Dark clouds gather over former South African international airport

The once-bustling Durban International Airport, which served as the city’s primary air travel hub for six decades, now lies abandoned, ensnared in a complex web of legal and political disputes.

Transnet Property’s (TP’s) agreements to redevelop the site are under heavy scrutiny, with bidders accusing the state-owned entity of irregularities in its tender process.

One of the accusers is Amabhubesi Property Holdings (APH), who allege unfair treatment and irregularities.

They claim a deal was “literally pulled from under their feet” due to a 10-year lease signed by a third party. Transnet and the third party, while at each other’s throats, deny any wrongdoing in the matter.

In 2012, Transnet Property bought the Durban International Airport’s terminal building, runways, and 800 hectares of open fields from the Airports Company South Africa for R1.85 billion.

Transnet planned to develop the former airport into a “dig out” mega container port for heavy modern cargo vessels.

The state-owned enterprise said that once the project was completed, it would triple the Durban port’s cargo capacity.

Former public enterprises minister Malusi Gigaba said in 2012 that the new port could create 64,000 jobs during construction and a further 28,000 during operation.

However, this project never materialised, and Transnet shifted its focus to resolve the mounting projects at the existing Durban port.

With the airport lying idle, Transnet Property put the lease out for bidding. Transnet ultimately signed a ten-year lease in 2017 with Seaworld Aviation.

Seaworld Aviation planned to use the airport as a hub for smaller airlines to bring tourists to Durban’s Southern coastline.

However, the relationship soon soured and has been mired in legal limbo ever since.

The dispute centres around tenants who have taken over the airport, causing significant damage and repurposing aviation fuel tanks.

Seaworld blames Transnet for not removing the tenants, while Transnet claims Seaworld violated sub-leasing rules.

The Mail & Guardian reported how forensic investigations into the matter were commissioned by Transnet.

However, these were largely ignored, with implicated employees either under investigation or having resigned due to alleged bribery.

In 2022, The Citizen reported that Transnet had failed to evict the company operating from the old Durban airport after the lease was cancelled.

Seaworld has been fighting the cancellation order and the various attempts to have it evicted from the premises over the years, with court cases ongoing.

Amabhubesi Property Holdings cries foul

Amabhubesi Property Holdings is an Umlazi Township Property Development company that wanted to turn the Old Durban Airport site into a Durban Logistics Hub (DLH).

It worked on a development plan for over eight years in conjunction with City Ventures, the development and investment arm of City Couriers.

The eThekwini Municipality’s Catalytic Projects Unit confirmed that the proposed development met the criteria of a catalytic project and pledged its support to expedite the necessary decisions to accelerate implementation.

The unit assigned a Senior Programme Manager to be APH’s contact person and offered assistance with any associated challenges.

Additionally, Invest Durban provided a letter of support for the DLH project, recognising it as “a Flagship Foreign Direct Investment (FDI) opportunity.”

Invest Durban believed that the project would attract investment due to its potential for the vehicle manufacturing and distribution industries.

Another attractive feature was its assistance with the handling, storing, and dispatching of containers at the harbour.

Specifically, Invest Durban’s support for APH was based on its recognition as a majority black-owned investment and property development firm based in Umlazi, and its partnership with City Ventures.

Invest Durban saw the project as a solution to key logistical challenges, a contributor to long-term port planning, and a potential catalyst for attracting an estimated R10 billion in investment.

It was projected to generate an annual turnover of R3 billion, creating 200 skilled and 5,000 unskilled jobs during construction and 700 skilled and 6,000 unskilled jobs during operation.

“Literally pulled from under our feet”

TP General Managers initially approved Amabhubesi Property Holdings’ transaction in the regional offices.

After the initial approval, the transaction was blocked by a “new” policy called the “Swiss Methodology.”

The “Swiss Challenge Policy” is described as a way to transparently and competitively test unsolicited bids to determine if they are market-related.

In communications seen by BusinessTech, Transnet admitted that the delay in communicating the rationale and purpose of the Swiss Challenge Policy was “regrettable.”

However, Transnet told APH that the policy’s adoption was “necessitated to align procedures with statutory prescript.”

APH Managing Director Kwazi Mbili alleged that they were simultaneously approached by an individual from Transnet requesting his involvement in the deal to make the deal go through.

When this did not happen, APH claims that an irregular agreement saw their proposal “literally pulled from under our feet at the last hurdle of negotiation.”

These allegations refer to the 10-year lease being signed with Seaworld at the Transnet Head Offices in Johannesburg.

Mbili said this “is part of a deeply entrenched corruption circle in the senior ranks on the assumption that they were not going to benefit personally from the lease award.”

However, Transnet said their own investigations “have not uncovered any wrongdoing by Transnet Property other than the undue delays referred to above.”

APH believes that if the DLH project had gone ahead, port challenges at the Durban Port would not have been as severe.

“We and our investment and implementation partners remain as committed as ever to follow through on this project and make it finally happen,” he added.

SIU steps in

In August 2024, President Cyril Ramaphosa authorised the Special Investigating Unit (SIU) to investigate allegations of serious maladministration within Transnet and to recover any financial losses.

“This investigation will focus on leases that were potentially facilitated through unlawful or improper conduct by Transnet employees, officials, agents, or any other involved parties,” said SIU spokesperson Kaizer Kganyago.

“The investigation will specifically examine whether Transnet officials or agents acted corruptly or unduly to benefit themselves or others,” he added.

The leases under scrutiny include the old Durban International Airport premises, including the runway, tarmac, apron, taxiways, old terminal building, ATNS building, security building, Maritime School, and SAA Site.

Our hands are clean, says Seaworld

Seaworld has launched a multimillion-rand counterclaim against Transnet for loss of profit and income, arguing it ruined its plans to turn the site back into an airport.

“There may be merit in some of the other leases being investigated [by the SIU], but ours was 100% above board,” Seaworld Aviation director Aaron Stanger told News24.

He said that the decision to launch the SIU investigation was a bid to “circumvent the court process” which he believes Seaworld would win.

“We remain committed to building the airport – even our funders remain in place. This is good for the city, the province, and the country.”

Transnet response

Transnet Properties said that it had responded directly to Amabhubesi Property Holdings regarding the matters raised.

In communications between the two seen by BusinessTech, responses from Transnet primarily focused on the ongoing litigation, the investigations by the SIU and the investigation that the SOE did itself.

“The current lease and tenancy of the Old Durban Airport is a subject of legal process and currently before the courts,” it said in response to questions posed by BusinessTech.

Transnet would, therefore, not wish to preempt the outcome of the court process,” added Transnet Properties.

The SOE said the SIU investigations “will address all relevant allegations.”

“Internal discussions are underway regarding the future development plans of the Old Durban Airport, and such plans will be made known to the public at the conclusion of the court case,” said Transnet Property.