Investigation Reports
REPORT BY THE PUBLIC PROTECTOR SUBMITTED TO
PARLIAMENT IN TERMS OF SECTION 182(1)(b) OF THE CONSTITUTION, 1996
AND SECTION 8(2)(b) OF THE PUBLIC PROTECTOR ACT, 1994
REPORT NO 25
(SPECIAL REPORT)
REPORT ON AN INVESTIGATION INTO ALLEGATIONS
OF IMPROPRIETY IN CONNECTION WITH THE SALE BY THE DEPARTMENT OF
PUBLIC WORKS TO MS Z MBEKI OF ERF 1432, SUMMERSTRAND, PORT
ELIZABETH
INDEX
Executive summary
Executive summary
The Office of the Public Protector investigated a complaint,
lodged by a Member of Parliament, in connection with the sale by
the Department of Public Works (the Department) to Ms Z Mbeki (the
wife of the President) of Erf 1432, Summerstrand, Port Elizabeth
(the property). It was alleged that the sale was improper and that
the price paid for the property was below market value.
From the investigation, it appeared that the late Mr Mbeki (Ms
Mbeki�s father-in-law), a former Deputy President of the Senate,
leased the property from the State for some time. His application
to purchase the property from the Department, at open market
value, was approved after a proper valuation was conducted. Mr
Mbeki died before a deed of alienation could be signed and an
enforceable contract of sale therefore never came into being.
Subsequent to the demise of Mr Mbeki, Ms Mbeki approached the
Department with an application to purchase the property in order
to secure a home for the surviving spouse, Mrs E Mbeki. The
application was approved, subject to the condition that a personal
servitude of usufruct is registered in favour of Mrs E Mbeki,
against the title deed of the property. The deed of alienation was
signed on 16 November 2001 and the property was registered in the
name of Ms Mbeki, 7 months later. Media reports in September 2002
suggested that Ms Mbeki attempted to sell the property at twice
the price she paid for it, shortly after it was registered in her
name. However, according to the Department, Ms Mbeki indicated,
prior to media enquiries, that Mrs E Mbeki was waiving her right
in terms of the usufruct as she did not want to utilize the
residence anymore.
When Ms Mbeki became the owner of the property, she obtained
all the rights and privileges that accrue to any owner of an
immovable property, subject to any conditions or limitations
registered against the title deed. Her alleged decision to sell
the property, at whatever price, was therefore a right she was
entitled to. As her ownership of the property is a private matter,
any unjustified investigation of the reasons for and details of
her decision to sell it on the open market would constitute an
unlawful infringement of her constitutional right to privacy. No
justification for an enquiry into this matter could be found. What
the Public Protector had to and could consider was whether the
sale of the property to her was irregular or improper.
In October 2002, Ms Mbeki confirmed that she instructed her
attorneys to arrange for a reversal of the sale of the property,
at the same price, on the basis of the waiver by her mother-in-law
of her rights in terms of the usufruct. The property was sold back
to the Department on 11 November 2002.
The Public Protector made the following key findings:
- The decision of the Minister to sell the property to the
late Mr Mbeki was not unlawful or improper;
- The decision of the Minister to sell the property to Ms
Mbeki was also in accordance with the powers conferred upon her
by law and was properly executed and motivated;
- Ms Mbeki�s efforts to purchase the property was clearly
motivated by the wish of the late Mr Mbeki to secure a home for
his wife and family;
- There was nothing improper in Ms Mbeki�s selling of the
property at a price different from what she paid for it; and
- As the sale of the property to Ms Mbeki was reversed on the
same financial terms, the State suffered no prejudice;
REPORT ON AN INVESTIGATION BY THE PUBLIC PROTECTOR INTO
ALLEGATIONS OF IMPROPRIETY IN CONNECTION WITH THE SALE BY THE
DEPARTMENT OF PUBLIC WORKS TO MS Z MBEKI OF ERF 1432, SUMMERSTRAND,
PORT ELIZABETH
1. INTRODUCTION
This report is submitted to Parliament in terms of section
182(1)(b) of the Constitution, 1996 and section 8(2)(b) of the
Public Protector Act, 1994. It deals with an investigation by
the Public Protector into allegations of impropriety in
connection with the sale by the Department of Works to Ms Z
Mbeki (Ms Mbeki), the President�s wife, of a property known as
erf 1432, Summerstrand, Port Elizabeth (the property).
