In the middle of Sandton is a \u2018crime scene\u2019.<\/p>\n
Stand on the rooftops of any of the big corporates \u2014 Alexander Forbes, EY, Werksmans \u2014 and you can see it: three hectares of prime land, hijacked from the city.<\/p>\n
In 2008, the City of Johannesburg (CoJ) agreed to sell the land above the Sandton Gautrain station to a politically-connected developer for R280-million.<\/p>\n
But the developer, the Regiments Kgoro Consortium, never paid the purchase price. Despite taking possession of the land in 2013, the development never happened, and the project went into liquidation.<\/p>\n
The land \u2014 described as \u201carguably the most important single piece of undeveloped real estate in South Africa\u201d \u2013 is now out of the city\u2019s hands and is destined to be sold by the liquidator.<\/p>\n
Why was this allowed to happen?<\/p>\n
It has long been suspected that the deal was tainted. But evidence to support that suspicion never emerged.<\/p>\n
Now a three-part amaBhungane investigation has uncovered how:<\/p>\n
*The consortium\u2019s majority shareholder, state capture kingpins Regiments Capital, promised to bankroll a mining venture linked to a member of the bid evaluation committee.<\/p>\n
*A senior fixer from the ANC\u2019s investment arm, Chancellor House, appeared on the outskirts of the deal.<\/p>\n
*Former mayor Parks Tau\u2019s brother-in-law and a mysterious trust with ANC pedigree received R10-million.<\/p>\n
Regiments, which has a long-standing policy of ignoring amaBhungane\u2019s questions, did not make an exception for this story.<\/p>\n
The city, under ANC leadership, still stands by the deal, saying that it is not unusual for a development to take more than a decade to get off the ground, while former mayor and political rival Herman Mashaba has slammed the Kgoro deal \u201cnot only absurd but highly suspect\u201d.<\/p>\n
So, is the Kgoro deal a victim of political warfare? Or \u201cexhibit A\u201d, demonstrating how the city was held hostage by the Regiments patronage machine and the broader Kgoro consortium\u2019s ties to the ANC?<\/p>\n
[sidebarContentSingleImage target=modal url=https:\/\/amabhungane.org\/wp-content\/uploads\/2021\/11\/Kgoro_Sandton_erf-pic1.png]Picture of Erf 575 as it stands today (9 November 2021).[\/sidebarContentSingleImage]<\/p>\n
Erf 575 \u2014 described by Regiments as “arguably the most important single piece of undeveloped real estate in South Africa” – is the three hectares of land above the Sandton Gautrain. The idea was to build a multi-billion rand development around a public avenue that would link the Sandton Gautrain to Nelson Mandela Square and the heart of Sandton.<\/p>\n
The tender<\/strong><\/p>\n Let us begin in 2008.<\/p>\n The new high-speed Gautrain was under construction. Its main station \u2014 Sandton \u2014 was being built underground. Above ground was three hectares of prime land, ripe for development.<\/p>\n In June 2008, the City of Johannesburg opened bidding to developers. Four companies submitted proposals.<\/p>\n One of them, the Regiments Kgoro Consortium, had no track record as a developer. But its major shareholder, Regiments, was influential in the city. It ran the city\u2019s debt management fund \u2014 termed a \u201csinking fund\u201d \u2014 and was a regular donor to the Johannesburg branch of the ANC.<\/p>\n It also had big dreams: a 65-floor tower housing a five-star hotel, luxury apartments, an art gallery, retail and restaurants built around a humming square.<\/p>\n \u201cImagine, if you could live, work and play at the epicentre of Africa\u2019s financial and economic hub, or step out your door and be immersed in a vibrant, Afropolitan milieu. This is Kgoro Central,\u201d the high-end promotional video<\/a> promised. The name of the proposed development was Kgoro which means “gateway” in Setswana.<\/p>\n See Kgoro’s residential brochure here<\/a><\/em><\/p><\/blockquote>\n In December 2008, the city awarded the project to the Regiments Kgoro consortium for a purchase price of R280-million.