SIU Probes Radically Overpriced Western Cape Land Deal

GOOD Statement by Brett Herron, GOOD Secretary-General & Member of the Western Cape Parliament:

The Western Cape Government must explain its irrational purchase of a piece of land in the Table View area for R64.4 million, when it paid just R9 million for a larger, more developable piece of land right next door.

The pretext for the purchase was the “urgent” relocation (in 2018) of the Siyahlala informal settlement, which had spilled onto the rail reserve in Dunoon. However, seven years later, the relocation has still not occurred, and the trains are unable to run.

Besides the radically inflated cost, the purchase was unnecessary because the City of Cape Town already owned land suitable for housing development in the immediate vicinity.

The Special Investigating Unit (SIU) has confirmed that it will probe the deal under Presidential Proclamation 265 that authorises the SIU to investigate corruption involving provincial Human Settlements Departments and the Housing Development Agency.

Background

In 2018, in my capacity as MMC for Transport and Urban Development in Cape Town – acting on the advice of the City’s own land acquisitions specialists – I opposed the purchase of 17 hectares of land in an industrial park in the Killarney Gardens precinct. Seven of the 17 hectares are undevelopable for housing as they form part of a wetland.

A private landowner had initially offered to sell the land to the City for R88m, before reducing the asking price to R77m, and then to R64m. But I was advised by the City’s professionals who dealt with land acquisitions that the R64m price tag was extremely high and much of the land was unusable.

The City experts estimated the land to be worth about R20m, while the Industrial Park Owners Association (where the land is located) estimated its worth at about R21 million.

I. The most recent comparable transaction at the time, land bought for housing development in the Annandale area, had cost R225 per square metre, while the developable portions of the land offered to the City would cost R542 per square metre. That’s nearly three times higher.

II. The City had recently acquired developable land in Doorenbach at a cost of R9m for 130,000 square metres. This deal proposed a price of R64.6m for 100,000 square metres of developable land right next door. That’s an 820% premium!

III. The City also already owned land adjacent to Potsdam Road, just down the road, close to a taxi rank and eminently suitable for housing development. I gather that the DA does not want to use this land to accommodate a “township” within sight of the neighbouring “suburb” of Table View.

Notwithstanding these facts, the Western Cape Province proceeded to purchase the land through the Housing Development Agency.

Investigation

I have previously referred the evidence to the Western Cape Standing Committee on Public Accounts (SCOPA), which dodged the issue.

Now that the SIU, one of the most effective state investigation units, has been authorised by the President to investigate corrupt transactions involving Provincial Departments of Human Settlements and the HDA I am hopeful that the public will finally find out why this land deal was pursued and whether the state acquired land at best value for money as is required by GIAMA (Government Immovable Asset Management Act).

Land has become an opaque and convenient currency for corruption.

Transparency International, a Germany-based organisation established by former World Bank employees to stop corruption and promote accountability, and is active in approximately 100 countries, says: “Land is the new currency of corruption.”

The organisation lists seven forms of land corruption prevalent in rural and urban settings around the world. These include the payment of bribes, denial of land rights and sexual extortion, but the two seemingly relevant to Table View are: “When a community is excluded from participating in land deals between private investors and local authorities,” and “When urban planning is unaccountable and land speculation takes place.”

Because land values can be subjective, depending on a variety of factors from location to demand, corrupt land deals are often undetectable in financial statements and audit reports.

Given the radically inflated price of the Table View property and the fact that the City already owned suitable land in the area to re-accommodate the Siyahlala community, the purchase makes no sense and is a massive waste of public funds.

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