The CEO of a state-owned developmental finance institution is under criminal investigation for allegedly fraudulently signing off a multimillion-rand sale of land — while he was on suspension and being investigated for earlier property transactions.
Zakhele Lebelo, one of two former Transnet Property executives, along with two former Transnet service providers, entered into several agreements with the Special Investigating Unit (SIU) this week to pay back a combined R31.4m arising from unlawful contracts concluded while they were in Transnet's employ.
The Sunday Times has established that Lebelo signed off a R39m sale of 5.8ha of land belonging to his employer, the Free State Development Corporation (FDC), last August. The sale — well below market value — is said to have cost the FDC about R100m in lost revenue.
The land, which comprises the Setsing shopping complex in Phuthaditjhaba in the Free State, was sold to Nthoese Development, a company based in Johannesburg. At the time of the transaction, Lebelo was five months into a precautionary suspension, pending investigation, which resulted from other property deals he signed off as CEO at the FDC.
The FDC is an entity of the Free State provincial government under the department of economic, small business development, tourism and environmental affairs (Destea). Its mandate is to promote and develop small, medium and micro enterprises through loans and other empowerment projects. It courted controversy in 2018 when it unlawfully invested R100m in VBS Mutual Bank, which would later go into liquidation.
An internal memo meant for the FDC’s board of directors last year shows Lebelo authorised the transaction by deposing an affidavit that he was authorised to sign all relevant documents relating to the sale; signing and witnessing a power of attorney to the transferring attorneys; and signing the consent to transfer the land.
According to the memo: “Analysis of the actions of the suspended CEO ... indicates that Mr Lebelo’s conduct amounts to a violation of his terms of suspension (and) commission of fraud and forgery of utterance of forged documents.”
It recommended that the matter be reported to the police and that the FDC be included in the disciplinary investigations against him, saying it lost more than R100m as the property was valued at R143.3m.
The R143m valuation was, however, disputed by two insiders with direct knowledge of the history of the transaction, because the “land had been developed by the buyer who operated the shopping complex anyway”.
In terms of this week’s agreement with the SIU, Lebelo — who is a former group CEO of Transnet Property — was liable to repay R5.2m in alleged bribes and secret profits, and his family trust is liable to pay a further R500,000 for the SIU’s legal fees
“It cannot be true that the loss to FDC is R104m because remember they are the ones who built this shopping complex in any case. To offset that the FDC gave them a multi-decade lease, where it collected a percentage of the revenue collected,” said an official, who cannot be named as they are not authorised to speak to the media.
A Free State police spokesperson confirmed its commercial crime unit was investigating a case of fraud. The Sunday Times understands the FDC has instituted legal action to have the transaction declared unlawful and have it reversed.
The transaction only came to light when an electronic transfer of R30m was made into the corporation’s bank account on September 30 last year. Further investigation revealed the payment corresponded with the transfer of the shopping complex, which had been authorised by Lebelo a month earlier.
It is not clear why Nthoese Development — which developed and operated the mall on the FDC’s land — paid R30m for the property when the sale price listed on transfer papers was R39m.
The company this week said it could not respond to questions on the transaction as the matter was under investigation.
“Nthoese Development followed and complied with all due process requirements in acquiring the property, ensuring compliance with legal and regulatory requirements for the approval of the property,” it said.
In an affidavit accompanying his authorisation of power of attorney, Lebelo said the sale of the property was approved by the previous Destea MEC, Makalo Petrus Mohale, in 2023. Contacted this week, Lebelo declined to comment.
Mohale — asked this week whether he saw a valuation of the property at the time of his approval — said: “I left the department in 2023 and this matter occurred in 2021, not 2023, as per your enquiry.
“I do not have any facts pertaining to the matter because I have left all applicable documentation with the department. The current MEC or the department is therefore in a better position to reflect on the matter.”
On Friday, Destea spokesperson Mojalefa Mphapang said MEC Moses Makume was informed by the FDC of its litigation in the matter.
“Subsequent to a couple of meetings and based on a legal opinion, the MEC advised the FDC to reconsider litigation and renegotiate better terms with the buyers. The FDC board reiterated their resolve to continue with litigation. Seeing that the matter is sub judice, the department will not comment further.”
In terms of this week’s agreement with the SIU, Lebelo — who is a former group CEO of Transnet Property — was liable to repay R5.2m in alleged bribes and secret profits, and his family trust is liable to pay a further R500,000 for the SIU’s legal fees.
The SIU said the money would be recovered from his pensions and the sale of three properties he owned in Rosebank, Johannesburg that are valued between R3.8m and R4.2m.
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