21 December 2009

South Africa: Dodgy Land Transfers Point to Deeds Office 'Tampering'

Johannesburg — A TOP-level investigation is under way into irregular property transfers that point to fraudulent tampering with records in the title deeds registry, Business Day has established.

The suspect transfers suggest security procedures have been compromised at the deeds office, which means property owners cannot be sure their title deeds guarantee security of tenure.

Cases being investigated include the sale of a game ranch near the Kruger National Park, and 12 cane farms in Mpumalanga bought by Remgro 's TSB Sugar, government officials have confirmed.

TSB declined to comment on the investigation.

Rural Development and Land Reform Minister Gugile Nkwinti, under whose department the deeds office falls, had been briefed, but not yet supplied with a full report with recommendations for corrective action , spokesman Eddie Mohoebi said on Friday.

"An in-depth legal audit is being conducted, and the findings will be escalated to the state attorney for advice and guidance," said Mohoebi.

The department's investigation, in co-operation with the Companies and Intellectual Properties Registration Office (Cipro) and the Master of the High Court, was launched in response to a complaint by sequestrated Swazi businessman Dumisa Dlamini.

Many of the suspect sales originate from the liquidation of Dlamini's companies by Absa in 2004 after he had failed to honour a court settlement to pay outstanding debts.

In court papers, Dlamini alleges employees of Absa, lawyers, liquidators, officials of the deeds office and Cipro colluded to defraud him of his farms.

Absa stressed the farms were sold by liquidators on the strength of a valid, final liquidation order issued by the high court.

Absa's acting general counsel, Marthinus van Rensburg, said: "Mr Dlamini's allegations of collusion and fraud have been denied by Absa, and have been rejected by the courts and the authorities on every occasion."

But the transfers themselves have attracted renewed scrutiny from the authorities.

Last Dec ember, the police commercial and financial crime intelligence unit informed the registrar it was investigating allegations that "unknown individuals" had defrauded Dlamini of his farms, and requested relevant documents.

A preliminary report by the registrar's office, seen by Business Day, shows its records were mysteriously tampered with some time between 1998 and 2002.

When the farms were transferred to TSB Sugar in 2004, the owner reflected on the electronic deeds registration system (DRS) was not the same close corporation reflected on the title deeds, the report found.

"An important and conspicuous discrepancy (exists) between the DRS and title deeds of the properties", although no application for "rectification" of the deeds or DRS was received by the deeds office, the report concluded.

It recommended an investigation to establish who had changed the electronic records and the role played by members of the new close corporation.

This year, chief registrar of deeds Sam Lefafa, who in earlier correspondence had said there was a "prima facie case (of) elaborate fraud", wrote a letter urging the state attorney to take legal action flowing from the Dlamini investigation.

"The South African Deeds (Registry) is one of the finest in the world as cases of fraud are almost nonexistent," Lefafa wrote. "Our procedures and processes are such that they provide property owners with security of tenure.

"Surely, what happened in the Dlamini matter has compromised this system."

Irregularities being investigated in the transfer of the game farm near Kruger Park are more conspicuous. Deeds records confirm the farm, 2 Te Kort 395 JU, belonged to Dlamini's company Paradise Game Ranch Share Block, registered in 1970.

When the same property was auctioned and sold to a private trust in 2005, the liquidation interdict was noted against a bogus close corporation with an identical name, but the registration number of an unrelated bridal couture company, Crystal Lace.

The deed of transfer contains further discrepancies. It shows the bogus close corporation granted conveyancers power of attorney for the transfer, but this was done from another entity called Paradise Game Ranch CC registered in 1994, which is not reflected as owner of the farm anywhere in historical deeds records. This means the trust bought a farm from a close corporation that never owned it, sold through a liquidation interdict and power of attorney from an entity that does not exist.

"This is maladministration," said Tiveni Nkosi, Dlamini family spokesman. The department was unable to say when the probe's results would be made public.

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