Leases or sneaky deals? Government contracts raise eyebrows

EYEBROWS have been raised over the procurement of office space for two key Northern Cape government departments, amid allegations of “questionable” leases.

It appears that payments continued for the rental of the Department of Transport, Safety and Liaison's provincial office — located on the corner of Lennox and Sidney streets — even after the lease expired and the building was evacuated due to safety concerns last year.

In correspondence dated November 28, 2024, the department advised that it would be “in contempt” if it paid the building owners, Ocean Echo Properties, directly.

This follows a court order obtained by Nedbank, instructing the department to pay rentals to the bank instead.

Staff members were forced to evacuate the building immediately on November 26, 2024, after the Department of Employment and Labour issued a prohibition notice due to structural defects, a lack of ventilation, non-operational lifts, and general non-compliance with occupational health and safety regulations.

Since then, officials have been sharing desks at the Office of the Premier.

Five bids were received in response to a tender for new office accommodation after the lease with Ocean Echo Properties ended in August 2024.

Competitive bids were received for the Savoy Hotel, the Du Toitspan building, Ocean Echo Properties, and the JW Sauer building, which was previously utilised by the Office of the Premier.

Following site visits, the JW Sauer building was identified as the most suitable option, as it could accommodate the Padkamp traffic station under the same roof within the provincial precinct.

It was recommended in April that a five-year lease be concluded for the JW Sauer building.

Premier highlights inhabitable conditions at the JW Sauer building

In 2023, Premier Dr Zamani Saul highlighted the “appalling condition” of the JW Sauer building when he justified relocating offices to the Derek Corns building due to ongoing cable theft and vandalism.

He noted that the Transnet-owned building was nearly 60 years old, with the elevators and air conditioning frequently malfunctioning, and there were persistent electricity problems due to cable theft and a lack of back-up power. 

Saul labelled the building a fire hazard, posing risks to employee safety and government assets.

He also cited various occupational health and safety violations and a prohibition notice served on the building in 2020. 

He added that the government could not afford to spend R174 million to renovate and maintain the building, while Transnet proposed selling it for R68 million.

The Office of the Premier is currently involved in a dispute with Transnet over an outstanding debt of R28 million for leasing the building.

A well-known businessman this week confirmed that he is negotiating to buy the building and lease it to the Department of Transport, Safety and Liaison after the provincial government withdrew its offer to purchase the building in 2022.

Meanwhile, on June 20, an application was made in the Northern Cape High Court as the Department of Transport, Safety and Liaison has been barred from entering the provincial offices on the corner of Sidney and Lennox streets since March 10.

According to the court application, the department is seeking an order compelling the building owner — Ocean Echo Properties — to remove all chains and locks from the entrances.

As a result of being locked out, the department has been unable to access documents and information stored inside or issue, renew, or transfer any operating licences or permits.

It also indicated it needs access to personnel files that must be submitted as part of its annual audit report to the Auditor-General.

It was reported that, to date, no attempts have been made to address the issues listed in the Department of Employment and Labour’s prohibition notice.

Requests to probe the leases  

COPE acting national chairperson Pakes Dikgetsi said he would request the Public Protector to investigate why the tender for office accommodation for the Office of the Premier was only advertised 17 months after occupation of the Derek Corns building commenced in July 2023.

“It appears that the advert that was released in December 2024 was tailor-made to fit the specifications of the bid for the Derek Corns building,” Dikgetsi claimed.

At the time of the 2023 relocation, Dikgetsi had already called on the Special Investigating Unit and the Public Protector to probe the 10-year lease agreement and also identify the real owners of the building.

He also believed that the monthly rental of R1.3 million was inflated.

Dikgetsi added that rental payments for the Ocean Echo Properties building should have been suspended after the lease expired.

“I will bring this to the attention of the Auditor-General, especially given the exorbitant monthly rentals that were concluded in 2011. Someone must be held accountable.” 

The chairperson of the Northern Cape Civics Organisation, Ross Henderson, said he would also approach the Public Protector to investigate both leases.

“The lease for the Ocean Echo Property building continued after the late Minister of Finance Pravin Gordhan instructed the former MEC for Finance and Economic Affairs, John Block, to terminate the lease in May 2014 due to alleged irregularities. Now the chickens have come home to roost. It appears as if certain high-ranking politicians are exempt from the law,” said Henderson.

Ocean Echo Properties 333 CC director Glynis Aysen stated that she was not in a position to respond to media enquiries, as the matter was subjudice.

The matter has been postponed in the Northern Cape High Court until July 18.

The Premier's Office, Department of Transport, Safety and Liaison, Department of Roads and Public Works and Public Protector indicated that they would respond to media enquiries, although no comment was received at the time of publication.

Office of the Premier responds

Chief Director for Information Communication Services at the Office of the Premier, Monwabisi Nkompela, stated that the Office of the Premier moved from the JW Sauer building in 2023, necessitated by a number of key and urgent factors which included safety, health, accessibility and efficiency of operations. 

“As the Office of the Premier, we submitted a request, as a client department, to the Department of Public Works, as the custodian of government property. The Department of Public Works duly handled all the processes of securing the premises in accordance with the request from the Office of the Premier to accommodate all staff members and to make provision for the possibility of future staff members. 

“Based on the urgency of the request, the relocation to the T&I building in Monument Heights was approved.” 

He added that the T&I Building was vacant and that the building was the most suitable, safe and relevant office accommodation. 

“After all legal prescripts were concluded and followed, approval was granted to the Office of the Premier to occupy the new premises.” 

Nkompela stated that the disputed outstanding R28 million that was owed to Transnet was currently being dealt with by the accounting officers of both the Office of the Premier and Transnet. 

“Initially, the Office of the Premier relocated based on internal supply chain processes that were followed by the Department of Roads and Public Works  

“We wish to put it categorically clear and on record that there were no prior direct  engagements between the owner of the building and the Office of the Premier for  the lease of the T&I building.” 

He indicated that the Office of the Premier was never directly involved with the procurement processes of other sector departments, such as the current lease of the Department of Transport Safety and Liaison.