Why Amazon might end contract with its African HQ developers

Amazon has warned that further postponement of its HQ construction could result in the termination of its agreements signed with Lesbeek Leisure Properties.

Why Amazon might end contract with its African HQ developers
The construction site of Amazon’s African headquarters in Cape Town. Credit: Joao Silva/The New York Times

In 2021, Amazon announced that it will open its African regional office in South Africa with a real estate investment of over $280 million, with Lesbeek Leisure Properties (LLP) saddled with the responsibility to develop the facility.

Earlier in March, a South African court ordered LLP to halt construction over concerns by indigenous people—Khoi and San—that the US company is defiling sacred land.

The proposed HQ is part of a real estate project at a site known as the River Club, located on a floodplain at the confluence of the Black and Liesbeek Rivers near Cape Town—which is expected to see Amazon become the anchor tenant, along with other large commercial businesses – if completed.

The site for the construction is a historic site of the Indigenous people’s struggle against colonial powers.

"In the early 16th century, invading Portuguese forces were beaten back by the Khoi and San communities. Some 150 years later, the Indigenous people resisted Dutch settlers who launched their campaign of land dispossession from this same spot. Indigenous communities consider it sacred ancestral land and construction on it would be a major violation of their rights," Michael Kwet, a sociology doctorate from Rhodes University, South Africa, writes.

To compensate the community, a Heritage and Cultural Centre that will memorialise the history of the area and educate the public about past events in the broader precinct and beyond will be erected on the facility, according to information on the developer's website.

However, Kwet argued that "if plans for the new headquarters go forward, the company will also further entrench its neocolonial dominance and exploitative economic model on the African continent."

Amazon received approval from the City of Cape Town in April 2021, in fact, the Executive Mayor of the city, Dan Plato described the project as "a significant boost to the economy and the people of Cape Town in the aftermath of the national COVID-19 lockdown". But resentment and protests quickly followed, then the court order in March 2022. However, the defendants—consisting of the LLP, the City of Cape Town, the Department of Environmental Affairs and Development Planning and First Nations Collective—launched separate appeals to continue construction of the site.

On Sunday (July 24, 2022), Sunday Times reported that LLP filed an affidavit on July 18, 2022, expressing its concern that any further delay in the construction could warrant a penalty of $28,000 a day, payable to Amazon.

The affidavit, reportedly filed by LLP spokesperson James Tannenberger, reveals LLP was advised by its legal counsel that if the court rules in favour of further work stoppages, it could take between 12 to 24 months for a final ruling to be made by the court—a delay which would see all contractual agreements with Amazon Development Centre (ADC) South Africa terminated.

Amazon has also warned that further postponement of the construction could result in the termination of the development and the lease agreements signed with LLP.