Pam Golding Properties is now being investigated by the Estate Agency Affairs Board of South Africa (EAAB), due to the sale of two properties, in Dainfern and Kyalami Estate north of Johannesburg, believed to be worth a combined R50 million.

Yes, the same Kyalami Estate where shirtless men brawl on the streets with swords.

The issue, claims the EAAB, is that the real estate giants contravened financial regulatory laws when facilitating the sale of property to “politically exposed people”.

IOL reports:

“Pam Golding Properties will be the subject of a multi-pronged investigation following reports that it allegedly facilitated the sale of properties to the children of former Mozambican president Armando Guebuza without following legal requirements and thus allegedly aided money laundering,” the EAAB said in a statement…

“It is alleged that former political leaders and their families were laundering money by investing large sums of illegal monies in properties in South Africa, resulting in the artificial inflation of property prices and skewed market values,” the statement said.

The issue first came to light in a Mail & Guardian article published on February 21, which claims that South Africa’s “status as Africa’s most sophisticated financial hub, and its low prosecution rate, are enabling politically exposed persons to hide vast amounts of money in real estate”.

In the case of the Guebuza family, it was all too easy:

There are several mechanisms, including large cash purchases, the use of third parties (such as offshore and shell companies), and buying or selling properties for significantly different values than market prices, that could enable people to profit from South Africa’s real estate market. Artificial leases could also allow illicit funds to be laundered.

Investing illegal money in properties, whether residential or commercial, conceals the origin of funds and acts as an entry-point into legal markets. If the properties are sold, leased or transferred, particularly if they are owned by companies rather than individuals, such profits are “legalised”.

Yep, that’s exactly how money laundering works.

The Financial Intelligence Centre (FIC) will meet with the EAAB this week, and take a closer look at whether Pam Golding Properties transgressed certain laws within the FIC Act.

When pressed by the Sunday Times, Bradd Bendall, the general manager of real estate operations for Pam Golding Properties, said they were in the process of conducting an independent investigation, and that they “take these allegations extremely seriously”.

For a closer look at exactly how the Guebuza family snapped up those two properties, read the full Mail & Guardian article.

[sources:iol&mg]