Public Protector releases City of Cape Town, Naspers report

Public Protector Adv. Thuli Madonsela on Wednesday released a report titled Over a Barrel, in which she found that none of the allegations of improper conduct in the procurement of a piece of parking space, registered as Erf 246 Roggebaai, by the City of Cape Town were substantiated by evidence.
The investigation followed complaints received in March 2012 from the Chief Whip of the majority party in Parliament, Dr Mathole Motshekga. This was after the Cape Times newspaper reported that the City was set to purchase the property from Naspers Properties (Pty) Ltd at the cost of R106 million. This was reportedly for the expansion of the Cape Town International Convention Centre (ICC), in which the City is a shareholder.
Dr Motshekga had mentioned that, according to independent property experts quoted in the media, the property was valued at no more than R50 million and that taxpayers would, as a result, have to pay double the property’s market value. It was further alleged that the transaction raised “serious” questions regarding the nature of the relationship between the Democratic Alliance and Naspers.
Dr Motshekga had requested the Public Protector to look into whether the deal was above board and of benefit to the people of the City; whether the purchase price in the amount of R106 million was justified; whether there was collusion between the City and Naspers to short-change taxpayers; and whether there were individuals who benefited from the deal or “whose palms were greased” through the deal.
During the investigation, the Public Protector identified two more issues for investigation, namely; whether approval by the City Council was required to consent to and register a height restriction against the property and whether the City, as the prospective purchaser, took charge of the negotiations, which led to the sales agreement.
Following the investigation, which included the procurement of expert services to review the valuation of the property, with the opinion of the said expert being that the City’s valuation was sound, the Public Protector found that the transaction between the City and Naspers was above board and generally of benefit to the public.
She found that reports or allegations that the value of the property was no more than R50 million, were not substantiated by the evidence obtained during the investigation.
The Public Protector, however, found that the purchase price of the property was R2 million more than the initial valuation that was obtained by the ICC in August 2010 and R1 million more than the subsequent updated valuation.
No evidence could be found to indicate collusion between the City and Naspers to short-change taxpayers, the report stated. In addition, no evidence of individuals improperly benefiting through the transaction could be found.
On the additional issues investigated, the Public Protector found that the officials of the City failed to obtain approval from the City Council prior to concluding an agreement with Naspers to register a height restriction against Erf 246 in favour of Erf 244 against the title deed of the Erf 246, which condition shall be praedial in nature and endure in perpetuity. This failure constituted maladministration, she said.
In terms of Regulation 5(1) of the Municipal Asset Transfer Regulations read with section 4(1) of the City of Cape Town By-law relating to the Management and Administration of the City’s Immovable Property, the officials ought to have obtained the City Council’s authorisation.
The Public Protector further found that the City, as the prospective purchaser, failed to take charge of the negotiations from the outset, leading to the sales agreement. This constituted maladministration.
In view of the two findings of maladministration, the Public Protector directed that the City Manager ensure that the condition to the sale agreement of 18 November 2011 between the City and Naspers, regarding the height restriction against Erf 246 in favour of Erf 244, be referred to Council for consideration and resolution.
The City Manager, after having had regard to roles and responsibilities of officials, must consider taking disciplinary action, should any officials be found to have neglected their duty. As far as the ancillary issues and complaints relating the ICC expansion are concerned, the Public Protector directed that the Executive Mayor establish a task team to attend to all allegations and to report back to the Mayor, the Municipal Manager and the complaints concerned. The task team ought to comprise, among others, the City Ombudsman and its Head of the Forensic Investigation Unit.
Click on the following link to access the full report:
Issued on behalf of the Public Protector by:
Oupa Segalwe
Manager: Communication
Public Protector SA
Tel: (012) 366 7035
Cell: 072 264 3273 
Published Date: 
Wednesday, December 5, 2012