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Having been raised in the province, trips to KwaZulu-Natal are always an occasion for me – a time to catch up with old friends, meet new ones and absorb the latest news. During a visit at the end of July, I noticed a number of cranes in the centre of Umhlanga. On inquiring, a story emerged that the construction of a massive mixed use development had been stalled for so long that the corrosive effects of the sea air meant the entire structure might need to be demolished. I passed on the scuttlebutt during our July 27 episode of From The Editor’s Desk with my colleague Felicity Duncan. On Friday morning, at the invitation of Vivian Reddy, the central character in the R3.4bn Oceans development, I heard the real story. And got a lot more than bargained for. It provided a rare opportunity to ping tough questions at the media-shy billionaire who worked his way up from poverty to owning the largest electrical contracting business on the African continent. And from his responses, was left with the impression that the tall poppy Reddy attracts far more malignant attention – and gossip – than he deserves. To begin with, Reddy was justifiably testy, but the conversation improved and ended in a real highlight as you’ll hear towards the close. – Alec Hogg
I’m so glad that you know the professionalism and the fact that you agreed to hear my side of the story and that’s what good journalism is all about when you are fed fake news is to ensure that you get the facts, and in fact that article came across as misleading, fake reporting and it created confusion and it seemed to be designed to discredit Ocean’s development.
Now in that article…
It wasn’t designed for anything, it was just people’s perceptions and I think… I mean let’s go back. How did you get involved in this in the first place. Where does it all start?
This land, Rob Alexander was my 50% property developer partner and we bought this land in 2000, and we bought it from private developers who originally bought it 22 years ago from the city, and it changed hands in between and we became the third owners of it.
Okay so that’s fake news number one. You didn’t buy it from the town council for R30m.
No. We bought it. I can’t tell you the amount that Rob and I bought it for but Investec funded it in 2011.
And it’s a lot of land. Was it difficult to accumulate so much?
Yes we spent a lot of money, we had to relocate the clubhouse, we had to relocate Telkom buildings, we had to relocate the post office, we had to relocate the main water line going in Umhlanga and we had to take out 340,000 cubic meters of land which cost us about R180m. And the people of Umhlanga, in fact on the new clubhouse we spent R20m, it was supposed to be the job of the city but the city reneged and Rob and I built a beautiful new clubhouse on the Umhanga Ridge and it’s a world class facility and there’s a nice plaque in honour of this because we respect the people of Umhlanga rocks and we created this facility at no charge. And they’ve got a long term lease on it.
How big is the Ocean’s development?
The development is 240,000 square meters. It consists of a Radisson Blu hotel, you see the cranes are busy building it, above it 65 apartments. The 600 other apartment blocks and a world class shopping centre. We are going to have another diamond walk in the centre. We are planning a snow park.
How much is all of this costing?
This is just over R3.4bn.
It’s a big numbers.
It’s a big number. And despite what your information said, it is fully funded, I can show you the letters from the financial institution. We’ve got the money for it. And the question I think what people are concerned with, what happened, why were the cranes removed and this is what happened. We had the big misfortune that the first contractor that was employed to do the job went into liquidation.
Was that Group Five?
Actually we had confidentially agreements, we don’t want to mention contractors but the first contract wasn’t Group Five, the first contract went into liquidation, then we had to negotiate with liquidators and then we gave the job to Group Five and then to our horror and dismay, Group Five went into business rescue and the banks said hold on, sort that out, we want another contractor in there and we had to negotiate with Group Five amicably, and it cost a lot of money because when a contract is valid and when we parted, we believed and I strongly believe that if Group Five had continued under proper supervision and if we had support from the banks that they could have done it. But unfortunately the financial institutions said we need you to find another builder. We have now got Trencor, the new builder that has been approved by the financial institution and they’ve done remedial work on site and they are going to complete the towers, and the hotel project and the residential, and the mall is going to be done by the only last big construction company left in South Africa, WBHO.
So why were they fighting with you, there was that court action?
I tell you what happens when you have disagreements. It was really how the agreements were written and I think a lot of it. And if you look at follow up reports, once again very mischievous reports, where it was actually cleared up by the contractor themselves. To date we don’t owe anyone one cent, not one cent whether it be Group Five, WBHO, not even the previous guys, it went really good. But at the end, what happens and I think… one of the things that someone had informed you about was the steel.
Maybe let’s just go back a little bit. So you’ve gone into this incredible project, as you say R3.4bn, which has got to be one of the biggest in some time that’s being built.
