The Nelson Mandela Bay Metropolitan Municipality is paying huge monthly rentals for office space it isn’t using, but nobody is saying why – and if you’re not a friend of the friends of the man known within the ANC as Comrade Giraffe, you’re not likely to find out.
Better known as Nceba Faku, Comrade Giraffe spent 13 years on Robben Island, and since 1995 has been at the helm of the ANC in the Port Elizabeth region – which makes him an extremely influential person. Back in 2004 when the first of the office leases were signed, Faku was also mayor of the windy city (aka “the friendly city”) – and a good friend and sometime business partner of PE businessman Yossuf Jeeva, into whose company accounts those municipal rents tumble each month.
But first some history. The general decline of the Eastern Cape over the past ten years is sadly reflected in the decline of its major city – and nowhere more than in the city’s historic central business district. Devastated by economic recession and strangled into stagnation by a bleak ring of raised concrete motorways, five years into the new era the few high-rise office blocks built on Govan Mbeki Avenue to match the new highways were emptying as fast as the old city lanes. The populace simply took off up Old Cape Road for less threatening new shopping centres in the suburbs.
(If the 1970s planners who designed those motorways thought this would signal how progressive PE had become, all they succeeded in doing was destroying Port Elizabeth’s last claim to fame: its history.)
Three of the country’s major financial institutions, which had rushed to stamp their mark on the small city’s new “skyline”, with multi-storeyed concrete towers, quickly found these a serious liability. “Seventy percent of the office and retail space in the city was vacant. Our maintenance and management costs far exceeded our rental income – with no prospect of improvement in the foreseeable future,” says Bonnie Olivier, sales manager at Sanlam Properties.
Sanlam’s 20-storey Starport building at 40 Govan Mbeki Avenue had already been written down in value to R2.27m in 1991. Deeds Office records reveal that in 2003 Sanlam was happy to sell it for just R1.14m.
When Norwich Union’s eight-story building just down the road entered Investec’s property portfolio (via Fedsure) in 2001, it was valued at just R4m. The following year Investec was happy to sell it for R2.5m.
Up the road, at 62-64 Govan Mbeki Ave, Old Mutual did somewhat better a few years later when it managed to sell its double-volume eight-storey block for R15m.
Their common history does not end there: all three buildings, it emerges, were sold to Yossuf Jeeva’s Africorp International Properties. Now here’s the really extraordinary bit: while Investec was so desperate to dump the Norwich building that it settled for a sale price of just R2.5m, almost immediately the deal was done, Investec granted Jeeva bonds over the three “hopeless” CBD properties for a total of R49.4m – more than three times what he had paid for them.
Investec Bank spokesperson Ciaran Whelan confirmed to noseweek that they had sold the property at a loss, but insisted this was “because that was the best price we could get”.
Asked about the around R50m Investec then advanced to Jeeva’s company, Whelan confirmed: “Yes we advanced that amount but we cannot disclose reasons as that would breach confidentiality. All I can say is it was part of a larger transaction.”
Of that, noseweek has no doubt.
Whatever the transaction, Investec was clearly of the view that Jeeva’s prospects in Port Elizabeth’s CBD were way better than those of Sanlam, Old Mutual or Investec itself.
Their assessment was correct. The Norwich Life Building has a new name, Kwantu Towers, and a brand new tenant: The Nelson Mandela Bay municipality rents the bottom five floors – and three of them have remained unoccupied since their lease was signed in 2006. Two of those vacant floors were officially assigned to the municipal communications department – but only two people appear to occupy them: communications director Roland Williams and his personal assistant. The rest of the communications department remain housed at the council-owned Algoa House, where they’ve been since they were “temporarily” moved there in 2006, supposedly until Kwantu Towers was ready for their occupancy.
So far, this wasted space appears to have burned over R6m of the municipal budget. (Since 2006, the council has paid around R10.3m in rents for the Kwantu Towers premises.)
Contacted for comment, the council’s chief operations officer, Dr Israel Tsatsire, insisted that “the communications department” is housed at Kwantu Towers. When noseweek pointed out that, yes, indeed, the provincial government’s communications department rents a floor in Kwantu Towers, but the municipal communications department is housed at Algoa House, Dr Tsatsire hung up.
Kwantu Towers is one of some 18 buildings owned in PE by Jeeva’s Africorp International Property.
