July 05, 2020

Land restitution can go very wrong

As the debate on land restitution gains momentum, with unseemly haste displayed by the ruling party which couldn't even wait for the parliamentary process to run its course, now is a good time to stop and look back. The decade-long MalaMala land deal provides a salutary lesson on the need to tread with great caution. Before the country-wide consultation process got underway Parliament’s Portfolio Committee on Rural Development and Land Reform discussed this example of how land redistribution can go very wrong, even if it is agreed in principle that this is what it will take for transformation ti become a reality.

In a meeting which may in time turn out to have shown unexpected foresight, the Committee called for a forensic audit on this troublesome land deal, with some Committee members denouncing the settlement as “bordering on criminal conduct”. Remember, this was before Parliament’s Joint Constitutional Review Committee traversed the country scanning public opinion on whether it’s necessary to meddle with the Constitution to achieve land restitution. This also took place in the days of hefty compensation agreements in which vast amounts of money landed up in unexpected hands.

It is at least ten years since this land redistribution deal was agreed upon, and in so doing became the most pricey land settlement ever concluded in South Africa. Things happen fast in South Africa -- that is when they happen at all -- and only weeks ago a reportback on MalaMala had Members declaring that it is time for the Committee of Parliament to step into a clear governance breach.

Members took turns denouncing the deal and asking each other why criminal charges have not yet been laid, although it remains unclear if the Committee itself actually intended laying charges.

There had been talk for some time of disgruntled beneficiaries taking the battle to the Pretoria High Court, and serious tension is known to exist within the governing Nwandlamharhi Communal Property Association (NCPA), but Committee members appeared quite unaware of this, or were keeping their mouths shut.

Some of the initial claimants in the MalaMala land restitution have not benefitted at all from the R1bn settlement paid out by the government.

The Committee had gathered for a reportback on the Restitution of Land Rights Amendment Bill; Communal Property Associations (CPAs) without title deeds; and, last on the agenda, the MalaMala land claim settlement. Apologies were duly noted from land Minister Maite Nkoana-Mashabane and Deputy Ministers Mcebisi Skwatsha and Candith Mashego-Dlamini who were attending a Cabinet meeting and it was agreed that there was no need to call on former Minister Gugile Nkwinti who oversaw the MalaMala deal.

There was some muttering from the opposition about questions that could not be answered in their absence, but assurance came from the Chair that the Acting Director-General and the Commission on Restitution of Land Rights (CRLR) would take care of anything that came up and any further questions could be tabled at the next meeting or asked in the House or in writing.

The afternoon session got off to a pleasant enough start with Nomfundo Ntloko-Gobodo, Chief Land Claims Commissioner, presenting the MalaMala Report on behalf of the CRLR. But by the end the Committee was outraged to learn that a group of the initial claimants in the MalaMala land restitution of 2014 was not benefitting at all from the R1bn record-breaking settlement paid out by the government.

The Committee was told the claim had been lodged in the joint name of the Mafuraga and Mhlanganisweni communities who together formed a single Community Property Association (CPA), but that the Mafuraga have since been inexplicably sidelined and excluded from the deal.

Ken Roberston from the DA said at the time that indications of money possibly having gone missing, “we introduce a forensic audit on MalaMala” and added if the land commission cannot do this, the matter should be taken up by the Special Investigation Unit.

After hearing the report from the CRLR, the ANC’s Andrew Madella said of the MalaMala deal, “this doesn’t speak of empowerment at all” and warned there was a need to be cautious of people who come into a community that is “vulnerable” and “force them into signing deals that will actually cause poverty. Unscrupulous people will become instant multi millionaires at the expense of the people,” he said.

His colleague Mamagase Nchabeleng said it was important that such issues be brought out into the open. “People who are supposed to be beneficiaries from this process are not getting value for the land they are given and their conditions are worse than they were before the MalaMala deal was signed. There are beneficiaries who are excluded from enjoying the benefits of their own sweat and tears.”

He concluded that this “smells of corruption and the duty of this Committee should be to expose corruption and action must be taken,” he said.

This was a convoluted decade-long land restitution deal that almost reached the Constitutional Court. In dispute was R989m agreed to by the seller in 2008 for the more than 13,000 hectares claimed as ancestral land by the local communities.

