Durban - The State had a tough time on Thursday trying to convince the Pietermaritzburg High Court that 1 244 properties built in Phoenix by businessman Jay Singh’s company Woodglaze Trading should remain under a preservation order.

Advocate Coenraad Rheeder also had trouble explaining why 710 more properties should be part of the order.

The provisional order was granted last month and placed the flats, which were part of the Phoenix social housing project, under restraint.

In addition, rentals estimated at R3 million a month, from the flats, had to be paid to Eugene Nel, a court-appointed curator .

The argument on Thursday was whether the order should be extended.

Woodglaze was accused of fraudulently accessing R236 million worth of grants from the Social Housing Regulatory Authority by setting up a social housing company called Moko Rental Housing Project to access state funds to buy the flats from itself.

Acting Judge Peter Olsen questioned how the properties were considered as the proceeds of crime, saying that senior advocate Maurice Pillemer, for Woodglaze, had argued that the flats had been built by Woodglaze with its own resources.

Throughout Rheeder’s argument, the judge asked him several times to explain why the preservation order should be extended.

Once, the judge said he was trying hard to understand Rheeder’s point, but was battling.

Rheeder’s response was that he was having difficulty in doing so (explaining his argument further) and was trying his “level best”.

A few times during his submissions Rheeder conceded that the State’s papers were “thin”, but he said it was enough to satisfy the test of preserving property.

Rheeder said that, according to the court papers, R235m had been paid out of public funds in respect of the housing project to Woodglaze.

The papers also mention money being paid to Moko, which had the same directors as Woodglaze.

He added that the flats were the proceeds of unlawful activities because they were derived from the proceeds of an unlawful act.

The judge said it had been submitted that there was nothing to show that Woodglaze built the flats using money unlawfully.

Rheeder responded: “By having received R235m for payment of the flats, the flats became tainted as the proceeds of crime.”

Pillemer earlier said the State had to show criminal conduct or a crime, but did not.

“He said that Woodglaze built the flats and wanted to recover the money by selling them to a social housing institution.

“There isn’t a link to identify the property as an instrumentality or the proceeds of crime… there has to be admissible evidence, the application is fundamentally flawed.”

Judge Olsen said that he could not make a finding on corruption; the only thing he was concerned about was if the preservation order was justly granted, and if he could extend it.

Judgment takes place on Friday.

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The Mercury