/ 12 August 2011

MalaMala wants R900-million

Malamala Wants R900 Million

MalaMala, the world-renowned game reserve, is involved in a land-claim dispute that could determine the future of government’s land-reform programme.

The amount deemed fair compensation to MalaMala for its land was at the centre of a Land Claims Court hearing this week in Randburg, Johannesburg. Observers say the matter could go to the Constitutional Court, whose judgment would set a benchmark for the vexed question of whether the state should pay market-value rates for its land-reform projects.

Ecotourism destination MalaMala boasts some of South Africa’s most expensive real estate. The Rattray family is the major shareholder and wants R900-million for its land, but the state says it can pay R360-million at the most.

MalaMala is not opposing the land claim but demands that market value be paid. The court heard expert testimony this week on what constitutes just and equitable compensation.

Gerrit Grobler, MalaMala’s advocate and a veteran of land-reform cases, argued that one entity — a person or a company — should not have to carry the burden of a whole society’s obligations regarding land reform by compromising on the value of its property.

For the community that has lodged the claim, advocate Rudolph Jansen argued in favour of abandoning market value as the benchmark for calculating a just and equitable price for land, saying a more “holistic” approach must be taken.

Jansen was arguing for about 2 000 people who claim rights to the seven farms that comprise the MalaMala Game Reserve. The state is also a party in the case.

Michael Rattray founded MalaMala in 1962 as a commercial ecotourism destination in the Sabi Sand Game Reserve.

The properties now under claim were purchased and incorporated into MalaMala between 1964 and 1980. The land-claim documents before the court say the community was dispossessed of its land between 1926 and 1970.

MalaMala was the first game reserve of its kind in South Africa and bred ecotourism’s golden goose. In the half-century of its existence, MalaMala and the Rattrays have won global renown for luxury eco-safaris — and property prices around Sabi Sands have skyrocketed.

The fiscus cannot afford to pay market value, the state argues. In 2010/11 the restitution budget was R3.5-billion, but that went merely on paying backlogged claims.

If the state is ordered to pay market value, it could simply revert to chequebook compensation: that is, MalaMala would retain its land and the state would compensate the community at R30 000 per hectare rather than the R70 000 market value.

“We don’t want money,” Raymond Mtileni, the deputy chairperson of the Mhlanganisweni community told the Mail & Guardian this week. “We are fighting for our land.”

This could mean the community might end up opposing the state in the Constitutional Court, where the government would wage an essentially political battle to do away with market value and let other factors such as a fair return on an investment determine compensation.

“This case will have huge repercussions for land-reform compensation if the community succeeds,” said the community’s attorney, Louise du Plessis. But the community needed the government’s support to see the fight through, she said.

MalaMala became integrated with the Kruger National Park in 1993 when the boundary fence between the two was removed. The reserve’s western border, the Sand River, attracts the best game-viewing in the area.

The reserve has a 70% occupancy rate and its annual profit is estimated at R25-million. About 95% of its clientele is foreign.

Mtileni said the community would look for a partner to manage the reserve and its lodges if it won back its land. “We are not interested in running the operations ourselves. We have seen too many land restitution projects fail. If MalaMala wants to continue to manage the lodges, it can,” he said.

MalaMala Game Reserve is also asking the Land Claims court to set conditions that will ensure MalaMala continues as a viable and sustainable business.

It says it will assist the claimants and provide the use of the MalaMala brand to help.

Patrick Falconer, the attorney for MalaMala, said negotiations commenced with the Commission for Restitution in 2002, but failed to reach resolution.

“There is no plausible reason to depart from market-value legal principles in the present case,” he said.

Court papers show that in 2008, MalaMala was willing to accept an offer from the then Mpumalanga land claims commissioner of R741-million, calculated at R52 500 per hectare plus improvements on the land of R66-million.

But the offer was withdrawn when the land minister deemed it excessive.