Land Bank head office in Centurion, Pretoria. Picture : Masi Losi
Land Bank head office in Centurion, Pretoria. Picture : Masi Losi

ANC bigwigs sued over R100m loan

By Loyiso Sidimba And Candice Bailey. Time of article published Mar 30, 2014

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Johannesburg - Several ANC heavyweights, high-ranking government officials and property mogul Roux Shabangu have been slapped with a massive claim by the state-owned Land Bank, which is trying to recoup an unauthorised R82 million loan it granted them for a botched North West development.

The development was mooted to be a massive tourism attraction in the Hartbeespoort area, complete with a hotel, conference centre, shopping mall and over 400 sectional title units.

But eight years after Westside Trading 570 signed the contract, the deal has gone sour. The land is still vacant and has not been sold, the company is in liquidation, and the Land Bank wants its multimillion-rand loan back, with interest.

According to papers filed in the Pretoria High Court, Westside Trading had failed to make payment of the R82m by the end of April 2009.

Summons was issued against the company and its nine directors, who were sureties and co-principal debtors.

Shabangu, Gauteng legislature speaker Lindiwe Maseko, Department of Co-operative Governance and Traditional Affairs chief operations officer Dr Lydia Sebego, and former SABC board member Desmond Golding, who sits on the ANC’s economic transformation committee and Cosatu’s panel of progressive economists, are among the nine shareholders in the company.

Golding was previously former public works minister Geoff Doidge’s economic adviser, and is currently the head of the KwaZulu-Natal Department of Economic Development and Tourism. Adriaan van Rooyen, one of company’s liquidators, this week confirmed that the matter was proceeding in the high court.

Speaking to The Sunday Independent yesterday, Maseko, who is fourth on the ANC’s Gauteng province-to-national list for the May 7 elections, and the ruling party’s former treasurer in the province, said that while she was still on the company’s books, she was not involved in the operations.

“I just want out of this thing. It did not work for me. I have asked to be removed,” she said.

Maseko said things “fell apart when one of the shareholders, Jacob Sihlangu, died in 2008”.

Sihlangu is understood to have been responsible for the construction.

Shabangu’s lawyer, Francois Botha, did not respond to questions on Friday, and the businessman referred questions to his spokeswoman, Percy Shabangu, who said she would be able to respond only next week.

The Land Bank’s lawyer, Leslie Mkhabela, said his client’s claim was against only the individual directors of Westside Trading who stood surety for the loan, and not the company, as it was now in liquidation. The Land Bank had lodged another claim against the company with its liquidators.

Mkhabela said the case would probably be heard in court next year. “We’re still exchanging pleadings at this stage,” he said.

In terms of the agreement, signed in 2006, the Land Bank would lend R100m to Westside Trading 570.

Of the R100m, R51m would be used to buy six pieces of land in Hartbeespoort in the North West, collectively amounting to 32 hectares.

The remaining R49m would be used for township establishment and engineering service fees.

Westside Trading agreed to repay the Land Bank once the land was sold. At the time of the signing, it is understood that deeds of sale had already been signed.

Between 2006 and 2007, the Land Bank gave the company R62m.

But in 2007, the Land Bank informed Westside Trading that the loan fell outside its mandate in terms of the Land Bank Act, and it could not make any further advancements.

The bank’s turnaround came at the same time that then-minister for agriculture and land affairs Lulu Xingwana placed a moratorium on all payments from the bank’s land for development finance unit.

According to the court papers, as at January 31, 2009, the liability of the company to the Land Bank stood at R94 million.

The Land Bank argues that the company entered into an agreement when it acknowledged liability of R82m, which would be paid in full by April 2009.

It says its claim is based on a suretyship agreement between the Land Bank and the company’s shareholders that dates back to July 2006.

This suretyship agreement, it argues, binds the directors individually and collectively as sureties and co-principal debtors.

Judith Bornman, a 10 percent shareholder in the company, told The Sunday Independent the Westside Trading 570 dealings were complicated, as the shareholders were divided by infighting.

She acknowledged the court case.

Speaking about the development, she denied that Maseko, Sebego and Shabangu were appointed as a result of the political influence they could exert.

“We were all hoping to make money, but things started going wrong when the Land Bank cancelled the loan. Up until then, we truly believed that Lank Bank had the mandate to fund us,” said Bornman.

“Everybody is under the impression that we made a whole lot of money, but nothing came of the development, and in the end we lost a whole lot of money,” she said.

The company’s other directors include Pretoria-based businesswoman Gezina van Rooyen and Mandla Shumba, who each own 10 percent of Westside Trading 570. They are also opposing the Land Bank’s claim. - The Sunday Independent

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