Cape Town announces investigation into R87 million foreshore deal

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Mayor of Cape Town, Patricia de Lille, has requested a forensic investigation into the Foreshore land auction.

In a statement on Sunday (30 September), de Lille said the site was sold to Growthpoint Properties through an auction for an amount of R86.5 million.

She added that there are allegations that the land was severely undervalued and that this resulted in a loss of R58 million.

“I wrote to the city manager to express my concern at this alleged loss of public funds and also stated that the city could also run the risk of an audit query from the auditor general or as a result of a member of the public reporting the matter to the public protector,” she said.

“In light of these concerns and allegations, and in the spirit of transparency and responsiveness, I have requested that the city manager initiates a forensic investigation into what exactly transpired in this sale process.”

Put on hold

In July, Cape Town announced that it had cancelled its request for proposals for the development – citing regulatory concerns.

The Stage 1 bid evaluation process was concluded in February 2018. However, several appeals and objections were lodged that contested the application of the evaluation criteria as set out in the Request for Proposals (RFP) documentation.

“Having received legal advice, the city concluded that a lack of sufficient clarity in the RFP documentation rendered the evaluation criteria vague,” said Lungelo Mbandazayo, the city manager.

“Procurement processes must be compliant with the rule of law, in particular with Section 217 of the Constitution which governs public procurement. There must be no doubt about the integrity of these processes and, as such, I have decided to cancel the RFP.”

“Furthermore, the economic outlook for the country has become significantly weaker since the issuing of the RFP two years ago.

“This change, together with the additional burdens that the city, its ratepayers, and residents are facing at the moment, cannot be ignored. The city is, therefore, reconsidering the future of this project, and we will communicate further once a decision has been made.”