<\/p>\n The rival Sandton Spirit Consortium had offered a higher price, but lost out. The rival Zwelethu Consortium \u2014 which included the National Union of Mineworkers\u2019 property investment arm, Numprop \u2014 was furious and threatened to take the deal to court.<\/p>\n Undeterred, the city signed a deal with the Regiments Kgoro consortium\u2019s special purpose vehicle, Cedar Park Properties 39, on 3 July 2009.<\/p>\n Rewind: what are we missing?<\/strong><\/p>\n One of the people who sat on the bid evaluation committee was William Mathamela, then the city\u2019s treasurer.<\/p>\n In August 2008, one month before the bids closed, Mathamela received a letter that had nothing to do with his day job.<\/p>\n *Mathamela\u2019s correspondence appears amongst Regiments\u2019 internal emails which, through leaks and seizures by the NPA, have become public.<\/p>\n The letter, addressed to \u201cMr. W Mathamela, TLD Mining\u201d, came from Itumeleng Lute, a mining consultant hired to help secure mining prospecting rights on two farms in the Namaqualand district of the Northern Cape.<\/p>\n \u201cI hereby write this letter as a competent person appointed by your company, TLD Mining Projects, to request proof of availability of funds to back up the prospecting right applications,\u201d Lute wrote.<\/p>\n TLD Mining was actually not Mathamela\u2019s company, but Lute clearly believed otherwise: \u201cIt would be desirable to provide proof of availability or commitment of an amount of at most R 900 000.00 per project, which must be provided separately for each prospecting right application,\u201d he wrote.<\/p>\n Mathamela forwarded the letter to Regiments director Eric Wood.<\/p>\n Within a few hours, Regiments had delivered a copy of its financials and two letters of support offering to invest R900 000 in each of TLD Mining\u2019s projects.<\/p>\n Regiments\u2019 prompt and generous response was addressed to Lute but delivered to Mathamela\u2019s CoJ email address.<\/p>\n Three months later, Mathamela sat on the bid evaluation committee that recommended the Regiments Kgoro consortium be awarded erf 575. There is no indication that he declared a conflict of interest, or recused himself from the meeting.<\/p>\n Shortly thereafter, Regiments made a payment of R40 000 for \u201cmining rights\u201d to the Northern Cape department of mineral resources and energy.<\/p>\n Regiments forwarded the proof of payment to Mathamela.<\/p>\n Assessing the evidence<\/strong><\/p>\n On the face of it, this looks like the tender was tainted: Regiments appears to have promised to bankroll a mining deal for a city official who, three months later, apparently helped Regiments to secure a multi-billion rand piece of city property.<\/p>\n But is it that simple?<\/p>\n Mathamela, who is now the chairman of Johannesburg\u2019s refuse removal company Pikitup, denies that he had any personal stake in TLD Mining.<\/p>\n \u201cI wasn\u2019t a director or shareholder, I had no involvement,\u201d he told us when we called him last year. He had merely \u201cintroduced\u201d Regiments to a childhood friend who was looking for investors in a mining venture: \u201cI was facilitating to help somebody,\u201d he told us.<\/p>\n TLD director Tebogo Dipico had a different recollection of events: \u201c[Mathamela] was going to get on board at a later stage … When I said I wanted an investor he said he could do that … As an investor [Mathamela] was going to take an active role at a later stage.\u201d<\/p>\n Mathamela denied this in several lengthy letters from his lawyers: \u201cThe supposed \u2018relationship\u2019 can be summarised as a friendly introduction of parties, having similar goals, by our Client\u201d.<\/i><\/p>\n They also stressed that at the time Mathamela made the introduction, he had no idea he would be asked to evaluate Regiments\u2019 bid for erf 575.<\/p>\n Would Regiments have known, when it promised to invest R1.8-million in TLD\u2019s mining venture, that Mathamela would sit on the bid evaluation committee and have influence over the tender for erf 575?<\/p>\n Maybe not.<\/p>\n But Regiments might have had multiple reasons to curry favour with Mathamela. He played a critical role on the city\u2019s risk committee which oversaw Regiments\u2019 other big deal: the sinking fund contract.