It’s the biggest in South Africa, the current biggest. It’s going to employ during peak construction 15,000 people and when it’s complete it’s going to have 2,500 job opportunities and that’s what excites us, we are creating jobs and that’s what this country needs, investment in jobs.
People from outside of KZN. Can you give us an idea of how big the project is relative to shopping centres elsewhere?
This project is bigger than the Mall of Africa.
If you look it’s the biggest development, a 240,000 square metre development, it’s massive. It’s big. It’s major. And you know it is much bigger.
And in the middle of Umhlanga so everyone can see it.
In the middle of Umhlanga and it’s going to change the landscape of Umhlanga, it’s going to increase property values because we are bringing this unique building, and by the way it was design designed by LYT architects, amazing guys, won the African Award as the best mixed use development in Africa. And it came third in the world design.
So it’s it’s a great project. It’s a big project, an expensive one but it stopped and I think that’s what got tongues wagging.
Absolutely. And as I said it was most unfortunate, it’s beyond our control when contractors go into liquidation and it’s very important that the financial institutions have to protect their interests and we don’t blame them. But what is good now, things are getting back on track. We’ve informed all the relevant stakeholders and we’ve had great support. The mall’s 85 % let, big national tenants, seven international brands, generally another diamond walk that we are creating.
What’s a diamond walk?
Diamond walk is where, in Sandton City you have a diamond walk, you’ve got all the big stores there, Burberry, Louis Vuitton, Gucci you know all these high end brands and Versace. We want to create that kind of walk in Durban. You know I’m involved in the casino industry and we know the disposable income. If you look between the casinos in Durban, you look at the shopping centre, the turnover at Gateway. Durban has great disposable income and we are very excited. I mean I had meetings with MDs of these international retailers and it was amazing the amount of money the people in Durban spend at these high end stores, there’s a big demand. It’s not a big market. But you know when you walk into one of these big international brands and you buy one handbag it’s R20-30,000. And you know you can close the doors after that. You have made enough profit for the day. But we are very excited.
This is a very ambitious project. I know you’ve been successful in your business. We’ve spoken about how you started as a bakkie-builder really and worked all the way up. But even for you this must be a stretch.
You know I’m not afraid and that’s why I’ve got Rob Alexander as a partner, a seasoned businessman. And you know the banks and the financial institutions had confidence in giving us the money and they’re still supporting us.
So it was a big ambition but I’m not afraid of things because I believe in life. I mean I started off with R500 and a bakkie and built today the biggest electrical company in this country, employing 7,000 people across Africa. I’ve developed five casinos and I knew nothing about casinos and even you know we built the Newcastle Mall which won the award as the best designed and best performing mall six years ago.
You’re very bullish on South Africa.
I’m positive. Look we’ve got a great president in Cyril Ramaphosa and he is someone that I believe is going to take us out of this recession and I hope people give him more of a chance. I think there’ve been too high expectations. You know. The country has been in decay for a while and we must look around the world at what’s happening and we must look at what other countries, take some of these European countries and what has happened out there in Portugal, you know they’ve been worse off than South Africa and they picked it up and I believe that this country has got more positives than negatives. We’ve got to start being more patriotic as South Africans. You know I quote the story about 9/11 quite often to people. And yesterday I addressed a Sepoa conference in Durban. And I told them, they call it landlord’s interaction with people. I told them, do you know when you go to America, patriotism is really important. All we remember of 9/11 is the planes going into the tower. You will never see a picture anywhere on TV of the planes going into the Pentagon. The greatest embarrassment in American history was that plane going into the heart of their security and George Bush put out a quote on the news, guys please if you want to be patriotic, let people forget about it. And people are forgetting about the biggest embarrassment. And if we believe the news as everything published as the facts… But the problem is, to give you an instance when a certain paper had a front page article about Cape Town being the worst murder capital of the world, 3,000 people dying and stuff like that, that went all over the world. I mean I’m part of a big group in the hotel industry. We had reservations drop by 30% and we are saying you know Cape Town, and we know it could have been qualified. We just believe that we need more positive news, there are great happenings in South Africa. There should be more reports about that. The problem is, like the Oceans thing, people are not. And I’m glad you’ve given me the opportunity, and they’re not talking about it, it’s going to create 2,500 jobs . It’s going to be a big project. We have hiccups. There are problems but we’ve overcome those problems.
