Valuation process marred by allegations of corruption

Date: 20 June 2014 By: Andries van Zyl

The Zoutpansberger’s decision to dig a little deeper into the company appointed to compile the Makhado Municipality’s 2014 to 2018 valuation roll has literally opened up the proverbial can of worms.

Amidst serious allegations of corruption in the awarding of the tender to Risuna Property Consultants and Valuers, the Makhado Municipality opted last week not to respond to any questions regarding the company and a confidential settlement agreement reached between them and Risuna. “The matter is still sub judice, therefore it is prohibited from public discussion,” was the answer received from municipal spokesperson Mr Louis Bobodi.

Notice that Siyabuselela Trading Enterprise 275 CC, trading as Risuna Property Consultants and Valuers, was appointed as municipal valuers was given by the Makhado Municipality in September 2013. The same notice listed Risuna’s Mr Kulani Dumond Nkuna as municipal valuer.

The release of Risuna’s valuation roll for inspection and objections by the Makhado Municipality earlier this year sparked major controversy from the onset.  Because of the controversy, the Zoutpansberger decided to take a closer look at the valuation roll in April and found it to be riddled with discrepancies and inaccuracies. What was immediately obvious was that a lot of home owners had suddenly become overnight millionaires, especially home owners below Rissik Street. It seemed that Risuna had displayed a total disregard for these properties’ current market value and valued them at overinflated prices. Several cases were also found where luxury homes in the town’s affluent Skuldbult area were valued at ridiculously low values and many local property experts went so far as to describe the valuation roll as absurd and a total thumb suck.

The discrepancies in the valuation roll placed a huge question mark over Risuna’s competence and prompted the Zoutpansberger to ask the Makhado Municipality what criteria Risuna had used to calculate property values. Questions in this regard were sent to the municipality on 14 April.

For more than six weeks, despite numerous enquiries and follow-ups, the Zoutpansberger struggled to elicit a response from the Makhado Municipality. The municipality finally responded on 27 May by merely listing extracts from the Municipal Property Rates Act (MPRA) as the criteria used by Risuna. Ironicaly, the municipality quoted from the act that also says that the market value of a property is the “amount the property would have realized if sold on the date of valuation in the open market by a willing seller to a willing buyer.” This was exactly the point many home owners argued Risuna had not adhered to in compiling the valuation roll.

Still not satisfied with the response by the municipality, the Zoutpansberger then focussed its attention on Risuna’s previous track record. An enquiry to fellow newspapers in the provinces yielded an interesting response. It turns out that the same Risuna, and Mr Nkuna, had compiled the valuation roll of Marulaneng (Hoedspruit). Apparently, Risuna’s compilation of the valuation roll there was also marred by allegations of serious corruption and incompetence.

A bombshell dropped when the Zoutpansberger managed to obtain a copy of a confidential “Settlement Agreement” between Siyabuselela Trading Enterprise 275 CC, trading as Risuna Property Consultants and Valuers, and the Makhado Municipality, wherein it is stated that Siyabuselela “desires to voluntarily withdraw from the tender in an amicable manner”. This settlement agreement, already signed by Mr Nkuna on behalf of Siyabuselela and the Makhado municipal manager, Mr Sakkie Mutshinyali, on 16 May this year, further fuelled suspicion that something was terribly wrong with the valuation process and the awarding of the tender. The MPRA clearly states under Designation of Municipal Valuers 33(4): A municipality may withdraw the designation of a person as its municipal valuer but ONLY on the grounds of (a) misconduct, incapacity or incompetence; (b) non-compliance with a provision of this Act; (c) under-performance; or (d) breach of contract, in the case of a person referred to in subsection (2). Subsection 2 states: If a municipality decides to secure the services of a person in private practice as its municipal valuer, it must (a) follow an open, competitive and transparent process in accordance with the Chapter 11 of the Municipal Finance Management Act; and (b) designate the successful bidder as its municipal valuer by way of a written contract setting out the terms and conditions of the designation.

The Makhado Municipality’s refusal to answer questions about the settlement agreement and the implications thereof for the taxpayer, stating that the matter is sub judice, indicated to the Zoutpansberger that it is embroiled in a pending court case. Lo and behold, this is indeed the case. The Zoutpansberger managed to obtain court documents of a pending court case in the High Court between DDP Valuers (applicant) and the Makhado Municipality (first respondent), Siyabuselela (second respondent) and Mr Nkuna (third respondent). DDP Valuers also tendered for the compilation of the valuation roll and brought a motion in the High Court to award the tender for the compilation of Makhado’s  2014 to 2018 valuation roll to them, or alternatively that the awarding of Tender 1/2013 be referred back to the Makhado Municipality for renewed consideration.

The documentation submitted by DDP with regard to the Makhado Municipality’s awarding of the valuation roll tender to Risuna makes for shocking reading. The case was heard in the North Gauteng High Court on 23 May, with final judgement temporally being withheld at this stage.

DDP argued and openly stated in court that the said tender had been obtained by fraudulent means in that Siyabuselela had forged documents in their tender bid. Furthermore, DDP stated that the Makhado Municipality took irrelevant considerations into account or failed to consider relevant considerations in that the designated municipal valuer did not have the work experience as prescribed in the tender conditions. DDP also stated that the Makhado Municipality had awarded the tender to Risuna in contradiction of the municipality’s own bid evaluation committee's recommendations that Risuna’s tender was not acceptable and that the tender be awarded to DDP.

It was not only the High Court that heard allegations of fraud and corruption against Mr Nkuna and Risuna Property Consultants and Valuers. The Zoutpansberger’s investigation further revealed that the South African Council for the Property Valuers Profession (SACPVP) is currently investigating Mr Nkuna. This was confirmed on Wednesday. As far as could be determined, the investigation focusses on similar complaints of corruption and fraud against Mr Nkuna with regard to the compilation of Marulaneng’s valuation roll. The SACPVP was, however, unable to answer specific media enquiries from the Zoutpansberger regarding Mr Nkuna and Risuna with reference to the Makhado valuation roll because the responsible person who could comment was on sick leave. The SACPVP, however, indicated that a response would be forthcoming within the next week.

Amidst all this controversy surrounding Risuna, Mr Nkuna and the compilation of the valuation roll, several questions arise regarding the legality of the valuation roll compiled by Risuna. The existing valuation roll expires on 30 June, with the new valuation roll coming into effect on 1 July. As far as could be determined, should the Makhado Municipality implement the 2014 to 2018 valuation roll on 1 July and it is declared null and void later, it cannot fall back on the previous valuation roll. This would effectively leave the municipality without a rates income for the next four years. This would mean, according to several property rates experts, that the municipality would have to be put under administration, with the Sate having to pay its operating expenses.

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Andries van Zyl

Andries joined the Zoutpansberger and Limpopo Mirror in April 1993 as a darkroom assistant. Within a couple of months he moved over to the production side of the newspaper and eventually doubled as a reporter. In 1995 he left the newspaper group and travelled overseas for a couple of months. In 1996, Andries rejoined the Zoutpansberger as a reporter. In August 2002, he was appointed as News Editor of the Zoutpansberger, a position he holds until today.

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