Shocking and Unjustified Levies and Dodgy Dealings

Photo: Kobu Agency

It is not surprising that most Homeowners in Pecanwood are still reeling from the shock of a sudden and unexpected levy increase with effect from the 1st of June 2022.

This shocking announcement comes in the wake of repeated attempts to get the Pecanwood Homeowners Association (PHOA ) to address a number of high Cost Drivers that have resulted in inordinately high Levies for Pecanwood Homeowners and Tenants.

There is overwhelming evidence that a large number of Estates get the same level and quality of services at roughly half the Cost that we are paying in Pecanwood. Perhaps it is worth going down memory lane, particularly for those who were part of other Groups that tried in vain to get the PHOA to focus on containing Costs and to ditch those Costs that aren’t justified at all.

Firstly, the issue of the Malaysian Lease Agreement is the biggest and most unnecessary Cost Driver. The primary reason being that the Golf and Country Club together with the Boat Club are not the Homeowners’ assets, and consequently it does not make sense to pay an outrageous amount for Leasing the asset and still incur millions for its maintenance at the expense of Homeowners and current Tenants on the Estate.

The lack of transparency on the part of the PHOA has up till now prevented Homeowners eager to find a solution to the mismanagement of funds from accessing the relevant Lease Agreement.

The shocking discovery that was made recently is that there is no Confidentiality clause in the “Malaysian Agreement” as claimed by the PHOA. If they have to lie in order to prevent Homeowners from getting to understand the content of the Agreement, what else are they covering up? Surely, that suggests there is something unethical about the Lease Agreement when they refuse to share the content thereof with people who are footing the bill for it.

The second shocking revelation is that the Lease Agreement renewal has not been signed despite numerous false claims that it has been signed. In the recent past, the chairman of the PHOA sent out a communique purporting to embrace transparency and yet the PHOA actions belie that. To test my contention try requesting a copy of the Lease Agreement and their response will undoubtedly shock you.

The second contentious issue revolves around forcing Homeowners to carry the Costs of the Golf and Country Club in particular, which is contrary to what the Memorandum of Incorporation of the Estate stipulates.

Paragraph 4 of the MOI explicitly outlines what the PHOA is responsible for and that covers the areas that Levies must be spent on. And that excludes the Golf and Country Club as well as the Boat Club. The two establishments are businesses that should be run as such to generate a profit for their shareholders, Country Heights and be self-reliant.

The incorporation of the Costs of the two businesses into the PHOA Cost base is to ensure that Homeowners carry the Costs of the two businesses despite the fact that they are owned by Country Heights of Malaysia.

Furthermore, Homeowners would not be paying VAT on their Levies if this daft and costly decision was not taken by the PHOA. Naturally, it goes without saying that if we have a PHOA that disregards its MOI, then we have a serious problem with the calibre of leadership we have as Directors thereof. We hope that clarifies the rationale for the PHOA to charge Homeowners VAT.

In 2014 SARS encouraged all Estates to deregister for the simple reason that they are not businesses. Estates that wanted to retain their status as VAT registered Vendors had to submit a motivation to support their position and we doubt that PHOA did that unless they claimed that Homeowners owned the Golf and Country Club as well as the Boat Club, which is untrue and would be tantamount to fraud.

The fourth issue that is of concern to us is that a bad decision, that further increases our Costs as Homeowners, was unilaterally taken by the PHOA to increase our security Costs by 12% following the appointment of Bidvest Coin Security. By insisting that higher Grade guards be deployed on the Estate will certainly not materially change the quality of the service. It will certainly be intriguing to hear the rationale behind that decision. That also begs the question as to whether a proper tender process was followed to appoint Bidvest Coin Security . The PHOA borrowed R2.4 million for cash flow purposes from Omega Security when they were appointed, which begs the question what the 12% increase in costs is really for. We will be surprised if the evidence to disprove our contention is presented for scrutiny based on the track record of the PHOA.

You may also recall that at the AGM convened in November last year, a decision was taken not to vote on the introduction of the so-called 1% Stabilisation Fund to boost the coffers of the PHOA when Homeowners sell their properties. Despite the fact that the introduction of yet another onerous cost to Homeowners was rejected and the voting was rather on the principle, the PHOA recently announced the illegal introduction of the Stabilization Fund. Once again, there was no consultation with Homeowners to get approval for its introduction as required by the MOI.

We should really be worried about the kind of Leadership we have on the PHOA. Flagrant disregard of sound governance and the rule of law have become the order of the day.

The last item or example we would like to point out relates to the number of employees and the attendant Salary bill of said employees of the PHOA. It is 61 employees to be precise. How on earth can a HOA employ so many people when most services are outsourced and all we need is a small number of people doing admin work and monitoring the performance of Service Providers?

We have been made aware that previous Groups have requested details and a breakdown of the roles and salaries, without the disclosure of individual names, and to date they have not received any official response. What we have learned is that Morné Botha earns a salary of approximately R800k per annum and Hannes Hendricks, R1.2 million per annum. The Homeowners Association is not an operating enterprise and these costs cannot even be sustained by a comparative small business.

The issues raised in this article just constitute the tip of the iceberg as there are many others that we would like to bring to your attention to demonstrate the excesses that the current Board and Senior Management are guilty of. It is inconceivable that no effort has ever been made to reduce Costs and ensure clean governance for the benefit of all Homeowners and Tenants as any person of sound mind would expect from any Board and Management.

Homeowners and Tenants are now facing two dilemmas, the first one being the unjustified increase in the levy amount and the second one being the high cost of purchasing a property in Pecanwood, which inevitably will result in property values going south.

This unintended consequence was not considered by the short-sightedness and irresponsible introduction of these costs. There is no doubt that this time sustained and decisive action is inevitable. If we allow this opportunity to slip through our fingers, we will regret our inaction for the rest of our lives.

Watch this space for proposals on the way forward. You may also submit your suggestions to the Pecanwood Corruption Watch e-mail address: pecanwoodcorruptionwatch@gmail.com.

© Pecanwood Corruption Watch