of the FIC Act”. He said that STBB was registered with the FIC as an accountable institution and that they took their responsibilities seriously.
Borwick said Blok’s marketing arm UAL provided the company with its estate agency services, but it is not clear whether UAL was involved in the Johnson transaction and, initially at least, amaBhungane was not able to get Blok to confirm that UAL was registered with the FIC.
A search of the Property Practitioners Regulatory Authority (PPRA) website shows that UAL is a registered estate agency. As such, the FICA requires, if not Blok as a whole, then at least UAL to be registered as an accountable institution.
Eventually Borwick confirmed this, noting, “I am instructed the entity is registered with FIC, registration took place in approximately 2018. Blok will not comment on business strategy and we cannot disclose details of a specific transaction without all parties’ consent. No further emails or calls will be responded to.”
When amaBhungane approached the FIC with the same question the entity threw up a bureaucratic wall, saying that its register of accountable institutions was “not a public registry”.
“The purpose of the registry … is to facilitate [the] regulation of accountable institution compliance with the FIC Act, including with their reporting obligations, in line with the FIC’s mandate.
“As such, the FIC is obliged to maintain [the] confidentiality of the regulatory information that is provided to it. Furthermore, the FIC Act provides for the protection of the confidential information which the FIC holds.”
This legally questionable stance, which precludes the public from knowing whether companies are complying with their mandatory responsibility to register, helps no-one – except perhaps people like Johnson.
