Several leading property developers may be liquidated because they allowed themselves to be dragged into a massive, highly controversial property scheme. For 18 months, developers have been waiting for their money after a Ghanaian businessman offered to buy hundreds of properties for $6.5bn (R55bn). It now appears that the promised funding is unavailable because it still has to be sourced.
The worst of it is that the developers have to help carry the costs of sourcing the finance.
The property developers have also been unable to proceed with selling stands and units in their developments because they have been waiting for the company.
At the time developers thought that the scheme was their salvation amid serious pressure in the industry following the financial crisis.
Joseph Eshun, a Ghanaian businessman, said his company - Katota - wanted to buy and complete the developments in order to provide almost 78 500 dwelling units for the 2010 Fifa Soccer World Cup.
However, the soccer tournament opens in three months and not a single development has been bought and completed.
Katota's latest plan is apparently to buy the land and the development and then to appoint a developer to do the development on its behalf.
In the past couple of weeks, Sake24 has been phoned by several developers who said they had to pay Katota R110 000 per development to have their projects evaluated.
Only 78 of the developers who paid the initial evaluation money are still dealing with Katota. Some want their money back, but have been unable to get satisfactory answers about where the capital has been deposited.
Katota apparently told one of them that the money was in a trust account with PricewaterhouseCoopers, an auditing firm.
PricewaterhouseCoopers said it was its policy not to hold monies for clients in a trust account.
Yusuf Turundu, of Katota Corporate Services, told Sake24 that this capital represented a financial contribution towards the cost of the valuations and was a necessary outlay in order to attract additional international funding. Katota was financing 67% of the evaluation expense, he said.
Katota Corporate Services said it had appointed the Signature Group, whose head office is in Dubai, to get the funding by means of debentures. The debentures will apparently be launched in Dubai in two weeks' time.
The moment the funding is obtained and paid into Katota's international bank accounts, guarantees will be issued to the developers, after which the agreements will be signed and the buying process can begin, it said.
