Source: Investment boob costs NSSA $8m | The Herald December 3, 2016
Takunda Maodza Assistant News Editor
THE National Social Security Authority (NSSA) bought a Harare property for a price inflated by over $8 million in yet another investment boob bordering on corruption, it has emerged.
Documents in The Herald’s possession — mainly from an audit conducted by Grant Thornton — the fired James Matiza-led management bought Celestial Park for $32 million from Matay-Kingdom on September 29, 2014.
NSSA management ignored a BARD valuation report which priced the property at $24 million, a difference of a whopping $8 million.
The auditors noted that NSSA could have built a similar structure for only $27 338 386, meaning the BARD valuation was on point.
The documents show that GreenPlan valuators had valued Celestial Park at $36.5 million as at June 15 2014.
BARD valuators put it at $24 million as at May 27, 2014.
Eventually, NSSA forked out $34 089 758 when other charges are factored in.
“Given the significant difference of $12. 5 million between the two market values derived by the independent valuers, one would have expected both reports to have been tabled for discussion and BARD valuation included for determining the offer for bargaining purposes,” reads the Grant Thornton audit report.
The audit noted that the BARD valuation of Celestial Park was dismissed by the then NSSA management on flimsy grounds.
“BARD valuation reports were being disregarded due to the fact that they were assigning values that were too low to properties and hence the authority would find it difficult to purchase any properties at those values as most sellers would be unwilling to sell.”
It noted that the transaction prejudiced NSSA of $13 793 006.27. This being excess of purchase price over market value as per BARD valuation report $8 million, input VAT on purchase of Celestial Park $4 173 913, access road construction $72 270.27 and potential rental loss in respect of unoccupied space $964 320.
The auditors also raised issues with the agreement of sale entered between the seller, Matay-Kingdom and NSSA.
The agreement of sale was prepared by Kantor and Immerman at NSSA’s request.
Reads the audit findings: “Clause 11 and 12 of the general conditions of the agreement of sale stipulate that the property is sold voetstoots even though the property was still incomplete at the time of signing of the agreement.
“The agreement did not include any set targets for the completion of the property as this was the property that was acquired when it was still under construction.”
It was also noted that the agreement of sale was silent on whether the price was inclusive of VAT.
“The agreement of sale was silent on whether the purchase price of $32 million was inclusive or exclusive of VAT. This led to a dispute with the seller. In terms of VAT (Chapter 23:12), where an agreement of sale is silent on whether the purchase price is inclusive of VAT or exclusive of VAT for registered operator, the amount charged is deemed to include VAT,” reads the Grant Thornton audit report.
It added: “The agreement of sale was silent on interest earned on funds in Trust. There is no evidence to suggest that due care was taken to ensure that the above mentioned issues were ring-fenced in an effort to protect the authority’s interests. There was also no evidence of a quantity surveyor or similarly qualified person being engaged to assess the building and generate a slag list for inclusion before the agreement was signed. The satisfactory completion and or addressing of the snag list should have been one of the conditions precedent in the agreement.”
Grant Thornton also noted in its findings that according to the agreement of sale, NSSA was supposed to pay $4 million immediately to Matay-Kingdom with the balance being released upon completion of all conveyancing documents to facilitate transfer of the buyer.
“However, from our review we noted that there were other disbursements apart from the $4 million that were made available to the purchaser,” noted the auditors.