KWAZULU-NATAL. – The Special Investigating Unit (SIU) welcomes a ruling by the Special Tribunal which declared the arrangements under which three service providers were appointed to develop low-cost housing in Phoenix, eThekwini, unlawful and unconstitutional. The three companies unlawfully benefited by approximately R29,14 million according to the investigation. One erf was sold for R21 090, for example, and later sold for R9,54 million to an unapproved beneficiary.
Selby Makgotho, SIU spokesperson, says the investigation found that Woodglaze Trading, Madupha Business Enterprise and Ready Homes participated in the low-cost housing project without following the required public procurement processes. The tribunal found the irregularities were not merely administrative errors, but touched the core of Article 217 of the Constitution, the Municipal Financial Management Act and eThekwini's supply chain management rules.
The investigation further found that the three service providers sold 18 properties that formed part of the housing programme to third parties. Some buyers were not approved beneficiaries according to the SIU and were possibly also not first-time homebuyers or within the applicable income category for subsidies. In some cases, properties that the municipality sold for about R34 200 were later sold for amounts between R350 000 and R9 million. One erf in Canehaven Road was sold for R21 090 to Woodglaze and later sold for R9,54 million to an unapproved beneficiary.
Woodglaze benefited by R25,32 million according to the investigation, Madupha Business Enterprise by R2,26 million and Ready Homes by R1,56 million. The Tribunal declared the appointment arrangements unlawful and constitutionally invalid, but made no immediate repayment or forfeiture order. The three service providers may complete housing that had already commenced by the date of the ruling and sell it in accordance with applicable legislation. However, they may not commence new construction under the invalid arrangements. If eThekwini wishes to develop further housing under the programme, the municipality must follow a new, lawful procurement process that complies with the Constitution, the Municipal Financial Management Act and applicable procurement policy.
This article is an automatic English translation of a Nuusflits article originally published in Afrikaans. Read the Afrikaans original.