Are you back on site now?
Back on site, the cranes are working, the piling has been finished for the mall, the mall contract has been awarded to a contractor and it’s happening. It’s just that we are faced with delays, it’s stressful but in life it’s how you overcome and Mandela always said he has the greatest respect for people that stumble and pick themselves up and that is what is important.
Delays cost money especially when you’re doing a big development like this. First of all, when is it going to be finished and secondly how much is the delay going to cost you, can you insure against things.
Let me tell you firstly, December next year it will be over, everything will be finished. There are costs but remember when we terminated the builders, we had termination costs because today when you sign an agreement and you cancel it and say sorry. The financial institutions don’t want you anymore. You’ve got to pay them to walk. It cost us money.
And the holding costs are not that great. The new contractors have come in because the construction market is depressed. We’re able to get new prices much lower than the old prices. When we originally built it the market was at a high. So we got very good construction prices so it balances out, it did cost a bit but between Rob and I, it’s affordable and you know it’s not major figures.
So at the end of next year it’s going to be finished. What about the investors because it’s not just retail there’s also a hotel and residential.
They have been kept informed of the delay. We’ve got an extension period and we are well within that, we are quite comfortable the mall will be finished on time. And the hotel will open. We were planning to open the hotel in July but it’ll now open in September, which isn’t a train crash, the Radisson is still on board. We own the hotel. It’s our hotel you know and we’re quite comfortable with that.
Vivian you’ve also been described as a politically active or connected person. Now how many of these stories, first of all the Gangster State, I’m sure you’ve read that book, you feature as a friend of Ace Magashule. Did they talk to you about?
Well let me tell you something in that report the journalist published our side of the story but its fact is nothing. It says for my 68th birthday party we invited 2,500 people of which we invited every premier and mayor because I’m well known. I mean I’ve been involved with the ANC now since the early 90s and so I know everyone, you could see the picture on the wall. We have a relation. These are my friends and you invite them to your birthday. And it’s odd because Ace Magashule attended the function with 2,500 other people and one year before that there was some contract being awarded. That is why I’m included in the link. It’s wrong in fact, we have actually launched legal action against that. I think even the other book that had a ridiculous story. About a plane landing in Durban with some medical equipment and we facilitated that and it was a good project anyway. But we had nothing to do with it. And this is the unfortunate thing that when people write books they don’t fact check, you say things, you create defamatory statements and they tell you look we gave you a chance to comment but they don’t present what you commented on. So it’s a bit of an unfair situation and that’s why we felt very aggrieved. And we are launching defamation. I think it’s already been launched.
It’s extraordinary what South Africa is going through at the moment. Immediately the conclusion is jumped to that Vivian Reddy bought this land cheaply, he is a scoundrel, he’s now being sued by a contractor etc. and it can quickly get out of control when people’s tongues get wagging. How do you address stuff like this personally.
And I tell you what happened. I think you learn over the time to become thick-skinned.
And now there’s been a whole lot of allegations, like you know people said the only reason he’s powerful and successful is because we’ve got government contacts and the reality is that 95 percent of our income is from the private sector. You know it seems to be the saying, oh because you were linked to Zuma, I mean I was linked with Mandela as my friend, Thabo Mbeki, including the current president.
We’ve known him for a long time. Now it doesn’t mean those relationships must be corrupt. I mean there is this crazy concept in South Africa that if you know a politician there must be some corruption. Over the years what happens is my success story, looking at having about thirty awards for your contributions to the underprivileged. Having been voted businessman of the year, being invited to speak to hundreds of audiences, just the other day someone sent me a message saying a 13 year old child did an amazing story for the class project telling a teacher that I am his hero and he wants to meet with me. But I think that there are more than 90 percent good stories about me and 10 percent negative and it’s something we’ve got to accept. When you are a high profile person, when you are successful, people get jealous, envious and we know a lot of people on the Oceans project who are very envious. How does this man and Rob Alexander. They are two medium sized businessmen, put out a project this brilliant. That is why you get fake stories being spread about the project. And in life one of the most unfortunate things about life in South Africa is we see people who want to see people fail. They don’t herald successes but they want to talk, when they see a project there’s a jealousy, our society is so riddled with jealousy, unhappiness about people’s successes. And we need to change that mentality. We should be applauding each other. We should be supporting each other. And that is how South Africa has been a success because there is so much going wrong in this country at the moment. We should be coming together but yet we’ve been divided. We should be working together. The only way South Africa is going to succeed is if everyone comes behind our new president and say we are with you, we want to support you. I mean the Thuma Mina campaign, everyone’s on about what they promised and what they are not doing. We need more investors and we’ve got to work together with government to build this country.
