Im no rat, says tycoon on casino deal - Thursday 26th of July 2007
Durban businessman Vivian Reddy has rejected accusations that he broke a promise to donate a multimillion-rand building to the Newcastle community and pocketed a huge profit by selling it to the same community.
Reddys Balele Leisure Group bought the Iscor Club from the Newcastle council in 1998 for use as a temporary structure to house the Monte Vista Hollywood Casino, while it finalised plans for a permanent building in the northern KwaZulu-Natal town.
In its licence application to the Gambling Board, the group had allegedly promised it would donate the club, for which it paid about R9-million, back to the community for use as a sports centre once the casino had moved to its new premises.
The new permanent casino was opened last year, but the old Iscor Club was not transferred to the community.
It has since transpired that licence conditions were amended to enable Reddys company to sell the building for R15-million to the council, a revelation which has sparked anger and an accusation of breach of promise against Reddy, which he has hotly denied.
Local newspaper the Newcastle Advertiser has gone as far as calling him a "greedy rat".
Reddy conceded to the Tribune on Saturday that he had promised to turn the club into a sports centre, but later found this would not be financially viable for his firm.
Last year his company sold 60 percent of its shares in Monte Vista casino to Century Casinos. According to the sale agreement, the shares were to be sold for R57-million, with R40.5-million being paid out upon signing the deal and a further R17-million within 18 months if certain criteria were met.
If the gross gaming revenue exceeded R95-million during the first 12 months of the casinos operation (Century Casino Newcastle), a further R2.5-million would be paid to the sellers.
It is believed Reddys company sold the club to meet the conditions of the sale agreement.
In an April 1998 letter from the Newcastle council, the Iscor Club was valued at R9-million which would "for the purpose of Agreement of Donation be regarded as the value".
In October 1999, the transformed Iscor Club opened its doors as the Monte Vista Hollywood Casino, renovated at a cost of about R50-million. In an interview at the time, Reddy said he believed the casino would dedicate R1-million annually for the upliftment of the area.
On Saturday he said the letter to the (then) mayor of Newcastle, Dr Sibongiseni Dhlomo, about donating the temporary casino site to the municipality was a personal and introductory letter of some of Balela Leisures intentions at that time.
"When we submitted our application for a casino licence, we found our initial intentions were not economically viable and we subsequently had a meeting with the mayor and some of the councillors to explain our situation," said Reddy.
Reddy said there was no compulsion or condition in the casino licence to donate the temporary premises to the public.
He said advertisements were placed widely for a public hearing to be held in connection with changing the conditions of the casino - from temporary to permanent - which included selling the temporary casino.
"Subsequently, the KwaZulu-Natal Legislature and Newcastle Municipality said we had to sell the temporary casino premises and build a permanent casino."
Of the accusation that the sale price was inflated, Reddy said the temporary casino premises were worth R25-million and was sold at a discounted price on condition the temporary complex was turned into a sports academy.
He said the casino had contributed about R3 million towards community projects in the past six years.
He was "very, very upset" at having been called a rat for implementing a business decision made by the board and shareholders of Century Casino.
"This is a personal vendetta against me and the casino. The vendetta is being conducted because of an issue that arose at the casino and my public support for (ANC Deputy President Jacob) Zuma. This will all be revealed in the pending litigation we have launched against these individuals," he said.
Reddy said he had received a call from a senior Newcastle council official about five weeks ago asking for a meeting in connection with the
R15-million for the temporary casino. The official asked for a "commission" to facilitate the transfer of money from the council to his group.
Reddy said he met IFP Secretary-General Musa Zondi, whose party controls the municipality, to discuss the conversation with the official. Zondi confirmed he had received a complaint from Reddy.
"We have handed this matter over to the mayor, Sam Mlangeni to investigate the allegations," said Zondi.
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