2. BACKGROUND
2.1 The
investigation was the result of a complaint lodged with the Office
of the Public Protector by a Member of Parliament, Mr J P I
Blanche.
2.2 In his
complaint, Mr Blanche referred to media reports in connection with
the sale of the property from which it appeared that the
transaction was perceived to be suspect. It was alleged that Ms
Mbeki tried to sell the property at twice the price she paid for
it in a �private deal� with the State, a month after it was
registered in her name, and that it was sold to her at a price far
below market value �without it going to tender�.
2.3 It
was also reported that subsequent to advertising the property for
sale at a price of R875 000 in a local newspaper, Ms Mbeki
withdrew it from the market and offered it back to the Department
of Works for the original selling price of R440 000.
2.4 Apart from
the issues raised by the media, Mr Blanche raised concerns about
the propriety of the process that was followed in selling the
property to Ms Mbeki and whether Mr Mbeki was entitled to purchase
it at a special price simply because he was leasing it from the
State.
3. THE POWERS AND FUNCTIONS OF THE PUBLIC PROTECTOR
3.1 The
institution of the Public Protector was established in terms of
Chapter 9 of the Constitution, 1996, as one of a number of bodies
that support constitutional democracy. The operational
requirements of the Office of the Public Protector are provided
for by the Public Protector Act, 1994.
3.2 The Public
Protector is appointed by the President after approval by the
National Assembly of a candidate recommended by a joint committee.
He/she is independent of government and any political party. The
Public Protector receives complaints from aggrieved persons and
institutions against government agencies and officials. He/she has
the power to investigate these matters, to report on his/her
findings and to take appropriate remedial action.
3.3 In
terms of the Public Protector Act, �appropriate remedial action�
includes mediation, negotiation, conciliation, and the making of
recommendations to the affected government agency on how any
shortcomings found should be rectified and a recurrence of similar
deficiencies could be prevented.
3.4 The
Public Protector reports on the activities of his/her office to
Parliament at least once a year. However, the Public Protector can
report to Parliament on the findings of a particular investigation
whenever he/she deems it necessary.
4. THE INVESTIGATION
4.1 The
investigation of the allegations, referred to below, was conducted
in terms of section 7 of the Public Protector Act, 1994.
4.2 It comprised of:
4.2.1 Consideration of the details of the complaints received
and the reports by the media on the matter;
4.2.2 Comprehensive and detailed correspondence with the
Department of Public Works during which voluminous documentation
relevant to the matter concerned was submitted, studied and
scrutinized;
4.2.3 Consultations with officials of the Department of Public
Works; and
4.2.4 A study
and consideration of the relevant provisions of the Constitution,
1996, and the relevant legislation regulating the alienation of
State land.
5. THE MATTERS INVESTIGATED
In the main, the following matters were investigated:
5.1 The history of the property;
5.2 The value of
the property at the time it was decided to sell it to Mr Mbeki;
5.3 The sale of the property to the late Mr Mbeki;
5.4 The
sale of the property to Ms Mbeki; and
5.5 The reversal of the sale by Ms Mbeki.
6. THE HISTORY OF THE PROPERTY
From the records of the Department of
Public Works it appeared that:
6.1 The property
originally belonged to the former Republic of Ciskei. After the
advent of democracy in April 1994, it became the property of the
State of the Republic of South Africa. It was made available to
the Eastern Cape Provincial Government and utilized as an official
residence of the Premier.
6.2 During the
period that the property was utilized by the Eastern Cape
Provincial Government, it was, erroneously, assumed that the
Province had become the owner. In 1998 the Premier, acting on this
assumption, decided that the property could be leased to Mr G
Mbeki, (the then Deputy President of the Senate) and a formal
agreement was signed.
