A CO-DEVELOPER of Bulawayo’s Egodini Mall project, Otis Tshabalala, has been implicated in a multi-million-rand fraud scandal at a real estate investment company in neighbouring South Africa.
The Johannesburg Stock Exchange (JSE) suspended the shares of the real estate company, Delta Property Fund, on 15 December 2020 at a time when it was reeling from a R46 Million fraud scandal.
The suspension of Delta shares from the JSE followed the company’s decision to withdraw its financial statements for the year ending February 2020 “because they can no longer be relied on by shareholders.”
Reports show that Delta listed on the JSE in 2012. The real estate company owns retail, office and industrial properties that are leased to South African departments and entities.
A forensic audit by Mazars implicated Tshabalala and other former Delta Property Fund (DPF) executives Sandile Nomvethe and Shaneel Maharaj, then chief executive officer and chief financial officer respectively in the fraud scandal.
Tshabalala is a former chief operating officer at the company.
Nomvete and Maharaj resigned from Delta in August with Tshabalala following suit, electing not to complete his notice period that was initially announced at the beginning of July, according to media reports.
According to the reports, a November 2020 forensic investigation by Mazars into the goings-on at Delta commissioned by the board uncovered fraud and misappropriation of funds amounting to R46 million. The forensic audit implicated Tshabalala and the former executives.
Irregularities cited include payment of commission of R43.9m for the three financial years to February 2020, resulting from invalid, lapsed or no broker mandates; fraud resulting from unethical dealings amounting to R2.1m and non-disclosure of related/connected party transactions to the board.
Tshabalala, a co-developer of Terracotta project awarded the Egodini Mall tender, and other former executives have denied any wrongdoing in a statement issued days after the suspension of the company’s shares on the JSE.
“We categorically deny the accusations of procurement irregularities and misappropriation of funds or any other illegality or irregularity as contained in the Sen’s reports and pursuant reporting in the media. We trust that the incorrect impression created about the discovery of R43.9million fraud will be corrected,” the former executives said.
Analysts however said the fraud scandal involving an official of Terracotta Trading Private Limited (TTPL) raised questions on how the Bulawayo City Council (BCC) settled for the company.
Reports abound about how the company was improperly awarded the tender.
At one time, government officials such as then Local Government permanent secretary George Mlilo and Bulawayo provincial minister Nomthandazo Eunice Moyo queried the deal and accused the current Bulawayo councillors of lacking transparency over the Egodini project.
They suggested a re-tender, claiming that some senior council officials were either bribed or linked to Terracota.
Commentator Reginald Shoko said: “The council should have done proper due diligence and also put timelines that are clear and achievable. The investment climate in Zimbabwe is not favourable hence that must be considered.”
Contacted for comment, Bulawayo deputy mayor Mlandu Ncube refused to talk about the Terracota deal. Terracotta was in 2015 awarded a tender to develop Basch Street Terminus, popularly known as Egodini, to a state-of-the-art regional transport hub and mall at a cost of $60 million.
According to the Bulawayo City Council, once complete the project has the potential to create thousands of jobs for unemployed Bulawayo youths.
However, there has not been any movement since 2015 until in March 2018 when Egodini was fenced off and vendors relocated to new vending sites.
That was the only activity and, since then, there has been no movement. Sources claim the contractor is too broke to even commence construction.
At some point, Terracotta said it would launch a broad-based retail equity scheme to allow Bulawayo residents to acquire a maximum of 30% shareholding in the Egodini Mall project in a bid to raise capital for construction.