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Housing schemes collapse under graft

Publish date: 26 July 2007
Issue Number: 73
Diary: Legalbrief Forensic
Category: Fraud

The collapse of hundreds of low cost housing projects countrywide is being blamed on fraud and corruption by developers in collusion with housing ¬department officials.

As a result, the government is now spending more than R2bn to re-finance the completion of the low-cost houses that were abandoned by unscrupulous developers across the country since the dawn of democracy, says City Press. The problem has its roots in massive fraud scams by developers who colluded with some of the country’s housing department officials to siphon off millions of rands for work not done. City Press says that several documents in its possession show that developers in the nine provinces claim the non-completion of low-cost houses was caused by several problems, including unresolved land issues and delayed environmental impact assessment studies on sites earmarked for government’s low-cost houses. But a common concern among developers was the claim that the profit margins in the RDP housing construction were very low. But the government dismissed the complaints. It said tenders were ¬allocated based on submissions by developers and the low-cost housing subsidy had been increased ¬annually to cater for inflation. The government is now forced to ¬¬re-finance some of the projects as ¬attempts to get the developers to pay took too long. In the Eastern Cape, the provincial housing department has allocated another R311m to ¬unblock 183 housing projects that were either incomplete due to fraud and corruption or escalations and other \'implementation-related issues\'. But Limpopo is the hardest hit with a whopping 40 000 incomplete houses that have to be finished at a cost of R1bn in three years. Full City Press report