Nceba Faku (“Comrade Giraffe”) held the post of executive mayor of Port Elizabeth from 1995 to 2006. (In that period – in June 1998 – Faku was also listed alongside Yossuf Jeeva as a director of Cacadu Investment Company. The Department of Trade and Industry shows this company to have been deregistered in April 2004.)
Jeeva appears to have offered part of Kwantu Towers to the municipality for rental for the first time in mid 2004. It’s not known what discussions had already been held between the council and Jeeva, but in June 2004 municipal facilities manager Burnett Meyer received an odd draft letter from Yossuf Jeeva, which he was apparently meant to cut and paste onto his own letterhead, for circulation as a departmental memo. Dated 28 June 2004, the draft signed by Jeeva begins: “We are pleased to advise you that we have been offered office space suitable to the person and the reputation and standing of the members of the senior management, for communications, of the Nelson Mandela Metropolitan Municipality.
“The premises are ideally located in a prestigious building situated next to the City Hall, on the market square, which is within walking distance of both the mayor's office and Pleinhuis. The building owners are in the process of revamping and renovating the building to suit and promote the new image of the Communication Department; this will include a 1200sqm function area which is situated directly opposite the area set aside for the Communication Department. Although we will not be charged monthly rental for this function area it will be available to us on notice to the landlord at a minimum rental.
“The aforesaid renovations are to our satisfaction; copies of the plans are attached hereto for your perusal. The renovations are of a modern style which excludes any old fashioned typical government image.”
Apparently Meyer wasn’t interested in playing along. A source in the municipality told noseweek: “Meyer was a real professional. He questioned why a provider would dictate what was to be contained in the internal memo. This questioning didn't go down well with the City fathers. It was decided somewhere higher up to bypass Meyer in concluding the deal.”
A frustrated Meyer resigned from the council and his position was taken over, in an acting capacity, by Mrs Makaziwe Mokitimi. By 15 July 2004 Mokitimi was writing in an internal memo to the council that a decision had been made to move the communications department to Kwantu Towers. She included only some of Jeeva’s copy in her own, but Jeeva’s original letter, of which noseweek has a copy, remained in the council file.
Mokitimi wrote: “Negotiations were entered into between Kwantu Towers and the Communications Office with regards to the leasing of office space. Africorp International Properties has in principle agreed for the Communications Office to utilise space in their building subject to the signing of a lease. The Communications Office is therefore ready to move from Pleinhuis to Kwantu Towers.”
As we now know, the communications department moved to a different building – Algoa House. It is still there.
In 2006, Comrade Faku’s administration announced a tender for the accommodation of the Nelson Mandela Bay Business Centre and the office of Economic Development, Tourism & Agriculture.
Several PE property players handed in bids, including Madobo (Pty) Ltd, Gutsche Investment Management Company (in a consortium with Ken Denton's Denton Properties) Zig Zag Properties, Transnet's Propnet and Jeeva's Africorp International.
Apparently, it was then decided during the evaluation of bids to favour Africorp’s Kwantu Towers, because it was within 500m of the City Hall. Sources claim this factor was inserted as a requirement only at this late stage, to ensure that the tender be awarded to Africorp.
When the council received Africorp’s three-year renewable lease agreement, Advocate Sigodi, for the municipality, questioned a number of its clauses. For example Africorp wanted the municipality to insure all plate glass forming part of the premises. Sigodi’s comment: “We can’t insure what we don’t own.”
Another example: The lease required that the municipality “shall at all times and at its own expense, keep and maintain the interior and exterior of the premises, inter alia, the electrical installation, gas, drainage and sanitary works, the thermostats and air-conditioning appliances, carpeting, partitions and all other fixtures and fittings therein”. Sigodi’s note: “Check this clause!”
He questioned some dozen clauses – including one specifying that the council should pay the municipal rates on the building. The owner of a property is, of course, legally responsible for rates.
All of Advocate Sigodi’s objections were disregarded and the council signed the lease, with automatic renewal every three years.
Rent for the single floor then being signed for was set at R52,096 a month for the first year, R57,305 a month for the second year and R63,036 a month for the third year.
When noseweek visited Kwantu Towers in May, five floors were signposted as occupied by the Nelson Mandela Bay Metropolitan Municipality, with only two showing signs of actually being occupied. The eighth floor houses the Africorp International Properties offices. Also occupying a floor is the state-operated National Youth Development Agency – and the SAPS Crime Prevention Unit.
