Treasury queries ECDC’s failure to note probe.
THE provincial treasury has asked for a controversial multimillion rand golf estate deal to be referred to the Hawks. The instruction was communicated to the Eastern Cape Development Corporation (ECDC) in a letter on March 26 from treasury HoD Marion Mbina-Mthembu.
Treasury questioned the ECDC board for flouting corporate governance by not disclosing a probe into how R50-million of public money evaporated in a failed golf estate.
The Bushman Sands Development (BSD) is the subject of a Norton Rose legal due diligence probe, which sought to pinpoint why ECDC spent R50-million in loans and on shares in the failed project. Treasury directed the ECDC board to refer the matter to the Hawks.
In its report, Norton Rose raised the red flag as crucial documents such as board resolutions, business plans and valuation reports were missing during its probe in 2012.
Mbina-Mthembu said in the letter to ECDC: “Treasury is in possession of the Norton Rose legal due diligence report. We could not ascertain from the published annual financial statements whether you had disclosed that you had undertaken a legal due diligence as an entity in line with accounting disclosure standards. Treasury recommends that the file be referred by yourselves to the directorate for priority crime investigation unit.”
The due diligence inquiry was commissioned by ECDC boss Sitembele Mase, who has since been suspended by the board for disbursing R22-million to suppliers contracted by provincial treasury for former president Nelson Mandela memorial events, allegedly without board authorisation. The R22-million was taken from the social infrastructure fund after a provincial cabinet resolution.
The Norton Rose report details how ECDC bought 30 BSD shares worth R1 each for R100 000 each in 2003, and pumped in a further R37-million in loans between September 2003 and October 2004, effectively owing itself.
An amount of R10-million to BSD from ECDC for “conciliation” was classified as equity (shareholding). The development was touted as poverty alleviation in Alicedale with the creation of 7 000 jobs. The project featured a golf course designed by Gary Player, a 4-star hotel bought by Pastor Adrian Roebert’s River Group and a residential property development. The Mantis Group, linked to Shamwari Game Reserve founder Adrian Gardiner, is also involved.
Responding to the Dispatch, ECDC said losses relating to the BSD were in the latest annual report. “The board is constantly monitoring and is looking at it holistically in conjunction with other processes. ECDC is represented in the current BSD Board and is co-operating with the other interested party to ensure that the underlying assets in the BSD are retained and properly maintained,” said board chair Nomfanelo Magwentshu.