16 Feb 2005

Forensic auditors have found that the controversial sale of discounted luxury beach plots to companies linked to political parties was flawed, Cape Town mayor Nomaindia Mfeketo said on Wednesday.

"It is clear from the executive summary that the process was flawed," Mfeketo told reporters.

The summary she referred was an abridged version of a report by auditors KPMG, Gobodo, and the city's own forensic division.

BEE developers arbitrarily selected 

The process was flawed because the city's black economic empowerment (BEE) policy about the sale of land had not yet been formulated.

According to the summary, the identification of the 17 BEE developers, many with links to the African National Congress, had been done arbitrarily, and the qualifying process had not been completed in respect of at least half of them.

Acknowledging mistakes, Mfeketo said all officials involved in the decision to award the land were still at their desks.

"No action has been taken," she said, adding that the city would begin a process to determine if any disciplinary measures would be taken and "determine where the buck stops".

Petrus Marais, a director at KPMG, said that process should find out if the officials had acted irregularly, if there were any procedural errors or whether their actions constituted "intentional misrepresentation".

Entire process to begin afresh

Mfeketo said it was decided in the interests of transparent governance to begin the entire process afresh. A special three-man committee would be established to do this, and would report to the mayor's office. It had to act swiftly so that re-tendering could begin at the end of the month.

"I want a fair, transparent and accountable process."

Companies won't be excluded from re-tendering

Mfeketo said the 17 companies embroiled in the scandal would not be excluded from re-tendering. The city also did not expecting any legal challenges from these companies, to whom no rights had accrued.

Among the companies set to benefit was Lembede Properties, headed by ANC Youth League executive member Songezo Mjongile. The league's investment arm owned a majority stake in the firm.

Others on the list include Sharif Pandor, husband of Education Minister Naledi Pandor, businessmen Sam Montsi, Zitulele Combi and Sonja Gorvalla-Cummings.

A company owned by Democratic Alliance councillor Dan Plato was also a beneficiary.

Asked whether similar mistakes could crop up in future, Mfeketo said: "Categorically, no."

She said the city had a system to deal with procedural flaws, and had demonstrated a desire to act decisively when such flaws were exposed.

Sapa