North West Legislature Local Government Committee concerned over Human Settlement Department expenditure of R54 million on an abandoned housing project
The North West Provincial Legislature’s Portfolio Committee on Local Government and Human Settlement has raised a serious concern that the Department of Local Government and Human Settlement has spent over R54 million on a Community Residential Unit project in Unit 3, Mmabatho, that has been abandoned and the monies were never accounted for. This came after the Portfolio Committee went on an unannounced oversight visit to assess the status of Community Residential Units at Ext. 39 in Mahikeng and Unit 3.
According to the Acting Chief Director for Housing Development at the department, Mr. Vusi Bidi, the department entered into a Memorandum of Understanding with Marang Estates (the developer) and the Social Housing Regulatory Authority (SHRA) to develop 2400 social housing units on Marang Estates Mixed-Housing Project in Mahikeng (Unit 3) and made an initial contribution of R54 million as part of Phase 1. Marang Estates had to contribute 20% on the amount of the project and SHRA also had to make a certain contribution.
“It is important to note that the department entered into this project late after construction had already started, we were called by SHRA. The department initially transferred the amount (R54m) to the SHRA but the authority returned the monies claiming that the money was too late and that the developer was not registered with National Home Builders Registration Council (NHBRC) and did not meet its standards as there is no compliance certificate issued.
“The R54 million was then transferred to the developer by the department as part of Phase 1. At the start of Phase 2 of the project, we discovered that the project had been abandoned and there was no one to account on the monies already paid but SHRA had opened a case and came to the department for affidavits of the people that were involved and also visited the municipality,” said Mr. Bidi.
He said the developer has the title deed for the land but do not know how they acquired because they did not pay all the monies during the purchase of the land.
The Acting Director for Housing Division Planning, Mr. Tebogo Phaedi said the land was sold for R89 million at an auction to the developer who was the previous owner of the land.
“The company was liquidated and the land was auctioned. The same developer then bought the land and only paid 5% of the actual amount. We do not know how he acquired the title deed as there was a huge outstanding amount. In a way the municipality was robbed of the land as not even half of the purchase price was paid for a prime land. We are still awaiting the investigations to find out how these people got the title deed,” said Mr Phaedi.
Chairperson of the Committee, Hon. Motlalepula Rosho, did not mix her words while questioning the department on how they recklessly spent public funds without verifying the details pertaining to the contract.
“Anybody can see that the department entered into this thing recklessly and they are not doing oversight on their projects. There is no value for money here and there is huge demand for accommodation in Mahikeng. R54 million is gone and it cannot be accounted for, Marang is not even coming on board, the municipality itself issued a title deed without verifying whether the money was paid or not.
“This matter has to be investigated, the department must recover that R54 million. We are going to hold the municipality accountable as well as this is for the interest of our communities and government, how do they give a person a title deed without even paying all the money the land was purchased for,” said Hon. Rosho.
The Committee next week will call the Head of Department for Human Settlements, the municipality and the developers to come and account as to what actually happened in the project and what are their intentions going forward.
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