Now there’ll be a lot of people surprised when you say our great president Cyril Ramaphosa because the perception exists that you were very close to Jacob Zuma, that you funded Nkandla, or at least partly and also that you’re in that camp.
The Nkandla thing. I mean what did happen about 23 years ago. All that happened and it was public knowledge. President Zuma, I mean he wasn’t the president then he was MEC at that time and he wanted a loan for his place in Nkandla because it was burnt by the opposition party and he wanted to rebuild it and he didn’t qualify because the Ingonyama Trust owns the land. And I knew nothing. Next thing I get a call from President Mandela telling me, look he wants me to help him, I wasn’t close to Zuma and and I met him with the bank manager, and at that time I was a known ANC supporter. And he said can you stand suretyship. It was a small amount and I stood suretyship. And suddenly about two and a half years later I get a corporate bank saying this bond hasn’t been serviced, we are calling upon you to pay. And all I had to do, I was forced to because of the suretyship, I continued paying the instalments, and that’s all. Zuma has repaid every cent of the money, it was about R500,000 and there are proper records, it’s been recorded in our financial documents. So coming back to the thing, I was very close to President Mandela, I mean I was very close to Thabo Mbeki. I support the president of day and I’ve known president Ramaphosa when he used to come in the 90s. So we go back a long time and he’s someone I have the greatest respect for. There are no camps for me. To me you’ve got to respect and support the president of the country. And you know whenever I meet President Mbeki we have a very warm relationship. Even in the midst of his fight with President Zuma we still had a good relationship. Even President Kgalema. And you know what people don’t realise is that when President Zuma became president during his first and second term, the more I didn’t have the opportunity to meet him one-on-one, I’ve never had the opportunity. I was busy with my business, my position is not government related we build casinos, we built a power business, we build properties, I’ve been in the IT sector and in the private market. So this misconception about Zuma is completely wrong, I’ve known him for a long time and the only financial arrangement was by default and when they say I’m a benefactor of Zuma it’s a total misnomer it’s actually wrong, the transaction that was repaid.
I didn’t see your name on the list of the benefactors for CR17. Did they not ask you to contribute?
I do not support individuals. I have never ever supported people in anything, I support the ANC during elections. It’s recorded during every ANC election, I’ve openly supported them I do not support individual rights.
Why do you support the ANC.
I support the ANC because when I look at where we have come from. You know my family and my father was involved with the Indian Congress in some way, in a very minor way but I believed the ANC is an organisation that actually gave us dignity, it brought us freedom, it gave us opportunity and policies. I wouldn’t be in the casino industry if it wasn’t for the ANC, I wouldn’t be able to build properties. And the most important thing is the sacrifices people like President Mandela, Ramaphosa, Zuma, all the leaders of parliament, what they went through in life. Thousands of lives. Everyone out there. They actually made a big sacrifice so that we and our children can have a better future life . I’ve been in business for 40 years now, I’ve made money a long time ago. I didn’t wait for the ANC to be in power. I worked hard, I had a good electrical company and also people forget, I have a relationship with everyone whether it be the DA leader Mmusi, Dr. Buthelezi, Herman Mashaba…
Herman Mashaba is giving you a bit of rough time with that city power contract.
Let’s talk about that city power contract, it was quite interesting, the ANC were in power at that time and we got the job and there was some person linked to one of the ANC members and also was after the contract. He was in competition with us and then suddenly there is a ridiculous story about how Zuma gave Reverend Frank Chikane an instruction to award the project to me. That’s what they allege. Reverend Frank I was shocked. That was the lie. I mean they hate each other, it’s publicly known. Then what happens. The Reverend wants to clear his integrity. They called an investigation. I think it was one of the big auditing companies, a team of advocates. They had a six month investigation, they found nothing was wrong. So along comes Herman Mashaba and the DA, now this must have been a cover up. I mean Frank Chikane is a man of integrity. He went into a press conference and said there’s nothing wrong. And he ordered that inquiry. Then there’s another inquiry started by Herman Mashaba and the DA and they brought along Gobodo and a whole lot of people, about nine months of investigation. Nothing, zero. So that project, it’s very simple. It’s public but that’s our business, we’ve been in it for 40 years. By the way Edison Power is the only company in this country to have been voted for 10 consecutive years as the best electrical company in South Africa. Ten years. No one else and because we’re good. That’s our DNA. We know what we’re doing and it’s a business that we know best.
