The Johannesburg Property Company (JPC) is the Wild West of governance in the city. Which is saying something, given the dumpster fires that are some of the city’s other subsidiaries.
The JPC, for those who don’t know, is mandated to manage all 28,193 properties owned by the city, an immense portfolio worth, at last count, R9.2bn. If you’re wondering how it has done on that score, cast your mind back to the fire that, last year, swept through the city’s building on 80 Albert Street, a former pass office under apartheid, which killed 77 people in part thanks to its lack of fire precautions. Or perhaps the 181 buildings in Joburg which have been hijacked and remain under the control of warlords and slumlords, with nary a peep from the JPC.
Precisely why it has failed on this front brings us directly to its dubious governance.
Take just one report in the Sunday Times last year, which revealed that after a shakeup in March, the company found itself with three board members who appeared on the face of it to be manifestly unqualified — a former tollgate cashier, a receptionist, and a person with a grade 11. It was said all three happened to be politically or personally connected to the ANC, or economic development MMC Nomoya Mnisi, the responsible mayoral council member, according to the publication.
This is, of course, the very same Mnisi who is alleged to have unsuccessfully pressured the JPC into stumping up R800,000 to cover an ANC Youth League bill at a Sandton hotel last July (she was both a member of the league’s executive and MMC at the time).
She previously denied the claim about the R800,000 payment, and declined to comment on the Sunday Times article.
It is the board that oversees how the JPC conducts its work.
Yet the director who reportedly has a grade 11, for instance, is a member of the property company’s “independent audit and risk committee”. The former tollgate operator too seems to have little more than a certificate in “networking theory” from Birnham Business College. Presumably an A+ for the networking part. And just to round it off, serial litigator Dali Mpofu was reportedly appointed a nonexecutive director too.
Given this stellar cast, does it surprise you that the company is insolvent?
‘Leadership instability’
To be fair, it’s not as if the City of Joburg doesn’t recognise there’s a problem. In its annual report, it points to “governance risks” at the JPC relating to relationships between the board and the administration/management. Another risk it identifies, incidentally, is “inadequate property management”. No small irony there.
The city also notes the problem of “leadership instability”. Which is unsurprising, given the rash of suspensions at the company – including of the CEO (twice), of two separate CFOs (one in an acting capacity) and a head of human resources.
If anything, the city is underplaying this turbulence in the boardroom. What happened is that in 2020, CEO Helen Botes and CFO Imraan Bhamjee were suspended amid allegations around R18m worth of dodgy Covid fogging contracts. Apparently four companies were awarded contracts that contravened procurement rules. None of these companies, it will shock you to learn, appears to have any experience in cleaning and sanitation.
A Special Investigating Unit (SIU) investigation recommended disciplinary charges for financial misconduct. And yet the JPC’s board simply returned the officials to work after seeking legal advice. Meanwhile the SIU’s report is said to be languishing in the bowels of city hall.
Those Covid contracts weren’t the only shady transaction. There was also the Proton House matter of 2022, where R27m was paid to a service provider to refurbish a building the JPC had previously leased, and which was left standing empty. Well, not entirely empty: according to the JPC 2021/22 annual report, the company had to pay R11m in rental to the landlord after the group finance department vacated the building but left its “assets” behind.
At the time, former Joburg mayor Mpho Phalatse laid criminal charges, claiming the R27m was paid to a front company, with part of those funds channelled to city councillors to vote against the DA-led administration. The ANC denied the charge, and Botes threatened to sue Phalatse.
Separately, an insider in a Carte Blanche investigation alleged that the funds had been diverted to political connections to keep Botes in the driving seat. Botes, however, was adamant that all legislative processes were followed, and there was no overinflation of prices.
In any event, Botes and acting CFO Sipho Mzobe were suspended that same year, based on the board’s charge that “‘the payment was made illicitly and breached the company’s delegations of authority prescripts’, allegedly under the watch of the CEO and acting CFO”, according to then economic development MMC Nkululeko Mbundu.
As luck would have it, Botes and Mzobe were both reinstated soon after the ANC was returned to power in the metro (their suspensions had apparently lapsed). Bhamjee, meanwhile, was “redeployed to oversee special projects” – but the JPC website, assuming it’s up to date, suggests he’s been returned as CFO in an acting capacity. So quite the switcheroo.
And now, the JPC is in the news again. First, for the apparently irregular extension of Botes’ contract for another five years (city mayor Dada Morero is said to have called the board meeting around the extension after Botes’ contract had already expired).
Botes has only been at the helm for 15 years – so what’s another five between friends?
Her leadership skills don’t come cheap either. According to the annual report, Botes’ basic salary is in the order of R2.7m. Then there’s her eyewatering R413,000 performance bonus and Gayton McKenzie-esque R250,000 travel allowance.
Second, the JPC last year allegedly instructed outdoor advertisers to stop paying their dues into the city’s bank accounts and instead pay them to the trust fund of a law firm – at an apparent collection commission of 25%, according to a weekend report in City Press.
This is no chump change: a source told the publication that outdoor advertising adds R50m-R70m a month to the city’s coffers. The law firm was allegedly “handpicked”, with no full tendering process, according to the source. Incidentally, this is said to be the self-same firm that investigated the dodgy Covid contracts.
Morero – then finance MMC – was reportedly in full support of the decision at the time, offering some mealy-mouthed reason about the law firm being able to take defaulters to court. But neither he nor Botes responded to City Press’s requests for comment.
Morally bankrupt
Of course, if you want to see how devoid of accountability and morally bankrupt the JPC is, look no further than retired judge Sisi Khampepe’s report into the deadly blaze at 80 Albert Street, which claimed those 77 lives.
Khampepe found that Botes had conceded the building was not zoned for residential purposes; that it was hijacked, occupied illegally and overcrowded; that its electricity and water connections were illegal; that there was a lack of firefighting equipment; and that the JPC had failed to maintain the building since 2003.
In other words, the JPC was aware of the parlous conditions – and did less than nothing to intervene. So, the blood of 77 victims on its hands.
The accounting officers, Khampepe noted, should face disciplinary processes. Only, if previous experience is anything to go by this will be another matter that’s dead in the water. Instead, Botes has been rewarded with an extra five years at the helm. Not to mention that R413,000 performance bonus.
That fire alone, all things being equal, should have seen Botes removed from her position – or at the very least facing a hearing. Throw in allegations of sustained political interference at the company, and you’d perhaps be forgiven for thinking this is another patronage system where personal connections trump good governance.
And the people of Johannesburg, again, bear the brunt.
A previous version of this story said the SIU findings had reportedly been referred to the National Prosecuting Authority. The JPC’s annual report says this is not so. We regret the error.
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