DEPARTMENT OF LAND AFFAIRS BRIEFING BY THE MINISTER TO THE PORTFOLIO COMMITTEE ON THE INVESTIGATION OF THE MPUMALANGA REGIONAL LAND CLAIMS COMMISSION (RLCC) 10 MARCH 2004

CONTENT Background Findings Recommendations Implementation of recommendations

BACKGROUND The Internal Audit had already planned to conduct an audit on the entire commission Investigation occasioned by media allegations on inflated land prices in Mpumalanga Independent valuer was appointed to investigate the allegations

Findings by Independent Valuer Market valuation principles and standards were not adhered to or were misconstrued by the valuers There was incorrect application of valuation methods resulting in flagrant overstatement of market value

Findings by Independent Valuer (cont’d) When using the sales selection method, the sales selected appeared subjective and selective to the point of misrepresentation of market conditions No competent sales analysis were carried out and the guidelines applied by the valuers cannot be supported by the listed sales

Findings by Independent Valuer (cont’d) No adequate or relevant research seems to have been carried out Misconstruction & application of the correct valuation principles & comparables sales indicates miscomprehension, lack of knowledge, experience & competency in accordance with Standards and accepted or best valuation practice by the Valuers

Findings by Independent Valuer (cont’d) Motivation of judgements is absent and/or unsupported and unconvincing Mistakes found in the reports demonstrate sloppiness of an unacceptable standard In general, it can be seen that the set standards and principles have not been adhered to by the valuers and therefore the valuations cannot be accepted as credible

SCOPE OF AUDIT

Audit covered the period 1 April 2003 to 31 August 2004 Ndwada Community Project Giba Community Project Phase 1 Giba Community Project Phase 2 Mapulana Tribal Community Mashego Clan Project

FINDINGS: NDWANDWA PROJECT Candidate valuer appointed instead of a qualified valuer, resulting in irregular valuation by a candidate valuer who was not supervised as required by the South African Council for Property Valuers Extension of Terms of Reference of candidate valuer after the work in question was covered by another valuer who had an indirect interest in the businesses operated by the landowner

FINDINGS: NDWANDWA PROJECT (cont’d) Improper use by the candidate valuer of the valuation report of another valuer appointed by the landowner Candidate valuer used this report as basis of his report and manipulated the figures The candidate valuer and the “landowner- appointed” valuer co- signed report

FINDINGS: NDWANDWA PROJECT (cont’d) Project Officer processed payment despite being cautioned by the Deputy Director: Finance of calculation errors Grant monies utilised to buy movable properties although the land bought was leased back to the seller/ original landowner Sale and lease back was not disclosed in the agreement sale or approved submission to the Minister

FINDINGS: NDWANDWA PROJECT (cont’d) One of the farms was leased back for R6 700 per month to the seller/ original landowner but the latter subsequently sublet it at a rate of R per month Fundamental issue: that the beneficial use of the property remained with the seller/landowner

RECOMMENDATIONS: NDWANDWA PROJECT Criminal investigations be considered regarding fundamental irregularities identified in the processing of the claim in terms of manipulation of valuations & the use of grants to purchase movable assets contrary to the decision of the community

IMPLEMENTATION OF RECOMMENDATIONS Charge sheet for RLCC finalised An advocate has been appointed to preside the disciplinary hearing However, RLCC’s legal representative has requested a pre-dismissal arbitration, which will determine the way forward

IMPLEMENTATION OF RECOMMENDATIONS The Human Resource Directorate is taking forward the disciplinary process of other affected officials Adv G L Grobler has been appointed to consider instituting civil action against valuers, landowners and possibly the Commission staff

IMPLEMENTATION OF RECOMMENDATIONS We are also identifying areas that might require criminal action. To this end, we will engage the Commercial Crime Unit of SAPS. A letter has already been sent to the National Commissioner of Police As part of the risk management plan the Chief Directorate:Financial Management will address concerns raised on the procurement process

IMPLEMENTATION OF RECOMMENDATIONS New appointments have been made to capacitated the RLCC Office.

THANK YOU