You’re in your mid 60s now. You are tackling this very testing project that we’ve been talking about right in the beginning, the Umhlanga Oceans. How much longer are you gonna be at it.
Look the Oceans will be open next year and our other projects, in total if you look at the Oceans and the other projects, I’ll be investing R6bn into the province and in total creating about 4,000 permanent jobs. And what I want to do, I am involved in philanthropy in a big way, I think that in KwaZulu-Natal, we are one of the biggest contributors, we’ve given over R150m to over 122 organisations. Amazing organisations that I want to dedicate my life to, in the next five years I want to slow down and serve the community. I want to uplift the community. My legacy I want to leave beyond, as a man that helped to make a difference in South Africa because I believe a rich man is poor if you do not share your wealth to uplift others and it’s very important in our community today. To give you an example, when 14 schools had a zero matric pass rate in KwaZulu-Natal in the greater Laurinburg area, everyone was criticising the department of education. What I did. I went out there and adopted those 14 schools. We spent over R10m on grants to our trust and we uplifted those schools.
Those 14 schools today have got great students. We have given bursaries and those 14 schools no longer have a zero pass rate, today 40, 60, 70%. And do you know what we discovered, some of those classrooms were so derelict and leaking we had to spend money repairing classrooms. Toilets were not working. Matrics were going home and not coming back. We repaired toilets. We discovered that children didn’t have calculators just before the exams. We arranged a motivational program over the weekends.
We brought in university students and paid them to teach them, that’s what business must do. And I urge businesses when you see schools not performing, go and adopt the school. And that is why we will be remembered for how we used our money to uplift the lives of others and that’s really important to me. And I believe in life I want to continue serving the people of South Africa. But most importantly to me is the future of the children. I want to make sure that we help. In fact there’s a big news story on the front page of the newspaper this week where I got involved in a project. It’s called Safe Children. What is happening is we have too many babies being abandoned, thrown into pit toilets and left out. I was approached by an organisation in child welfare to provide a drop where babies can be put into a box and it sends up an alarm , no identity of the mother and they can abandon their children, because hundreds of children are being abandoned. It’s not a big project but I’m going to do it country wide. And if every one of us can reach into our pockets, even if you can’t afford the money spend time to help others and uplift people. And that’s what we need to do. And you know I have a motive in life. It’s called CANEI. It means constant and never ending improvement. It simply means that every day has got to be a better day. And I sleep well at night because I know I help to uplift people. And that is what’s important. If you help to uplift other people’s lives you sleep well and you are comfortable, and then you are really serving this country well.
You know when we walked in here I saw that you were at the 13th World Jamboree. And I know from your Wikipedia page that this made a huge impact in your life where you met Neil Armstrong. Just as we close off, tell us a little bit more.
I got to tell you. And you know what is so ironic it’s the 50th year this year when Armstrong landed.
I was 16 years old and I was selected as a troop leader for the South African boys scouts to go to Japan. And I was absolutely excited but at the same time I was very sad because I’m the youngest of nine children, my father was a schoolteacher and we couldn’t afford it. The public rallied around, R1,750 was raised by the community to send me to Japan. It’s a poor community.
And in those days R1,750 was a lot of money.
They had cake sales, jumble sales, it took them about six months but the money was raised and I went out there and represented South Africa proudly and astronaut Neil Armstrong was a guest of honour and he came to the South African camp and I remember we shook hands and I had the opportunity to speak to him for about a few minutes and I didn’t know what to do. I was shaking you know and he had a boy scout uniform. He was an Eagle Scout and remember 69 he went under the moon and this was 71 and I said Sir can you tell me the secret of your success. He told me a little bit about his life but he left me with these words, he said: Young man if you can dream it, you can achieve it. Perseverance prevails when all else fails and that’s why even an Oceans, I will never fail, I will persevere, I will succeed because the Oceans is my dream and I’m gonna make that dream a reality.
That was Vivian Reddy, the youngest of nine children from an impoverished family but a man whose life was changed at 16 when he was selected to represent South Africa at the World scout jamboree in Japan, it was in 1971 and it was there that astronaut Neil Armstrong gave him some advice. He has lived to the full ever after.
And this has been the rational perspective until the next time.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.