Manaka defends controversial government leasing deal

Manaka defends controversial government leasing deal

Political connections were not leveraged to secure inflated prices – CEO Joe Mathebula.

The company involved in a controversial leasing agreement with the Department of Home Affairs (DoHA) has defended itself against allegations that it has leveraged political connections to secure inflated prices, saying that rentals are market related.

Manaka Property Investments leases approximately 25 400m² of office space to the DoHA in the Hallmark building in Pretoria’s CBD.

The lease was signed by the Department of Public Works (DPW) which, under its former minister, Gwen Mahlangu Nkabinde, was responsible for authorising the police headquarters leases which resulted in the suspension of police chief Bheki Cele.

Reports released in the media on Monday suggested that the lease agreement was costing the DoHA more than one-and-a-half times what it previously paid for office space.

According to a written reply to a parliamentary question, Home Affairs Minister Nkosazana Dlamini-Zuma, said the offices are costing her department around R109/m² per month, reports said.

This would translate into a yearly rental of R33.2m for 25 338m² of office space, as compared to a total of R25.7m for 30 859 m², or R69.40/ m², the department had been paying previously.

However, Joe Mathebula, Manaka Property Investments CEO, claims that Dlamini-Zuma’s costing has not been adjusted to exclude 400 parking bays being rented to the department at R450 per month.

The actual lease agreement, claims Mathebula, is at a rate of R87.76/ m² per month.

“The lease is for eight years as per our 75% BEE status according to Public Works,” he said.
According to the Rode Report, which evaluates average rental prices for properties, an A Grade property in the Pretoria CBD would typically cost around R80/ m² a month, excluding VAT.

A Grade property would be defined as being “generally not older than ten years, unless renovated, in a prime location with high quality finishes”.

Manaka claims to have invested around R70m into refurbishing the Hallmark building prior to leasing it to the DoHA.

Mathebula also contends that the increase in the price of the office space is natural, owing to the fact that the department has relocated its offices from an outlying industrial area to a prime office location in the Pretoria CBD.

“People want to be silly” when comparing rental prices, said Mathebula. “The department was leasing in Silverton which is an industrial space; it’s not even an office space,” he said.

Four of Manaka’s key management staff, including its chairman, CEO, director and a major investor, served as state officials in Limpopo leading to allegations that it had leveraged political connections to secure the lease agreement.

Manaka’s chairman and 50% shareholder, Thaba Mufamadi, is a serving ANC MP, chairman of Parliament's standing committee on finance and the Former Minister of Finance and Economic Development of Limpopo.

The current Limpopo Premier, Cassel Mathale, is registered by the Companies and Intellectual Property Commission (CIPC) as a Manaka director.

Mufamadi and Mathale are currently facing a probe by Parliament’s ethics oversight committee questioning how a company connected to public representatives had come to be awarded the contracts, apparently in breach of treasury regulations.

However, says Jannie Moolman, MD of the Moolman Group which holds a 25% stake in Manaka, and former chairman of the Limpopo tender board, Mufamadi had not held positions in political office at the time when Manaka was founded in 2007.

And, according to Manaka CEO – who is the former CEO of parastatal Trade and Investment Limpopo – Mathale had been asked to resign from Manaka but, owing to a difficulty with processes at CIPC, had not been able to do so.

“When Mufamadi and I decided to form Manaka he was out of political office,” said Moolman.
“When we formed Manaka he was no longer in politics, he was an ANC office bearer… A few years after, we sat with a situation where Mufamadi became a national MP”.

Moolman was unwilling to comment on the parliamentary probe saying simply that “I hope it’s not the case” that Mufamadi has breached and tender regulations in securing the lease for the Hallmark building.


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