Democracy Zwane is owed R70m in dodgy Ermelo govt deal

Democracy Zwane is owed R70m in dodgy Ermelo govt deal
DEMOCRACY: Mpumalanga ANC Bigwig Democracy 'Dube' Zwane is owed millions by the Msukaligwa municipality over a dodgy lease agreement of land wherein a water reservoir is located. PICTURE BY 013NEWS/ZK.

He is said to be a rich man and a closer friend of deputy president DD Mabuza.

Mpumalanga ANC PEC member Democracy Zwane is reportedly owed an amount of R70 million in a dodgy Ermelo deal that saw a municipal property being bought by him and then given back to the municipality for renting.

The deal is now the subject of a Hawks investigation and documents have already been obtained by investigators.

Zwane bought the public property for just over R430 000, then proceeded to charge the Msukaligwa local municipality in Ermelo an amount of R800 000 each month to rent the land from him, the Sunday Times reports.

The paper said it saw the agreement between the Democracy Family Trust and the municipality – and the document details the sale of a 1.3ha property in Ermelo to the trust by the municipality 11 years ago. The property has on it a reservoir and a water-pressure structure that pumps water in the area

Samuel “Dube” Democracy Zwane is the only trustee of the trust and now he is the subject of a fraud and corruption investigation by the Hawks.

The R70 million that is owed by the municipality to Zwane is due to arrears in renting his property.

Hawks spokesman Brigadier Hangwani Mulaudzi told the Sunday Times that they had obtained documents at the municipality and were busy probing fraud and corruption.

He said the Hawks had referred the matter to the Special Investigating Unit (SIU) for President Cyril Ramaphosa’s proclamation and for assistance in further investigation.

The Hawks are not commenting further on the matter until “certain individuals are approached for statements,” Mulaudzi said.

Democracy Zwane is owed R70m in dodgy Ermelo govt deal
The municipal water reservoir in Ermelo that is now privately owned. PIC SIMPHIWE NKWALI/ Sunday Times

An insider who alerted the Hawks about the alleged corruption at the municipality told the national weekly that this was discovered during a council meeting in January 2018.

“The municipality presented their financial records and among them was a R56.3m legal bill, but there was no explanation as to what it was for.

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“In court records I found agreements for the sale, lease and how the municipality had paid for the relocation of water-servitude pipes so Zwane could develop his property. The agreements were signed by different Ermelo municipal managers between 2008 and 2016.

“The documents show how in 2013 Zwane swapped his properties for a property of the same size across the road next to the airport. When the airport management learnt of his plans to build a shopping centre and fuel station and put a stop to it, he had reversed the property swap.

“At that point there was no lease agreement with the municipality. That only came in February 2016 when they signed the lease agreement, and they backdated it to 2011.”

According to the Municipal Financial Management Act, a municipality may only sell a capital asset if a decision has been taken in a council meeting.

This is also permitted only if the asset is not needed to provide services to people, and a fair market value for the asset is required.

But the Ermelo property sale and its rental had been kept secret from the council, until the legal bill got discovered. No explanation has ever been provided about the rental and the reasons why it was signed in 2016 – eight years after the property was bought, or why it was backdated to 2011 after being signed in 2016.

Court documents seen by the Sunday Times show how the municipality accepted the lawfulness of the rental agreement that they have with Zwane. There was never a time when they challenged it.

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In September 2017, Zwane successfully sued the Msukaligwa municipality for R53.6m in rental arrears dating back to 2011.

The land was one of two adjoining properties Zwane bought from the municipality. He bought the first in July 2005. He then built a shopping centre and fuel station on that land.

Though the 2017 judgment instructed the municipality to pay what is owed to Zwane when he was in court suing them but it is believed officials only paid Zwane R5m. He is now owed R70.8m.

Both the municipality and the SIU are not commenting on the matter.

They say the matter is still under investigations.

Zwane’s lawyers said they would respond to media queries but needed sufficient time to look to questions.

(edited by ZK) 

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