Back then the land minister rejected the deal, saying it was exorbitant and unaffordable for the state, and the Land Claims Court and Supreme Court of Appeal in turn agreed. Set down to be heard by ConCourt in 2013, the Minister, in an unexpected about-turn, had the case suddenly removed from the court roll, and an out of court settlement was reached. Except by then the total cost had increased to R1bn.

They say when it comes to real estate location is everything, and this land in Mpumalanga on the border of the Kruger National Park, is to be found in the highly exclusive seven star MalaMala game reserve, the preserve of only the very wealthy and those with foreign currency.

The agreed R1bn included R77m for “improvements” and another R7m for movable assets, but also offered a cooperative management deal which included use of the MalaMala brand at no extra cost. Someone was going to benefit hugely, but it turned out that was not to be the intended beneficiaries.

That was made clear by the co-management deal between the MalaMala Ranch (Pty) Ltd, Manco as the management company, a Community Equity Trust, the CPA and a community company, Monzo Community Investment (Pty) Ltd. According to the co-management proposal, the shareholders in Manco would be MalaMala Ranch (Pty) Ltd and the community.

If the final aim was black economic empowerment, this was a protracted route to it. The MalaMala Ranch (Pty) Ltd stake will diminish over time until the community holds the majority share ‑ in 25 years.

It was proposed that the dilution takes place on the following basis: during the first five years MalaMala Ranch (Pty) Ltd would hold 70% of the shareholding and the community 30%. From five to ten years, MalaMala Ranch would have 60% of shares and the community 40%, and from years 11 to 20 both parties will hold 50% each. It doesn’t specify at what point the community would take over the land altogether.

Like so much promised in the name of transformation, this could have been a restitution deal that changed lives. Except it all went horribly wrong, as have so many opportunities granted by our new dispensation but executed by those who recognise a deal brimming with self-serving potential and have no compunction about taking full advantage of it.

What had been achieved? In its first year of inception, the MalaMala joint venture paid a dividend of R40m, equivalent to 83% of the 2017 financial year’s after tax profit. R12m of this constitutes the 30% due to the community and was paid to the company, Monzo.

Monzo paid R6m of the R12m to the CPA. Over and above that, 84 community members were permanently employed at MalaMala and 15 community learners enrolled at various education and training institutions through bursaries which are funded by a “community levy” that is paid by each guest. Since November 2014, R5.5m has been raised by the community tourism levy.

During the three-hour-long discussion, the name came up of former land minister Nkwinti, who bought the land from MalaMala Ranch (Pty) Ltd, apparently on behalf of 960 families. In so doing the minister effectively spent almost the entire annual land restitution budget in one go. It emerged at the meeting that only 250 families have actually benefitted.

Also mentioned was ex-CEO of South African National Parks, Dr David Mabunda, who was said to have pocketed more than R80m from the deal through share-holdings in this land, before moving on to KZN SanParks and finally disappearing from SanParks altogether.

A name that kept coming up was “Derick”. This turned out to be a Derick Mthabile who had served as the lead negotiator representing the claimants in the run-up to the final settlement; the Mafuraga and Mhlanganisweni communities acting as a single entity in the joint claim. Despite all that was said at the Committee meeting about Derick, it was never made clear how it came about that by the end of the negotiations he represented only the Mhlanganisweni.

Ntloko-Gobodo, Chief Land Claims Commissioner of the CRLR, confirmed: “When the settlement agreements were signed, and when the verification was done it included both parties. The list incorporated both Mhlanganisweni and Mafuraga. There was no point where they [were] not seen as one. It was only after the settlement was done and it was time for the money to come in that it suddenly arose that they are two separate groups and not together as one.”

The result – a lot of impoverished people are still living in the area surrounding this island of excessive wealth, without access to it or any of the benefits listed in the deal.

What was being done about this, the Committee asked? Ntloko-Gobodo’s reply, in short, was “the Commission has undertaken to review the process and deal with whatever issues arise on verification to resolve the entire impasse.”

Moira Levy

Hear the full audio recording of this Committee meeting on the Parliamentary Monitoring Group website.

Additional Info

  • Author: Moira Levy
Last modified on Monday, 20 August 2018 18:12

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