A tower of power
The Friendly Windy City has a new king: Comrade Giraffe Faku. As chair of the Port Elizabeth regional ANC Faku appears to be the driving force behind politics in the city. Actually, a closer look finds he’s worn the crown for some time.
Born in New Brighton in 1956, Nceba Faku completed his matric in 1978 while serving a 13-year sentence on Robben Island. Following his release, Comrade Giraffe – given the nickname on the Island for his great height – became a regional organiser for the ANC/SACP local government portfolio and was elected chairperson of the Port Elizabeth Transitional Local Council in 1994. In 1995 he was elected ANC regional chairperson and mayor of the City of Port Elizabeth.
In those same early days of democracy, the family of his pal, businessman Yossuf Jeeva was embroiled in a battle over R49m in unpaid taxes, after the Receiver had placed two Jeeva companies in liquidation. The fight went all the way to the Supreme Court of Appeal in Bloemfontein, where four judges ruled in favour of the Receiver, ordering the directors (including Yossuf’s father Adam Jeeva) of Theunsus Transport (Pty) and Spirvin Bottling (Pty) to pay the outstanding R49m. It’s not known whether of not this was ever paid.
In September 2006 Faku married 22-year old Unathi Pazi at a ceremony that drew a who’s-who of South African politics. Comrade Giraffe was driven to the church by Roxane Jordaan (wife of 2010 World Cup LOC CEO, Danny Jordaan) in her black BMW 650i. Ministers Jeff Radebe and Makhenkesi Stofile, Mantis Collection chair Adrian Gardiner and Yossuf Jeeva, among others, were in splendid attendance.
The happy couple then spent the weekend at Jeeva’s Kwantu private game reserve, before leaving for a week’s honeymoon at Sun City.
In 2006 Nondumiso Maphazi took over from Faku as mayor of PE and soon found herself in hot water – apparently due to Comrade Giraffe’s determination to continue calling the shots. In August 2009 Maphazi pleaded with President Zuma to rescue her from Faku. The Times quoted Maphazi as saying that things started going sour in June 2009, when the ANC regional executive committee, led by Faku, called her into a meeting and told her she and municipal manager Graham Richards were being “recalled” from their positions, to be deployed elsewhere. Three months after appealing to President Zuma to intervene and resolve the tension between herself and Comrade Giraffe, she was replaced as executive mayor by the regional secretary of the National Union of Metalworkers, Zanoxolo Wayile.
Last month The Herald reported that Faku was involved in a R60m contract to install 120,000 low-pressure solar water heaters in the metro. The City’s Infrastructure, Engineering and Electricity Committee gave an assurance that the scheme, scheduled to start this month, is being fully funded by Eskom.
Who's who at the Starport zoo
Sanlam subsidiary Rycklof Properties (Pty) Ltd sold Port Elizabeth’s tallest building – the 20-storey Starport building – for just R1.1m to Yossuf Jeeva’s Africorp International Properties.
|The tower that Yossuf Jeeva bought from Sanlam for R1m|
A bare seven years after the deal, Starport’s municipal valuation now stands at R30m – and Africorp is now trying to sell it for R70m. Is Yossuf Jeeva just plain smart, a brilliant property speculator with a sharp eye for playing the market? Or is Jeeva’s playing field much wider, and certainly more political, than meets the eye? He’s definitely got friends in the right places (see stories “Comrade Giraffe” and “A Tower of Power”).
When Sanlam sold Starport in 2003 it had no tenants. When noseweek visited the building in May, Starport was turning a healthy rental income:
- Ground floor – Izwe Loans (R40,000 a month)
- First floor (plus six undercover parking bays) – Moneyline (R15,300 a month)
- Third and fourth floors – African Bank Ltd (R29,220 a month)
- Sixth, seventh and eleventh floors – Department of Public Works (R37,934 a month; (Public Works has also just signed for another three floors).
- Eighth and ninth floors – Eastern Cape IT Initiative (R31,795 a month);
- Twelfth floor – Scorpion Legal Protection (R12,500 a month)
- Thirteenth and 14th floors – Small Enterprise Development Agency – an agency of the Department of Trade and Industry (R31,150 a month)
- The roof – MTN mast (R5,321 a month); Communication Solution mast (R1,331 a month); Vodacom mast (R5,038 a month).
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