The Special Investigating Unit (SIU) is investigating allegations that the state-owned Housing Development Agency (HDA) is grossly inflating prices of land when it comes to housing projects in several provinces.
The SIU stated that it has not reached any conclusions regarding its investigations.
This was revealed on Friday by the SIU when it was making a presentation before parliament’s portfolio committee on human settlements. The parliament session took place virtually.
The SIU’s presentation focused on the allegations regarding the HDA inflating land prices for housing projects in several provinces.
It was led by its head Adv Andy Mothibi, and the team from the crime-busting, anti-corruption, forensic investigation agency.
In its presentation before parliament, the SIU said it is investigating several allegations against the HDA in connection with the inflating of prices on land for housing projects in several provinces.
Focus on valuations
Mothibi said the ordinary process that the HDA follows when purchasing land for housing projects is that provincial departments of human settlements transfer funds to the HDA with the instruction to buy an earmarked land parcel.
“The agency enters into negotiations with the landowner, three valuations in respect of the land in question are obtained.
“The first valuation is usually provided by the landowner. The agency sources two additional valuations.
“The valuations sourced by the agency are meant to be compared to the landowner’s valuation to determine the competitiveness or reasonableness of the landowner’s valuation,” said Mothibi.
He said it is, however, alleged that the HDA obtains the two additional valuations, which are grossly inflated, to manipulate the purchase price that the provincial departments of human settlements pay for the land in question.
“It is alleged that the inflation of the valuations is done at the instruction or through the influence of officials of the provincial departments of human settlements. A purchase price is then negotiated with the landowner based on the three valuations.
“The landowner usually sells the land at a price that is closer to the agency’s grossly inflated valuation.
“A middleman is allegedly introduced at some point in the transaction, purportedly by officials of the agency and/or the provincial department of human settlement in question,” said Mothibi.
Middleman’s commission
Mothibi went on: “The land purchase agreement is drafted to include the middleman’s commission, which, at times, is calculated as a percentage of twice or three times the purchase price.
“A conveyancing firm is then appointed to attend to the necessary matters in terms of transfer and registration of the land
“The agency pays the conveyancer the inflated purchase price. Other than the payment to the seller upon registration of transfer of the land, it is not clear whether the middleman or
anyone else involved improperly in the transaction is paid from the funds held by the conveyancer.
“It is not clear whether the land parcels purchased from private sellers are subsequently transferred to the state.
“Purchases are concluded based on only two valuations. Land purchased at prices which were in excess of the lowest valuation.
“In some cases, the valuations and/or purchases were poles apart, with the result that the purchase price did not appear to be in the best interests of the State,” added Mothibi.
Mothibi said the SIU is currently investigating municipalities in all provinces apart from Limpopo, and there are no outcomes at this stage.
