The new Cosatu headquarters in Braamfontein. File picture: Giyani Baloi

Johannesburg - When Cosatu moved house in 2011, the federation overpaid R6.3 million for its new building in Braamfontein, Joburg – and undersold its old Braamfontein building by up to R9.5m.

When the transaction was completed, Cosatu was almost R16m out of pocket. Moreover, the federation still owes R4m to the property guru at the centre of the scandal.

These details are contained in the forensic audit report compiled by SizweNtsalubaGobodo (SNG) at the behest of Cosatu.

Auditors found participants in the transactions did not initially have property valuations done on the buildings; members of the task team set up to deal with the sale and purchase had very little idea of what was going on; and no negotiations took place regarding the selling price of the old Cosatu building.

The report puts the blame for these irregularities squarely at the feet of Eskom’s current acting chief executive, Collin Matjila.

At the time, Matjila was the chief executive of Kopano Ke Matla, the federation’s investment holdings company.

Kopano and Matjila were requested to assist with the transactions based on their knowledge and experience.

However, Cosatu general secretary Zwelinzima Vavi, who set up the task team to manage the process, does not escape blame in the report.

Vavi was meant to keep a close eye on Matjila, and he allowed the old Cosatu House to be sold for R10m, even though its true value was higher and there were other offers on the table.

Vavi told the auditors he was forced to sell “under duress” because a “legal commitment was already in place (to sell at the lower price)”.

The Star sent a number of questions regarding the deals to Matjila, which he did not answer, claiming Cosatu president S’dumo Dlamini had refused to hand him a copy of the report.

However, a confidant of Matjila’s, speaking on condition of anonymity, said he had been under huge pressure from Cosatu’s national office-bearers to sell and purchase the buildings quickly, which was why corners were cut.

According to the SNG report, Matjila was introduced to property developer Ebrahim Joosub, the owner of the building Cosatu wanted to buy, by a former Kopano employee, Salim Essa. Although Joosub initially demanded R60m, this was negotiated down to R50m.

However, Matjila could not provide the auditors with evidence of the negotiation process.

The report says there is also contradictory information on who assisted Matjila with negotiating the purchase price. Matjila’s and Vavi’s inputs contradicted each other: one said it was Tamela Consultants, while the other said it was an individual named Iva Isaacs.

“We requested contact details (for) ‘Salim Essa’ and ‘Iva Isaacs’ from Mr Matjila… This information has, however, not been provided by Mr Matjila,” the report reads.

Matjila could also not provide any numbers for Tamela Consultants, as he said he had lost contact with them. He also had no documentary evidence showing the building was worth R50m, and no due diligence had been done because the building was considered to be in good condition.

It was visited by Cosatu’s national office-bearers, who approved of it.

Later, Joosub formed a new company, Street Talk Trading 175 CC, to buy the old Cosatu building. No due diligence was done on it either, as its value was not considered significant enough.

A “desktop” evaluation by Tamela Consultants, for which there are no documents, valued the building at between R8m and R10m. According to the report, the R10m received from Joosub for the old Cosatu House would help to pay off the new one.

But Cosatu’s old headquarters, situated a stone’s throw from Joburg’s Park station, was not worth a mere R10m. Based on two later valuations that the federation commissioned from Deloitte and CPF Valuers, the old Cosatu House was worth between R12.6m (Deloitte) and R19.5m (CPF).

Not only did Joosub pay up to R9.5m less for the old building, he also received R6.3m more for the building he sold to Cosatu.


May 2008: A report from Cosatu’s national office bearers recommends renovating the old Cosatu House, rather than purchasing a new building as Cosatu could not afford an outright purchase.

September 2008: The Cosatu executive asks for a purchase to be investigated.

November 2008: Cosatu’s investment arm, Kopano Ke Matla, is asked to assist with the sale and acquisition process.

February 2010: A letter written by Zwelinzima Vavi states the intention to purchase 110 Jorissen Street for the negotiated price of R50 million. The building was worth R43.7 million at the time of sale.

March 2010: Auditors Deloitte place the value of Old Cosatu House at R12.6m.

2011: JBI cc, the company that agreed to sell 110 Jorissen Street to Cosatu, acquires it for R33m from a previous owner.

May 2011: Sale of old Cosatu House and the acquisition of the new property is agreed. Cosatu pays R50m for the new property, R10m of the debt is offset with the money from old building. No due diligence is performed on either building and there appears to be no negotiation on the sale price of Cosatu’s old building.

August 2011: Vavi signs off on the transfer “under duress” because the legal obligation has already been made.

November 2011: An e-mail from Popcru to Vavi states they would like to buy the old Cosatu building for R15 million, R5 million above what it sold for. The old building has already been disposed of and Vavi responds by saying: “Please don’t rub the salt! We have been screwed literally by these fellows.”

A second market evaluation in the same month reveals the property is worth R19.5m but it is too late to back out of the deal.

March 2012: Cosatu moves to their new premises. But delays in the renovations means they pay almost R1m rent to remain in the old property until everything is ready.

Early 2013: Vavi’s stepdaughter Thabisa Ngema joins service provider VMS Technologies on a contract basis. AT the time VMS is installing various technologies in the new building for Cosatu. Ngema works there for four months until media reports of her involvement surface. Vavi says he didn’t know she was working there, while Ngema says she didn’t know VMS worked at Cosatu House.

February 2013: At a meeting of the Cosatu executive committee, rumours surface that the new building is not owned by Cosatu but by an investment arm. The executive decides to pursue a forensic audit of the sale of the old Cosatu house and purchasing of a new property.

They are also asked to investigate renovations done by a company in which Vavi’s stepdaughter is involved.

February 2014: The report is concluded. Vavi claims he was never consulted on the findings of the report.

The Star