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Mugabe’s man - big property spender

It was reported in the Mail & Guardian today that a trusted lieutenant of President Robert Mugabe has spent R185-million on property on the Durban north coast and one of the most exclusive areas of Sandton, Johannesburg.

Robert Mhlanga is chairperson of Mbada Diamonds, which according to the company has turned over $600-million from diamonds in two years. But it isn’t Mbada Diamonds’ controversial operating area (the Marange diamond fields in southeastern Zimbabwe) that is raising eyebrows.

M&G reports that Mhlanga seems content to pay up to six times the going rate for the properties he buys, but the Zimbabwean people are more interested in who Mhlanga is buying the properties for.

Many speculate that Mhlanga represents the Mugabe family’s interest in Marange and that he is buying properties on their behalf, although M&G could not prove that he has indeed been acting as a proxy for the Mugabes.

Spokesperson for Mugabe, George Charamba, had responded to M&G and said: "What is the link between Robert Mhlanga and Robert Mugabe except that they share the same [first] name? I find it strange that any Zimbabwean who makes money must be in association with Robert Mugabe. Is it being implied that Zimbabweans are not entrepreneurial enough?"

Attempts to contact Mhlanga has failed, both his personal assistant and employees at the Sandton offices of his company refused to help them contact the businessman.

A lawyer, Lazelle Paolo, which has acted on behalf of Mhlanga had denied that that there is any business connection between the two.

News of the purchase of a R200-million mansion in Ballito in surfaced in May. It is said that the property, which was purchased last year, is situated on the exclusive Zimbali golf estate and that it had “two man-made lakes, bulletproof windows, a helipad and an underground bunker beneath a security building.”

However the M&G investigation revealed that he had paid R100-million for the property in September 2011 and that he had bought an adjoining property for R1.2-million in 2002. M&G also used an property deed search to trace another four properties which was bought by Mhlanga in the past 18 months.

They report that on one day in January 2011 alone, Mhlanga had bought three properties for a combined R60-million, including a penthouse suite in Umhlanga Rocks and a pair of mansions almost opposite one another in Hyde Park, Sandton.

He followed up these purchases in August 2011 by buying a sprawling property along the Umhlanga beachfront for R25-million.

All five properties’ paperwork has been finalised in their respective areas and the M&G investigation has revealed a peculiar modus operandi by Mhlanga.

This is what they report:

“Mhlanga's modus operandi is to buy a shelf company with an obscure name, such as Formate Proprietary, or an obscure name followed by a string of numbers, such as Redlex 549. He uses the shelf companies as vehicles through which to buy property. Mhlanga is traceable as the sole director of these companies and, through the company names, to records of property sales at deeds offices.

The deed searches and deed of transfer documents obtained by the M&G show that Mhlanga paid up to six times more for each property than when it changed hands between previous owners. Both owners of the properties whose prices increased sixfold explained that they had made improvements to the properties. But whereas one owner "demolished and rebuilt", the other said he had done an "upgrade".”

The M&G team had managed to contact two of the previous owners of the property he had bought, attempts to the other owners have gone unanswered.

In the M&G article one previous owner had stated that he had bought his property "some 12 years ago, for just under R4-million. The property was registered in the name of his wife. The house was demolished and rebuilt so obviously the market value has increased. The property market has also improved over the last 12 years.”

Mhlanga's shelf company paid R25-million for that particular property.

An Umhlanga Rocks-based estate agent corroborated Nathan's account, saying he had improved the property and put it on the market for "R30-million to R35-million".

The article further stated:

“The agent expressed surprise at the R31-million Mhlanga paid for an apartment at the Oyster Schelles complex on the famous Oyster Box Hotel premises in the town. According to the agent, the most expensive flats were the penthouses in each apartment building, whose asking price was between R10-million and R15-million "absolutely tops". Even at R10-million, the penthouses were on the market for two or three years before they were sold.

Asked whether any apartment in the complex was worth R31-million, the agent said: "Absolutely impossible ... never, ever."

The owner of the two Hyde Park properties who sold to Mhlanga for a combined R29-million, said he had bought the properties for a combined R5-million in 2007 and that he then proceeded to upgrade them.

He had said to M&G that he believes Mhlanga had paid a fair price for the properties. He also said that the properties had been in the market for more than a year when Mhlanga made his offer and that he had heard that Mhlanga “was a miner...who was I to refuse,” said the owner.

A real estate analyst had said to M&G that if Mhlanga was buying property at well above the going rate, that he was not expecting to make a return on his investment.

The analyst explained to M&G:

"If you're buying property to let, there's a 7% to 8% return you would want to get back on your investment per year," the analyst said. "But if you're paying five to six times above market rates, then you're only going to get a 1% return on your investment. It doesn't make financial sense; you must be doing it for other reasons.

There could be money laundering happening, where basically you're paying a lot more than it's worth but there is some other agreement with the guy who's selling it to you where a percentage of the transaction flows back to you later in some other transaction down the line.

Or you may be trying to set up bolt holes or places of safety outside your country in places where governments are relatively friendly to you, like in South Africa, and you don't care about the price because you need them quickly."

The paper reports that lawyers have told them that there is “no business or other relationship” between Mugabe and Mhlanga but Mhlanga is a former air vice-marshal who is known to have piloted Mugabe’s private helicopter.

The M&G has traced all of his dozen South African shelf companies to a single address in Sandton’s business district. The investigative team was met by a security detail on the ground floor of the building and was told that no one was allowed on the 17th floor without an appointment (which could take up to 6 months to get.)


(The M&G Centre for Investigative Journalism (amaBhungane) produced this story. See www.amabhungane.co.za for our stories, activities and funding sources.)


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