The Dolphin Group has put together a deal that not only includes Mpumalanga’s prime resorts, but could also be at public expense, reports Justin Arenstein
The Mpumalanga government has handed over its main natural assets to an unknown foreign company and has promised not to talk about the deal for 50 years.
The contract which has been leaked to the Mail & Guardian allows the mysterious Dolphin Group to plunder the province’s tourist attractions in a deal which has enraged conservationists.
Since the extraordinary deal was announced with lavish fanfare on November 27, the Mpumalanga Parks Board, which arranged and signed it, has consistently refused to reveal details of its agreement with the mysterious group which has a convenience address in Dubai but is registered in Bermuda.
The contracts’ terms are massively weighted in favour of the Dolphin Group and contain highly controversial provisions, which dismayed leading members of the province’s Environmental Council.
They are shocked at the scope it gives Dolphin to exploit attractions including the Blyde River Canyon, Bourkes Luck, the Blyde River potholes and Pilgrim’s Rest.
In return for parks board’s largesse, Dolphin will for 50 years subsidise the budget of the board. The province will stop funding the parks board in eight years.
Although the contract does give the board the right to veto or adjust any Dolphin project on environmental grounds, this right is circumscribed by four clauses, one of which, for example, obliges it to “carry on responsible and sound conservation practice so as to best enable Dolphin to exercise their commercial rights”.
The parks board boss Alan Gray has repeatedly denied that Dolphin’s bankrolling of the parks board could create a conflict of interests when the board conducts environmental impact studies prior to approving Dolphin developments.
The parks board agrees in two additional clauses to “maximise developmental opportunities … and maximise financial returns” for Dolphin in Mpumalanga Province as it relates to the parks board.
A lawyer who read through the contract this week questioned the failure of the government to call for public tenders for the project. At the launch Gray said the parks board had to secure foreign funding because South African entrepreneurs were not interested and it was too big for them.
The lawyer also said the agreement could be restrictive in terms of the Competitions Act of 1979, because it puts so many public assets in one province in the hands of one business.
It contains one page of contributions Dolphin has to make and more than five pages of contributions the board must make.
Nowhere does it give any figures of the revenue or profits Dolphin expects. At the project launch Dolphin executives and Gray said the group would spend R300-million in “bricks and mortar” development in the first four years, which might rise to R400- million. Several thousand jobs would be created.
A diagram with the agreement allots up to 20% of shareholdings in some Dolphin subsidiaries to be established in Mpumalanga to “disadvantaged business and community” but gives no indication of what this means in money or jobs.
At the project launch both the board and Dolphin said the agreement would benefit disadvantaged communities.
Another section of the contract commits the board to endeavour to ensure the current contracts for Mpumalanga tourist sites in board reserves such as Aventura Lodges in the Blyde River Canyon, the exclusive Bongani Lodge in the Mthethonmusha Reserve, be shifted to Dolphin by negotiation or when they end.
These contracts will then be sold by Dolphin to sub-contractors for its own profit. The clause most seriously criticised by lawyers is that Dolphin may opt out of its financial obligations should there be any form of political instability, worsening security, civil unrest, or declining tourist arrivals over a period of only three months.
If the situation has not improved after a further six months, Dolphin will have to pay the board only 7% of any revenue generated from its Mpumalanga enterprises instead of wholly funding the board’s operations. This 7% payment, moreover, will be for three months only while the board looks for loans to cover its deficit.
In a seeming breach of normal management practices, the board also has to advise and consult with Dolphin before making any internal policy changes that might hurt Dolphin’s profits.
The contract will be debated on January 16 in Nelspruit at a joint meeting of the board and the Environment Council, whose members include environmentalists such as Dr John Hanks, of the Worldwide Fund For Nature, Rupert Lorimer, and Dr Sue Hart, founder of Ecolink as well as a National Parks Board member. The meeting is expected to be heated.