The East London High Court sitting in Vincent yesterday heard explosive details of how the Industrial Development Zone (ELIDZ) that shelled out millions on bonuses for its executives, and tried to sell government land to private companies to pay staff salaries and bills.
This was revealed in evidence led by dismissed Chief Financial Officer Babalwa Magongwa, who testified before Judge Bantubonke Tokota.yesterday
Magongwa is suing the organisation for R6-million for wrongful termination of contract.
Magongwa was appointed to the position on October 7 2014 and her contract was scheduled to run from November 1 2014 to October 31 2019,
But she Magongwa only worked for four months.
She approached the court claiming she was stripped of her duties as CFO after reporting to CEO Simphiwe Kondlo and members of the board that the IDZ was insolvent and without a reasonable expectation of trading out of its financial predicament.
She said the board approved R7-million in bonuses in late 2014, three months before the IDZ was expected to run out of money to pay staff salaries and suppliers.
She told the court yesterday the IDZ had lined up two land deals in 2015 with two companies, Emling Properties (Pty) Ltd and Metrofile.
She said, however, that the provincial treasury had blocked the IDZ board proposal that land be sold to the two companies.
She said Emling Properties, which focuses on developing customised buildings for blue-chip clients, would have bought 10727m² of land for R3.7-million and that they would have spent R18-million developing a Pepkor Retail Group’s warehouse and distribution facility. Metrofile would have spent about just over R2-million on the sale of 5498m² of land and would have spent R23-million developing on it.
MagongwaShe told Judge Tokota that when the proposal, which was supported by Kondlo, was brought to her for her approval, she instructed that it be taken to the provincial treasury for approval if the transactions were in order.
“I informed them in writing that if treasury later disapproves of this sale then the accounting authority might be required to account for the sale,” Magongwa told the court.
She expressed her doubts to the judge saying state land was significant in nature irrespective of its value.
“The view of the entity was that this was a regular thing.
“I was of the view that it is better to keep state land under the ownership and control of the state for future use. Instead of selling it we would rather keep it for the department of education to build a school, the department of health to build a clinic or the department of human settlement to build houses. There will always be a need,” Magongwa told the court.
She said as far as she was concerned, the moratorium on the sale of government land sale was still in effect.
She further revealed how a plan by the board to sell a sizable chunk of land to Mercedes-Benz South Africa in order to expand its operations was also crushed, citing government’s policy not to sell land to foreigners.
The trial continues today. — zwangam@dispatch.co.za
Ex-CFO: IDZ tried selling state land
This was revealed in evidence led by dismissed Chief Financial Officer Babalwa Magongwa, who testified before Judge Bantubonke Tokota.yesterday
Magongwa is suing the organisation for R6-million for wrongful termination of contract.
Magongwa was appointed to the position on October 7 2014 and her contract was scheduled to run from November 1 2014 to October 31 2019,
But she Magongwa only worked for four months.
She approached the court claiming she was stripped of her duties as CFO after reporting to CEO Simphiwe Kondlo and members of the board that the IDZ was insolvent and without a reasonable expectation of trading out of its financial predicament.
She said the board approved R7-million in bonuses in late 2014, three months before the IDZ was expected to run out of money to pay staff salaries and suppliers.
She told the court yesterday the IDZ had lined up two land deals in 2015 with two companies, Emling Properties (Pty) Ltd and Metrofile.
She said, however, that the provincial treasury had blocked the IDZ board proposal that land be sold to the two companies.
She said Emling Properties, which focuses on developing customised buildings for blue-chip clients, would have bought 10727m² of land for R3.7-million and that they would have spent R18-million developing a Pepkor Retail Group’s warehouse and distribution facility. Metrofile would have spent about just over R2-million on the sale of 5498m² of land and would have spent R23-million developing on it.
MagongwaShe told Judge Tokota that when the proposal, which was supported by Kondlo, was brought to her for her approval, she instructed that it be taken to the provincial treasury for approval if the transactions were in order.
“I informed them in writing that if treasury later disapproves of this sale then the accounting authority might be required to account for the sale,” Magongwa told the court.
She expressed her doubts to the judge saying state land was significant in nature irrespective of its value.
“The view of the entity was that this was a regular thing.
“I was of the view that it is better to keep state land under the ownership and control of the state for future use. Instead of selling it we would rather keep it for the department of education to build a school, the department of health to build a clinic or the department of human settlement to build houses. There will always be a need,” Magongwa told the court.
She said as far as she was concerned, the moratorium on the sale of government land sale was still in effect.
She further revealed how a plan by the board to sell a sizable chunk of land to Mercedes-Benz South Africa in order to expand its operations was also crushed, citing government’s policy not to sell land to foreigners.
The trial continues today. — zwangam@dispatch.co.za
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