<\/p>\n And Mathamela should have known he had placed himself in a what could be perceived as a conflict.<\/p>\n After all, he introduced a childhood friend to Regiments over a business deal. And when a request for a commitment of R1.8 million came, Regiments produced one with hours. As we\u2019ve already explained, all this correspondence passed through Mathamela\u2019s hands.<\/p>\n If his dealings with Regiments were indeed compromising, Mathamela\u2019s presence would have tainted any Regiments business with the city, including the sale of erf 575.<\/p>\n Asked why he failed to declare a conflict of interest and recuse himself from the bid evaluation committee, Mathamela\u2019s lawyers would not commit to whether he actually declared any conflict or instead had not regarded himself as conflicted.<\/p>\n Citing Mathamela\u2019s inability to retrieve a copy of the declaration they only said: \u201cShould any declaration and\/disclosure have been necessary, our Client would have made such a disclosure.\u201d<\/p>\n But if Mathamela had done nothing more than \u201cthe casual introduction of friends\u201d, as his lawyers claim, why did he continue to keep such close tabs on the TLD Mining deal?<\/p>\n We have noted that shortly after the tender for erf 575 was awarded, Regiments paid R40 000 for \u201cmining rights\u201d and forwarded \u201cthe requested proof of transfer\u201d to Mathamela\u2019s city email address.<\/p>\n Then, a few months later, Regiments asked Mathamela to fill in a draft agreement, setting out the details of the joint venture between TLD Mining and Regiments \u201cas per your discussions with Eric\u201d.<\/p>\n Later, Mathamela would ask Regiments to \u201caction the three month bank statements urgently\u201d to secure a TLD mining right.<\/p>\n Asked to explain this, Mathamela\u2019s lawyers told us: \u201cMr. Dipico felt that it will be best if most of the communication was handled by our client, as our client knew the investors.\u201d<\/p>\n All of this, they told us, should be seen \u201cin the context of our Client assisting his (then) friend with a commercial transaction\u201d.<\/p>\n We’re a non-profit newsroom that exposes wrongdoing, empowering people to hold power to account. But we cannot do it without <\/em>your support<\/a><\/u><\/em>.<\/em><\/p>\n Mathamela also complained that Dipico owed him money on another business venture: \u201cMr Dipico\u2019s allegations \u2026 are spurious and vexatious and can only be attributed [to] a concerted attempt by Mr Dipico to tarnish the reputation(s) of our client(s) due to the now-strained relationship.\u201d<\/p>\n Dipico did not deny that he owed Mathamela money, and said the funds were being repaid. But he continued insist that as far as TLD is concerned, Mathamela stood to benefit from the proposed mining venture.<\/p>\n “[H]e arranged for that Financial Competency letter from Regiments, with the understanding that he will get a stake in TLD, that wasn’t a favour,\u201d Dipico claimed.<\/p>\n Dipico added another intriguing allegation: \u201cWhen the whole state capture thing happened with Regiments, he did give me a call to say, \u2018there\u2019s trouble\u2019 … He said the Regiments Capital issue might come up.\u201d<\/p>\n Mathamela told us he did not recall this conversation.<\/p>\n A question of integrity<\/strong><\/p>\n The mine would never actually materialise. TLD failed to convert its prospecting rights into working mines, and Regiments would write off the R40 000 mining investment within a year.<\/p>\n But by this point, Mathamela had resigned as city treasurer and re-emerged as Regiments\u2019 new business partner through a new company, Pro-Grace Investments.<\/p>\n Together, Regiments and Prograce would earn R30.6-million in consulting fees for helping the City of Tshwane to restructure its long-term debt. For more, read our Nedbank investigation<\/a>.<\/em><\/p>\n Mathamela\u2019s lawyers have described our questions as \u201cextremely regrettable\u201d and \u201ccontemptuous\u201d. Their full response is available in our Evidence Docket<\/a>.<\/p>\n