The former municipal manager of Mahikeng local municipality, Henry Smit, was arrested in connection with the R144 million sale of municipal land.
National Prosecuting Authority spokesperson in North West division, Henry Mamothame, said Smit was arrested on Tuesday, and appeared in the Molopo Magistrate's Court in Mmabatho on the same day.
"He was granted R150,000 bail, and his bail conditions are that he should not interfere with the State’s witnesses and inform the investigating officer should he travel outside the Gauteng jurisdiction, where he resides," he said.
Smit, 70, was arrested by members of the Directorate for Priority Crime Investigation’s (known as the Hawks) Serious Corruption Investigation and Serious Commercial Crimes Investigation units.
"His arrest and court appearance relate to the unlawful sale of municipal land to the value of R144 million without council approval and further ignoring the competitive bidding process," Mamothame said.
The State alleges that Smit illegally agreed with a company for the sale of land belonging to the municipality on October 31, 2007.
The company only paid R5 million as a deposit to purchase the land.
"Investigations reveal that the company went into liquidation in December 2011 without paying the municipality the outstanding debt. The assets of this company were subsequently sold to another company for an amount of R16 million at an auction," Mamothame said.
In April 2012, the new owners of the land changed their company name, and between 2013 and 2015, they sold and transferred portions of the land to five other companies and a trust account.
Investigations by the Hawks revealed that directors and shareholders of these companies had links to the company that was liquidated, and they acted in common interest in illegally making gains from the municipal land that was acquired irregularly.
“It was further revealed that the company that bought the land from the auction entered into an unlawful agreement with the Social Housing Regulatory Authority (SHRA) to build 2400 units at a value of over R301 million. An amount of R54 million was allegedly authorised by the North West Department of Human Settlement for the start of the project,” Mamothame said.
This contract, however, failed to materialise as it was not budgeted for by SHRA.
“Investigations also revealed that an amount of over R550,000 was paid as gratification to one suspect, and it was further traced to a purchase of a house for the accused's daughter.”
Smit is facing charges of fraud, theft, contravention of the Municipal Finance Management Act (MFMA) four charges of contravention of the Prevention and Combating of Corruption Activities Act (PRECCA), two of corruption, money laundering, and contravention of the Public Finance Management Act (PMFA).
"More arrests are expected to be effected in this case, and investigations are completed," he said.
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