PUBLIC PROTECTOR'S FINDINGS ON DA-NASPERS DEAL

5 December 2012

The Office of the ANC Chief Whip welcomes and accepts the findings of the investigation by the Public Protector, Advocate Thuli Madonsela, into the land deal between the City of Cape Town and Naspers Properties. The land deal involves the city's purchase of a piece of land from Naspers for the expansion of the Cape Town International Convention Centre (CTICC), in which the city is a shareholder.

The investigation into this questionable land deal was instigated by the complaint of the Chief Whip of the Majority Party in Parliament on 14 March 2012, in which he requested the Public Protector to probe whether the city's purchase of the piece of land for R106 000 000, which independent property experts valued at no more than R50 000 000, was above board.

Although the findings of the Public Protector concluded that the deal was "above board and to be generally of benefit to the public", the city has however been found guilty on two counts of maladministration:

Maladministration 1:

The city, as the custodian of the public purse, failed in its responsibility to ensure value for money in this deal by not taking charge of the negotiations process in which millions of taxpayers' money is being spent. We believe that there is a direct link between this dereliction of duty, which saw CTICC and Naspers officials handling negotiations without involvement of the city, and the fact that taxpayers are now being expected to pay more than is necessary in this land deal.

As per the findings of the Public Protector, taxpayers will be paying R2 000 000 more than the value of the land. This fact supports our assertion that taxpayers have been short changed in this deal. It is scandalous that CTICC and Naspers handled the entire negotiations process, and even entered into a memorandum of understanding, while the city stood idly by and only came in to sign the cheque. This means that CTICC and Naspers were given a blank cheque by the city to make this deal happen.

Maladministration 2:

The city violated the prescripts of the Municipal Asset Transfer Regulations and its By-laws by not obtaining the approval of the City Council before concluding an agreement with Naspers regarding the building specifics on the purchased land. The Public Protector found that the deal, which the city took to the City Council for approval, was materially different from the one it later signed with Naspers. The Council approved the purchase of the land with the understanding that a 50 meter building will be built. However, the final agreement indicates that the city is restricted to a building height of only 30 meters.

The Council was therefore made to approve the deal on the belief that up to 12 storeys would be built, hence the valuated amount of R106m, while the city knew fully well that Naspers restricted it to only three storeys. We note with interest the contention by some witnesses interviewed by the Public Protector that if the height restrictions were taken into consideration by property valuers, the value of the land would have came down to between R50-R70m. Curiously, the height restriction details were omitted by the city when briefing its enlisted property valuers.

That the Council was deliberately misled on the true potential of land, probably to manipulate and hide the true value of the land, dirties up the entire transaction and reinforces the suspicion that the amount might be inflated.

The Public Protector's maladministration findings in this DA-Naspers deal, which follows hot on the heels of similar findings in Midvaal and the Office of Premier Zille in the Western Cape, makes a complete mess of the DA's ‘clean and efficient governance' propaganda. The DA cannot, with a clear conscience, continue to feed the public a daily dose of such propaganda while its competency is increasingly found wanting, as the series of maladministration veThe Office of the ANC Chief Whip commends the Public Protector for the thoroughness and diligence with which she conducted this investigation, which included going beyond the scope of our complaint to unearth wrongdoing in this deal.

Statement issued by Office of the ANC Chief Whip, December 5 2012

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