6.3 Mr
Mbeki subsequently indicated his desire to purchase the property.
During the consideration of his application, it was discovered
that ownership of the property was under the control of the
National Government. Mr Mbeki�s application was, consequently,
referred to the national Department of Public Works for
consideration.
7. THE LEGISLATIVE PRESCRIPTS REGULATING THE ALIENATION OF
STATE LAND
7.1 The State Land Disposal Act, 1961
7.1.1 This Act
regulates the disposal of certain State land. According to the
Department of Public Works, it applied to the disposal of the
property.
7.1.2 Section 2
provides that the President may, on such conditions and terms as
he/she may deem fit, sell any State land on behalf of the State.
7.1.3 The powers
and duties conferred upon the President by the Act can be (and
obviously has been) delegated, in terms of section 6, to the
Minister of Public Works (the Minister).
7.2 The Alienation of Land Act, 1981
Section 2(1) of this Act provides that
no alienation of land shall be of any force or effect unless it is
contained in a deed of alienation signed by the parties thereto or
by their agents acting on their written authority.
8. THE VALUE OF THE PROPERTY
In January 2001, the national
Department of Public Works (the Department) commissioned an
independent valuer, registered in terms of the Valuers Act, 1982,
to assess the open market value of the property. It was determined
at R440 000.
9. THE SALE OF THE PROPERTY TO THE
LATE MR MBEKI
9.1 According to
the records of the Department, the Director-General, in response
to Mr Mbeki�s application, advised the Minister that the property
was deemed superfluous in terms of the needs of the State and that
it could be considered for disposal.
9.2 In terms of
the policy of the Department on the disposal of superfluous State
properties, it was, under normal circumstances, sold via public
tender. However, in the case of State-owned residences, such
property could be sold (at market value) directly to a public
servant who occupied the property at the time of the decision to
dispose thereof.
9.3 Mr Mbeki�s
application was considered on the basis that he was employed by
Parliament as the Deputy President of the Senate at the time when
he entered into the lease agreement with the Eastern Cape
Provincial Government. He was (erroneously) regarded as a public
servant for the purposes of his application conforming to the
mentioned policies of the Department. On 24 July 2001, the
Minister approved the out of hand sale of the property to Mr Mbeki
at the determined market value of R 440 000, in terms of the
provisions of the State Land Disposal Act, 1961.
9.4 A
formal offer to sell the property to Mr Mbeki at the determined
market value was accepted by him on 17 August 2001. In his letter
of acceptance, Mr Mbeki indicated that Ms Mbeki would represent
him in the finalization of the transaction.
9.5 A deed of
alienation was drafted, but before it was signed, Mr Mbeki passed
away. No enforceable contract of sale between Mr Mbeki and the
Department was therefore concluded.
10 THE SALE OF THE PROPERTY TO MS
MBEKI
10.1 On
26 September 2001, Ms Mbeki wrote to the Director-General of the
Department and, inter alia, stated:
�Mr Govan Mbeki died on the day before
we could sign the Agreement of Sale. I shall nonetheless conclude
the purchase through his estate to ensure continued accommodation
for his surviving spouse and grandchildren.�
10.2 Attorneys
representing Ms Mbeki wrote to the Director-General on 28
September 2001 stating that:
�As you know, it was always within the
contemplation of the parties that the late G Mbeki would dispose
of the said property to Mrs Z Mbeki on behalf of and for the
benefit of Mrs Epainette Mbeki.
Our client accordingly wishes to
exercise the undermentioned option:
- Mrs Zanele Mbeki
will purchase the said property directly from yourselves for the
sum of R 440 OOO.00;
- The said sum of R 440 000.00 is
immediately available;
- The amount excludes
any/all legal transfer costs;
- The
property will therefore not form part of the Estate of the Late G Mbeki;
- The sale
of the property from yourselves to Mrs Z Mbeki is subject to the
proviso that Mrs Epainette Mbeki enjoys the right to reside
therein until she dies.
