State capture: Free State housing head quizzed on 'strange' deal for R1.6m house
Nthimotse Mokhesi, the head of the Free State human settlements department, came under intense questioning at the state capture inquiry on Monday for a commercial transaction he signed with a service provider to his department.
The commission's evidence leader Paul Pretorius SC read from Mokhesi's affidavit in which he stated that he entered into an agreement with Blackhead Consulting CEO Edwin Sodi to purchase a house in Bloemfontein for R1.6m in 2015.
Blackhead Consulting was part of a joint venture with Diamond Hill Trading, which was awarded a lucrative R255m tender to audit and assess households in the province with asbestos roofing. In terms of the agreement signed between Sodi and Mokhesi on April 1 2015, Blackhead Consulting (Pty) Ltd would pay R650,000 for the property to be purchased by Mokhesi's family trust.
In terms of the agreement, the house would be sold after seven years upon which Sodi would receive his initial investment and any profit that accrued from the sale.
Pretorius said the property was not registered either in Mokhesi's or in Sodi's name, even though it was a joint investment.
“Nowhere in Mr Sodi's books does it appear he made a payment for your benefit or for the joint investment, let me put it neutrally. There is no official record, nothing in the deeds office that shows that Mr Sodi owns a property with you. There is nothing in any bank account that shows a payment to you,” Pretorius said.
Pretorius said all that existed was a payment by Sodi to the attorney's trust account.
Mokhesi agreed, and said he raised 60% of the required capital for the house.
“This was not money for me. It has to go back to Mr Sodi as an investor. First the guaranteed capital and surplus and profit in the 60-40 share,” Mokhesi said.
Pretorius asked Mokhesi to explain why Sodi, who wanted to invest in property, would not register a share of that property in his name but limited his rights to rights against a family trust.
“Ordinarily an investor in property would want rights in that property.”
He said a collapse of the scheme would leave Sodi with rights against the trust only.
“All that Mr Sodi would have would be rights against a family trust which might be at that stage just be an empty shell. He does not have the security of his investment in the property. That's strange,” Pretorius said.
Commission chairperson deputy chief justice Raymond Zondo said this transaction happened a few months after Sodi's company had been given a job by the department.
“Do you accept the proposition that this is strange that he was prepared to agree to an arrangement in terms of which he would have no right in the property itself? Particularly for somebody who is quite involved in properties,” Zondo asked.
Mokhesi said he put in a proposal and Sodi accepted it.
“If one looks at documentation relating to this arrangement and agreement, and assuming that it is genuine and not just a cover for a donation to you, ... you were able to buy a property in which you were to reside now for at least five years with, at that time R1.6m, when you could raise a bond of R1m.
“Not only did you enjoy personal occupation of the house but also you enjoyed the benefit of what you have described as a potentially profitable investment of seven years, either of which you would not have had had Mr Sodi not invested R650,000,” Pretorius said.
Mokhesi said the transaction was an investment.
Zondo said he got an impression from Mokhesi that it was ethically inappropriate to enter into that transaction while Blackhead was still going to continue and do the second part of the job.
“Maybe in hindsight I shouldn't have,” Mokhesi said.