DEPARTMENT OF LAND AFFAIRS

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DEPARTMENTOF LAND AFFAIRS

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

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CONTENT

• Background
• Findings
• Recommendations
• Implementation of recommendations

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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

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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

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Findings by Independent Valuer (contd)

• 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

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Findings by Independent Valuer (contd)

• 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

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Findings by Independent Valuer (contd)

• 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

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SCOPE OF AUDIT
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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

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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

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FINDINGS NDWANDWA PROJECT (contd)

• 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

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FINDINGS NDWANDWA PROJECT (contd)

• 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

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FINDINGS NDWANDWA PROJECT (contd)

• 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 R75
  000 per month
• Fundamental issue that the beneficial use of the
  property remained with the seller/landowner

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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

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IMPLEMENTATION OF RECOMMENDATIONS

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

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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

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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
  DirectorateFinancial Management will address
  concerns raised on the procurement process

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IMPLEMENTATION OF RECOMMENDATIONS

• New appointments have been made to capacitated
  the RLCC Office.

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THANK YOU