- Such life
usufruct in favour of Mrs Epainette Mbeki, can be registered
against the Title Deed of the property.�
10.3 The Minister
approved the application by Ms Mbeki in October 2001. The approval
was granted in terms of section 2 of the State Land Disposal Act,
1961 and was made subject to the condition that a personal
servitude in favour of Mrs Epainette Mbeki is registered against
the title deed of the property.
10.4 From the
investigation it was clear that the Minister�s decision was
motivated by the following:
10.4.1
The late Mr Mbeki and his wife lawfully occupied the
property at the time of his demise;
10.4.2
The property was regarded as superfluous for the needs of
the State;
10.4.3
A decision to sell the property to Mr Mbeki had already
been taken;
10.4.4
Mr Mbeki�s intention was to secure a home for his wife and
his grandchildren;
10.4.5
Ms Mbeki clearly wanted to ensure the continued occupation
of the residence by Mrs E Mbeki; and
10.4.6
The property was to be sold at an open market value.
11. THE
PERSONAL SERVITUDE REGISTERED IN FAVOUR OF MRS E MBEKI
11.1 The property
was registered in the name of Ms Mbeki on 27 June 2002.
11.2 A Notarial
Deed of Cession of Usufruct was registered against the title deed,
in favour of Mrs E Mbeki.
11.3 It is trite
law that a personal servitude, such as usufruct, is cancelled when
the beneficiary expressly waives his/her rights in this regard.
12. THE
ALLEGED ADVERTISING OF THE PROPERTY BY MS MBEKI AND THE SALE
THEREOF BACK TO THE DEPARTMENT
12.1 It was
alleged in media reports that Ms Mbeki attempted to sell the
property for almost twice the purchase price, a month after it was
registered in her name. She apparently instructed an estate agent
to handle the matter on her behalf.
12.2 After having
been approached by the media in connection with the matter, Ms
Mbeki, allegedly, decided to withdraw the property from the open
market and to sell it back to the Department at the price that she
paid for it.
12.3 However, according to the Department, Ms Mbeki indicated to them,
before any media enquiries were made, that Mrs E Mbeki no longer
wished to utilize the residence and that the property could
therefore be sold back to the Department.
12.4 On 7 October
2002, Ms Mbeki confirmed her intention to reverse the sale of the
property, in writing. She wrote to the Director-General of the
Department:
�This is to confirm that I have given
instructions to attorneys Pillay Meyer Boqwana of Port Elizabeth
to conclude the reversal of sale of Erf 1432 Summerstrand back to
the Department of Public Works taking due account of the related
expenses and interest loss during the transfer process.
Thanking you very much for the
consideration that was given to the Late G A Mbeki�s wishes and
his widow regarding that attachment of the house for her use,
notwithstanding the fact that she eventually decided to waive that
right.�
12.5 The property
was sold back to the Department on 11 November 2002. It was done
subject to a condition that the usufruct registered in favour of
Mrs E Mbeki is cancelled. The State Attorney handled the transfer.
13. OBSERVATIONS AND FINDINGS
The following observations and
findings have been made from the investigation:
13.1 State land
can be disposed of by the Minister, on behalf of the State, to any
person or institution and on such conditions and terms she/he
deems fit.
13.2 Any policy
developed and applied by the Department in connection with the
disposal of State land would be subject to the Minister�s
discretion to act in accordance with the general powers and duties
conferred upon her/him by the provisions of the State Land
Disposal Act, 1961.
13.3 There appears
to have been a misconception on the part of officials of the
Department that the property could be sold to the late Mr Mbeki in
terms of the policies of the Department, on the basis of him
having been a public servant. Mr Mbeki was formerly employed by
Parliament and was not a public servant at the time the decision
was taken to sell the property to him. Nevertheless, the
Director-General recommended to the Minister that consideration be
given to dispose of the property, in terms of the provisions of
section 2(1) of the State Land Disposal Act, 1961, either to Mr
Mbeki, out of hand at open market value, or by public tender in
terms of the policies of the Department relevant to superfluous
State-owned residences. The Minister approved the first
recommendation.
