Mboweni’s rare misstep in an otherwise magnificent career

The story of how the minister got involved with Accelerate Property Fund.

Former labour minister, finance minister and Reserve Bank Governor Tito Mboweni had a remarkable career in politics, civil service and in the private sector.

He was an advisor to Goldman Sachs International (one does not simply get appointed to a formal role at Goldman).

ADVERTISEMENT CONTINUE READING BELOW

Read:
Tito Mboweni dies at 65
Tito Mboweni tributes stream in

He also held many, many directorships over the past three decades – including of the New Development Bank (the ‘Brics’ bank), AngloGold Ashanti, Nampak, Sacoil (now Efora Energy) as well as Discovery Limited (and Discovery Life).

And he was chancellor of Sefako Makgatho Health Sciences University (formerly Medunsa).

Mboweni was an active non-executive director of Discovery at the time of his passing on Saturday (12 October), having returned to the board in 2022 after he stepped down as minister of finance. He was previously a director at Discovery between 2013 and 2018.

One directorship, however, was most curious of all.

Mboweni was chair of Accelerate Property Fund from 1 June 2013 (prior to its listing on the JSE) until October 2018, when he was appointed to cabinet.

It can easily be described as a misstep, and what makes it even more intriguing is he accepted a reappointment as chair in January 2022 after he exited government (for the second time).

One would’ve thought that he would’ve seized the opportunity presented by his political appointment to stay off the board.

Controversial

Accelerate is perhaps best known as the co-owner of (the battling) Fourways Mall in Johannesburg.

The listing of Accelerate was always controversial as the bulk of its assets (some 31 properties) were acquired in the fire-sale of properties from the collapsed Highveld Syndication (HS) schemes.

Accelerate paid R1.3 billion for this portfolio, but only R30 million of this flowed to Orthotouch – the rescue vehicle of the various Highveld Syndication companies.

This was not the only portfolio purchased. In total, 51 properties were bought by Accelerate, from HS (ostensibly ‘Orthotouch’), the George Nicolas Trust and Fourways Precinct.

All four of these entities were/are linked to the Georgiou family (primarily father Nicolas, or Nic, who passed away in 2021).

Read: Nic Georgiou has passed away

The sprawling Georgiou empire has always been a confusing maze of related parties.

Even the most recent settlement between Accelerate and Azrapart regarding Fourways Mall is between two related parties (both involving Michael Georgiou, son of Nicolas, and the original CEO of Accelerate).

Hard selling

It tried hard to sell the listing (and the underlying assets).

Ahead of its debut in 2013, Accelerate said: “The Georgiou Group was founded by Mr. Nicolas Georgiou approximately forty six years ago and, through the innovation, effective management and vision of the Georgiou family, has expanded into a successful national property company.

“The unprecedented growth of the Georgiou portfolio, facilitated by the Georgiou family’s long standing relationships with three of the largest five banks in South Africa, led to the creation of a premier portfolio of properties having a national footprint including various iconic properties in prominent nodes such as the Fourways/Sandton node, the Charles Crescent/Sandton node, the Parrow (sic)/Bellville node, and the Cape Town Foreshore node, amongst others.

“In late 2012, a strategic decision was taken by Mr. Michael Georgiou to diversify the Georgiou family’s sources of funding and take advantage of the favourable legal and tax framework provided to qualifying property entities in terms of the Real Estate Investment Trust (“REIT”) legislation amidst continued interest from institutional and retail investors to participate in the income and growth of the Georgiou family’s unique property portfolio and experience by bringing some of the underlying properties to market through a listing.”

‘Useful’

This all makes the decision by Mboweni to join the board (and to accept the position of chair) all the more strange.

ADVERTISEMENT: CONTINUE READING BELOW

One reading of this is that Accelerate, given its history and links to the Georgious’ previous dealings, needed a veneer of respectability ahead of its debut on the JSE.

How else would banks and investors take the listing seriously?

Georgiou (Nic was very much part of Accelerate despite having no formal role, aside from being a major shareholder) desperately needed someone (many someones) to help launder his appalling reputation. Mboweni was useful in that regard.

Following its listing, Mboweni deflected questions from Moneyweb about his involvement and role at Accelerate.

There is absolutely nothing to suggest that there was anything suspect about his role at the Reit, but the link to the Georgiou family was pungent from the very beginning.

Mboweni appeared to be more than content to simply accept directors’ fees and chair board meetings at a company whose operations weren’t exactly complex – it owned some malls, offices and warehouses.

Over eight years (2013-2018 and 2022-2024), Mboweni was paid a total of R10 million in fees for his role as a non-executive director.

‘There was this crazy Greek man …’

There was a rare detailing of how he became involved with Accelerate in a 2013 interview with BizNews.

He said he got involved “purely by accident”.

As Mboweni told it: “There was this crazy Greek man who owned a large portfolio of buildings and shopping centres all over the place. He came to me and said ‘Look, I’m old. I’m used to having a book in front of me, and a telephone. I scratch around…who has paid the rent and who hasn’t’ and he said his portfolio has grown so much that he can’t manage it anymore. ‘I need younger people who understand something about business to come and run this thing. Can you help me establish a corporate, an identity, and a board of directors with all the things that go with corporate governance and a board charter etcetera’? ‘Appoint an Executive Manager that must run the company and prepare it for listing.’

“We began talking about that and we came to the conclusion that the listed company would be named Accelerate Property Fund.

“He had far too many properties and so we could not bring all those properties into the Accelerate Property Fund, but we chose the good ones: the Fourways Mall Precinct, which is wonderful, some properties in Cape Town and in Durban. However, we are eyeing one for the future, which will be the largest shopping and entertainment area in the middle of South Africa – Bloemfontein. That will be an additional cherry on top.”

That development in Bloemfontein was never more than a pipe dream.

Last year, the Georgiou family sold 26 Bloemfontein properties in an effort to “restructure” its portfolio. Included was the R3.5 billion Loch Logan Waterfront (80 000m²), the largest shopping centre in the Free State. It retains some assets in Bloem, but the family desperately needed money to prop up other parts of its empire.

In May, Michael Georgiou was forced into a share sale by Investec which exercised “its security rights in terms of an existing lending agreement”.

Read:
Georgiou-linked Bloem mall on auction block
Beleaguered Fourways Mall owner asks shareholders to stump up R200m
Director at Fourways Mall owner forced into share sale by Investec
The clock is ticking for Fourways Mall

And, notably, the family trust was unable to follow its rights in Accelerate’s issue of shares this year.

From Goldman Sachs and Discovery to this.

Why, oh why did Mboweni get involved in this mess?

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.