South African builder of 2,566 subsidized homes accuses officials of fraud in R470m pay dispute

Director Paul Mthabela took the complaint to Pretoria Central police on Sept. 1, according to The Citizen. On Sept. 30 the head of detectives, Colonel Kedibone Ndala, wrote to the provincial human settlements department asking for information and documents. Captain Tintswalo Sibeko, a police spokesperson, said the investigation is still open. None of the claims has been tested in court.

In a sworn statement, Mthabela says the department wrote provincial rates into its contracts and presented them as the nationally approved subsidy. XJR was first hired in 2013 for 400 houses of 45 square meters at R64,666 each. After an appeal the rate rose to R103,000, not counting geotechnical work. He alleges the department then recorded R110,947 a unit in the national Housing Subsidy System, a gap he puts above R39 million over houses in towns including Kinross, Bethal and Embalenhle. For 119 units awarded in May 2024 the department paid R183,257 each, he says, while the national figure had risen to R271,166 in April 2023.

The police case sits on top of a civil fight. TimesLive reported in June that the Mpumalanga High Court had granted XJR a default judgment for about R319 million in April, followed by a writ to attach R470 million in department assets. The department applied to rescind the judgment and the writ was stayed. A hearing set for Aug. 31 was dropped from the roll because nobody showed up for either side, The Citizen reported.

Department spokesperson Freddy Ngobe told The Citizen he was not aware of an active criminal case and that the department had already explained the transactions to police. In June he told TimesLive the department disputes several of XJR's allegations. A spokesperson for the national minister said then that a subsidized house may be built for less than the subsidy, but not for more.