13.4 Although a deed of alienation was drafted, it was never signed by Mr Mbeki or his agent (Ms Mbeki). The sale of the property to Mr
Mbeki was therefore, in terms of the provisions of section 2(1) of
the Alienation of Land Act, 1981, of no force or effect.
13.5 The value of
the property was determined, at the request of the Department, by
a valuer, registered in terms of the Valuers Act, 1982. It was
sold to Mr Mbeki and later to Ms Mbeki for a price equal to the
determined value. No reliable substance was provided for
allegations that the property was sold below open market value.
13.6 After the
demise of Mr Mbeki, Ms Mbeki initially indicated to the Department
that she would conclude the purchase through the estate in
the interest of the surviving spouse and Mr Mbeki�s grandchildren.
No indication could be found that she intended to represent the
estate in this regard. These issues are, in any event, academic,
as no executable agreement existed between Mr Mbeki and the
Department, as indicated above.
13.7 Two days
after her initial approach to the Department, Ms Mbeki�s attorneys
made an offer, on her behalf, to purchase the property �for the
benefit of Mrs E Mbeki�.
13.8 The Minsiter
approved the sale to Ms Mbeki in terms of the provisions of the
State Land Disposal Act, 1961. Her decision to do so was properly
motivated.
13.9 The Deed of
Alienation was signed on 16 November 2001. The property was only
registered in the name of Ms Mbeki on 27 June 2002, i.e. more than
7 months later.
13.10 When Ms Mbeki
became the owner of the property, she obtained all the rights and
privileges that apply to any owner of fixed property, subject to
any conditions or limitations registered against the title deed.
Her alleged decision to sell the property, at whatever price, was
therefore a right she was entitled to. As her ownership of the
property is a private matter, any unjustified investigation of the
reasons for and details of her decision to sell it on the open
market would constitute an unlawful infringement of her
constitutional right to privacy. No justification for an enquiry
into this matter could be found. What the Public Protector had to
and could consider was whether the sale of the property to her was
irregular or improper. Nevertheless, the fact of the matter is
that it was eventually sold back to the Department.
13.11
It appeared from the investigation that the reason why Ms
Mbeki initiated a reverse of the sale of the property was that Mrs
E Mbeki decided to waive her rights in terms of the registered
usufruct. This happened approximately 10 months after the deed of
alienation of the property was signed. From the investigation it
is, furthermore, clear that Ms Mbeki�s intention for purchasing
the property was to secure a home for the family of the late Mr
Mbeki, according to his wish. When Mrs E Mbeki decided that she
did not want to live in the residence anymore, the reason for
purchasing the property was cancelled, hence Ms Mbeki�s decision
to sell it. She was, obviously, under the circumstances not
obliged to sell it back to the Department.
13.12 During the
investigation, the Director-General of the Department indicated
that the Department is aware of possible misconceptions that could
occur in respect of the policies of the Department and that
consideration shall be given to review these policies to prevent
any prejudice that could result from its application.
14. KEY FINDINGS
The Public Protector made the following key findings:
14.1 The decision
of the Minister to sell the property to the late Mr Mbeki was not
unlawful or improper;
14.2 The decision
of the Minister to sell the property to Ms Mbeki was also in
accordance with the powers conferred upon her by the law and was
properly executed and motivated;
14.3
Ms Mbeki�s efforts to purchase the property was motivated
by the wish of the late Mr Mbeki to secure a home for his wife and
family;
14.4
There was nothing improper in Ms Mbeki�s selling of the
property at a price different from what she paid for it; and
14.5 As the sale of the property to Ms Mbeki was reversed on the
same financial terms, the State suffered no prejudice.
MR M L MUSHWANA
THE PUBLIC PROTECTOR OF
THE REPUBLIC OF SOUTH AFRICA
21 October 2003
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