DA requests Public Protector investigates R54 mil EThekwini lease deal

2 May 2017

The DA has written to the Public Protector, Adv Busisiwe Mkhwebane, calling on her to investigate a highly suspicious lease transaction between the EThekwini Municipality and Delta Properties (agents acting on behalf of the Embassy Building).

Earlier this month the City entered into a three-year lease agreement with Delta Properties to lease space at the Embassy Building in excess of R54 million, at almost double the advertised rental rate per square metre.

The Embassy Building usually rents for R69/sqm yet EThekwini has inexplicably bound itself for three years at R109/sqm.

This costly new rental space is intended to accommodate staff who have vacated City-owned offices at 75 Langalibalele Dube Street, for reasons which the DA does not believe justify a three-year-long relocation at all. It appears that the vacating of 75 Langalibalele Dube Street is a smokescreen to make someone at the Embassy Building very rich off an unnecessary three-year inflated lease.

Earlier this year, the Department of Labour issued prohibition notices condemning the use of the Langelibalele Dube building for structural defects and other minor transgressions, but it has since emerged that the defects are so minor that they would require just weeks to repair.

It is, therefore, incomprehensible that a three-year lease contract is needed to accommodate a few-week-long repair to a City building.

Additionally, the City of EThekwini owns sufficient vacant building space to have fully accommodated the75 Langelibalele Dube staff at no cost to public funds.

There is clearly compelling evidence that EThekwini has acted extremely recklessly in concluding an expensive three-year lease agreement for the Embassy Building.

These reasons why it was not necessary to enter into the R54m lease agreement are all contained in a report which was in the possession of the City Manager and Mayor at the time the lease agreement was entered into.

Notwithstanding this report, the City Manager, with the support of Mayor Zandile Gumede, met with senior ANC and South African Municipal Workers Union (SAMWU) officials at a private meeting in a hotel on the South Coast, to ensure that the City proceeded with signing a lease agreement with Delta Properties.

This is highly suspicious and raises questions about which politically connected cadres stand to benefit from this inflated lease.

For these reasons the DA has written to the Public Protector to probe:

- The financial recklessness of spending public money on an unnecessary three-year lease,

- The inflated rental cost per square metre, and who stands to benefit from this splurge at public expense,

- What the role of the Mayor was in this lease deal, considering the Procurement Policy prohibits the Mayor from becoming involved in or issuing instructions to tenders and agreements, and

- Whether or not proper transparent and open procurement processes were followed.

The DA will continue to hold corrupt public officials and leaders, who plunder public funds, to full account.

We anticipate a swift and comprehensive investigation from the Public Protector.

Issued by Sharon Hoosen, DA EThekwini Chief Whip, 2 May 2017