Government paid R70 million for a building to stand completely empty
The Minister of Public Works and Infrastructure is seeking answers regarding a R70 million lease agreement for an office building that allegedly has no tenant.
Public Works and Infrastructure Minister Dean Macpherson has requested guidance from the National Treasury on initiating an independent investigation into a controversial R70 million lease agreement for an office building in Pretoria that allegedly had no tenant.
This request comes after preliminary findings from the Department of Public Works and Infrastructure’s Anti-Corruption and Fraud Awareness Unit, which raised concerns about the procurement and implementation of the lease for the building located at 146 Lunnon Road in Pretoria.
According to the department, the Property Management Trading Entity (PMTE) finalised the lease in March 2023 for the then Department of Public Enterprises (DPE) at a cost of R69.6 million over five years.
However, this lease was reportedly signed even though President Cyril Ramaphosa had already announced plans to reconfigure and close the department.
Although the lease was never enforced and the building went unoccupied, the report revealed that officials later attempted to facilitate the transaction by seeking to relocate the National Prosecuting Authority’s Investigating Directorate Against Corruption (IDAC) into the same building.
“We are of the opinion that this was a self-created problem, awarded to someone who potentially shouldn’t have qualified because they did not have the minimum requirements needed to do so,” Public Works and Infrastructure Minister Dean Macpherson said in an interview with Moneyweb Radio.
Macpherson said that the national Bid Adjudication Committee was told twice not to proceed with the award, but did so anyway.
“We need to understand why this took place, and more importantly, who was responsible, who is currently employed and what action is going to be taken against them,” said Macpherson.
“People do not want a new system that demands more transparency”
Macpherson said that since taking office, he has identified the 10 top providers in the department and asked the SIU to look into them.
“When this specific point came to my attention, it struck me as an anomaly because it was awarded in 2023, but there has never been a tenant in it,” he said in the interview.
He said that the minister has the right to understand how these decisions are undertaken, and that there appears to be a complete lack of due diligence and internal control, as the decision was approved without any questions being raised.
Macpherson told Moneyweb Radio that his office was not involved in 2023, as he was not the minister then.
“What I can tell you is that we are absolutely determined to provide oversight and to ensure that the department and its entities comply with the Public Finance Management Act, with National Treasury regulations and all other applicable regulations,” he said.
The report, according to Macpherson, found that the department may not have even complied with its own supply chain management policies.
This, as well as the views of the Bid Adjudication Committee, which warned not to proceed with the lease due to governance and material issues.
“We are not going to accept a situation where officials are able to enter into collusion and corrupt practices and relationships with landlords and other officials to sign these deals,” he said.
“I will not apologise for defending due purpose and due practices, and I will not apologise for demanding transparency,” said Macpherson.
The Public Works and Infrastructure Minister argued that the system is often designed to enable the corruption problem.
He explained that the introduction of a new system requires the minister to concur on leases.
This means that while the minister cannot sign the leases, he is still allowed to ask essential questions about them and demand answers.
“People do not want a new system that demands more transparency and more accountability,” he said, when explaining why so many issues unfolded with the introduction of the new system.
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