A CASE of an alleged forced distressed sale flagged in an Allan Greyling forensic report involves a company called Zwelinzima Property Developers (not in any way linked to unionist Zwelinzima Vavi), Auction Alliance and Rand Merchant Bank (RMB).
The story goes back to 2000, when prime property was negotiated down at Cape Town’s Foreshore.
It belonged to Transnet, but some developers, including Fez Mahlati and Clive Lurie, won a tender to develop the site into upmarket residential apartments.
Initially, the land was negotiated under a lease agreement, but was then transferred into a freehold arrangement, as a leasehold would have deterred potential buyers.
The site in question was located along Roggebaai Canal, nestled between the city’s International Convention Centre and the V&A Waterfront. Zwelinzima contracted respected architect Dennis Fabian to sketch a luxurious development.
He came back with a set of plans for 72 apartments at the marina that would afford sweeping views, from Table Mountain in the south through to the sea and the harbour in the north. Typical of any development of its kind, it was a mix of studio, one-, two- and three-bedroom apartments, spread over nine floors, with five penthouses that had their own private swimming pools. It was named Canal Quays.
In October 2002, it became a near-instant sellout, with close to 80% of the units purchased off-plan within days of the launch.
But before Zwelinzima could begin building, there was a reshuffle at Transnet. Mafika Mkhwanazi’s tenure as CEO had come to an end and he was replaced by Maria Ramos — now the chairwoman of Barclays Africa — who took up office on the first day of 2003.
However, Mkhwanazi had left some unfinished business behind, and Ramos spent her early months trying to play catch-up.
One of the early problems brought to her attention was that the sale of the marina had never been completed. It transpired that Mkhwanazi had departed without signing the sale agreement, which left the development plans hanging by a thread.
Ramos was of the firm view that there was wrongdoing at play and she commissioned a forensic probe.
However, that investigation came to a halt when it was discovered that there was a conflict of interest between the team of forensic experts appointed and the panel that had appointed them.
THEY were forced back to the drawing board and, eventually, the late Percy Sonn, a former public prosecutor and judge and one-time president of the International Cricket Council, was appointed to carry out the probe. He found the deal tohave been in order and Ramos was finally satisfied.
All of this took time, however, and during the periods of investigation, Zwelinzima was unable to commence the construction of the development. It finally got under way sometime around 2005, at which time Susan Dean joined Zwelinzima as a director, not long after Lurie’s death. It was also around that time that Zwelinzima switched from Absa (now Barclays Africa) to RMB, where it was granted a R100m loan facility to complete Canal Walk.
It was also then, at the reinstatement of the development, that Zwelinzima entered into a sole mandate with Seeff Properties to sell the units, and RMB funded the construction against the so-called bankable sold units.
The deal was that the penthouses would be released to the market only during the later stages of the construction period. But as luck had it, it took longer to sell them than had been anticipated.
In the latter part of 2009, Zwelinzima turned to RMB to extend the financing arrangements.
At one stage, Roger Kebble, the father of the late mining magnate Brett Kebble, expressed a strong interest in purchasing a penthouse, and was on the verge of buying one for R15m.
The sale of the other units was also at an advanced stage when, one Friday morning in November 2009, and without any notice, according to Greyling’s report, Dean received a call from Ish Hendricks of Auction Alliance.
Business Day understands that he told her he had buyers for the penthouses — Auction Alliance directors — and wished to gain access to these apartments without using the services of Seeff.
At no time did he indicate that the properties had been handed to then Auction Alliance CEO Rael Levitt’s auction house to sell, despite the sole mandate that was in place with Seeff, so Business Day understands.
The following day, the remaining five penthouses and nine units including certain units already sold by Seeff, were advertised by Auction Alliance in the Cape Argus and the auction date was set for December 2009.
This, allegedly without any notice to the Zwelinzima directors by RMB or Auction Alliance.
Levitt maintained at the time that he had received the information and mandate from Inus du Preez of RMB.
Seeff, Dean and Mahlati then tried to sell the remaining units, but it was tough.
The public had been led to believe that a mass clearing auction was imminent, which evidently had an adverse affect on the selling price.
In the meantime, the bank was calling in an amount of R1.5m, and Dean and Mahlati were eventually forced to settle.
However, as part of that settlement, reached between Zwelinzima, Auction Alliance and RMB, Dean and Mahlati were forced to sign confidentiality agreements and are, therefore, prohibited from speaking about the settlement to this day.
Both of them refused to speak to Business Day.
GREYLING, however, states that he came into possession of the settlement, under which Auction Alliance apparently agreed to pay the property’s body corporate the amount of R1.5m that was owed by Zwelinzimain respect of levies on the units not sold.
For that, the auction house was afforded the privilege of selling off the prime properties, obviously for many times that amount.
When Du Preez was interviewed by Greyling, he conceded that Auction Alliance “had acted improperly in attempting to market and sell these properties without the prior consent of Zwelinzima Properties”.
However, Du Preez was adamant, both when speaking to Greyling and later to Business Day, that he “did not receive any benefit” from Auction Alliance “in respect of the properties”.
The public had been led to believe that a mass clearing auction was imminent, which had an adverse affect on the selling price