/ 24 May 2019

‘Farm flipping’: How land reform was broken by the elite

Msholozi’s man: Gugile Nkwinti is said to have captured land reform when he was rural development minister.
Msholozi’s man: Gugile Nkwinti is said to have captured land reform when he was rural development minister. (Siyabulela Duda/GCIS)

“The dream was to build a farm that would be a model of black farming excellence with farm workers and others in the valley.”

Monelo George Bongo’s eyes drift to the window, overlooking vineyards as far as the eye can behold. The struggle stalwart and veteran activist sighs before he speaks again.

“But, because we refused to be manipulated, we were thrown into a morass of hunger, frustration and despair.”

He is sitting in the lounge of a farmhouse on a table grape farm in De Doorns, called Nirwanda. It is hugged on all sides by the enormous mountains of the Hex River Valley — the heartland of agricultural prosperity in the Western Cape. But the vineyards on Nirwanda are buckled and gnarled. There will be no harvest this year, or possibly even next.

This once-flourishing, state-owned farm should have been one of land reform’s success stories; instead, it has become an emblem of its failures. The roots of its rot are allegedly located at the door of the department of rural development and land reform — which is charged with gatekeeping land reform — in cahoots with an apparently unethical agribusiness.

Nirwanda falls under the government’s proactive land acquisition strategy (Plas). This is a policy whereby government purchases farms in distress and leases them to emerging black farmers, until the farms become self-sustainable.

Coupled with Plas is the recapitalisation and development programme (RADP) where, to make the farms commercially profitable, a strategic partner or agribusiness is required to mentor the emerging farmers, provide a business plan and assist with skills training in marketing and export.

But, bar some exceptions, the RADP has been an unmitigated disaster, with the land department allegedly haemorrhaging funds into the agricultural holdings of comrades and politically connected corporates countrywide. These accrue substantial financial benefits for the strategic partners but negligible or disastrous consequences for the farms and intended beneficiaries.

“Billions of rands earmarked for the development of an agrarian economy have been squandered across all provinces,” says Ruth Hall, a member of President Cyril Ramaphosa’s land reform advisory panel and a professor at the University of the Western Cape’s Institute for Poverty, Land and Agrarian Studies. The panel was appointed in December 2018 to research the problems of land reform. Her findings point to a shocking scenario of the capture of land reform by the elite.

“What we have found is that politically connected individuals and companies are getting lucrative contracts from the state to take over land reform farms with subsidies that should be directed to impoverished rural farm dwellers and emerging commercial farmers. They are fleecing the state in collusion with politicians at the most senior levels of land reform. And they are getting away with it.” She adds: “This is making a mockery of land reform.”

Several former and current officials in the land department, who requested anonymity, complain of a culture of patronage where favours are meted out to “Luthuli House comrades-in-farms” and orders are issued to officials to carry them out, in flagrant violation of government policy. They have provided documents, emails and the findings of forensic investigations into blatant abuses of power, perpetrated by officials on state-owned farms, in collusion with corporates and comrades alike.

This alleged corruption has been the focus of a four-year investigation by SABC current affairs programme Special Assignment and is now being published in the Mail & Guardian.

The elite’s capture of land reform dates back to the early 2000s but seems to have spiked between 2009 and 2018, when Jacob Zuma became president, and Gugile Nkwinti was appointed minister of rural development.

Nirwanda was originally two portions of a farm called De La Haye. In 2007 they were sold to a company called Quickvest 427. A search on the property information website WinDeed reveals that Quickvest is one of a myriad “special purpose vehicles” or shelf companies for a multinational Dutch agribusiness called South African Fruit Exporters (Safe), and its so-called black economic empowerment partner, Bono Holdings.

Documents confirm that in 2005, Safe provided an interest-free loan to De La Haye, offering to market and export its produce. But the multinational suddenly recalled the loan, and when the former owners couldn’t repay the debt, Safe purchased the farm through Quickvest for R7.3-million.

In 2012, Quickvest sold the farm to the government for a whopping R19-million. Safe, operating under the banner of Bono as its strategic partner, subsequently applied for government funding to run the farm and reap the profits of the harvest.

This practice is known as “farm flipping” — buying farms in distress at low prices, selling them to government at heavily inflated prices and returning to the farm as strategic partners to further profit, allegedly, often at the expense of the intended beneficiaries of agricultural land reform.

This practice is not exclusive to the multinational but, from the findings of an incriminating forensic investigation conducted in 2016, Safe has perpetrated the flipping formula on farms countrywide, allegedly ploughing very little capital into the farms and allegedly swindling the intended beneficiaries, while making huge profits from the export of the produce to overseas outlets. The report, simply titled Nirwanda Investigation, was done by a forensic company, commissioned by the land reform department’s forensic investigation directorate.

In the case of Nirwanda, the intended beneficiary is the Big Five — a registered farming co-operative that includes chairperson Bongo, Manduleliu Mzayiya, who is a financial manager, Mpho Molaoa, a qualified agronomist who used to work for the department of agriculture, and administrator Weziwe Diwengu.

“Initially the DRDLR [department of rural development and land reform] welcomed our application for beneficiary status,” recalls Mzayiya. “In addition to government’s plans to Africanise the predominantly white-owned farms in the Hex River Valley, they approved of our commitment to gender parity.”

Molaoa adds: “We went through all the processes and because of our potential managerial and farming skills, we were initially regarded as ideal beneficiaries.”

As official documents confirm, the Big Five was formally approved as the Nirwanda lessees in July 2013 by the National Land Allocation and Recapitalisation Control Committee. But, six years later, they still have no lease, no government funding, the farm has been vandalised and the vineyards are damaged.

As confirmed by internal correspondence within the Western Cape office of the land department, the Big Five is now facing eviction from the farm. The reason? According to its four remaining members, the answer is, simply, two words: Safe and Bono.

“We have been rattling certain cages by opposing the presence of Safe and Bono on the farm,” says Diwengu. “This doesn’t suit greedy officials who are getting kickbacks. So their strategy is to try to divide us and rule.”

When approached for comment in January this year, Safe replied: “Re your questions to Safe. Safe declines to comment.” Subsequent requests for comment have been ignored.

Government policy stipulates that land reform beneficiaries may choose a strategic partner or agribusiness. The Big Five members allege that Safe and Bono were imposed on them by the land department, despite evidence of financial mismanagement and lack of transparency. They accuse former minister Nkwinti of, in 2014, sending Dumisani Luphungela to bully them into taking on the multinational, despite the co-operative’s expressed desire for another strategic partner. Luphungela is described as Nkwinti’s “henchman” by the Big Five, other would-be land beneficiaries and current and former officials in the land department.

The land department’s former head of security, Luphungela has a controversial track record. Once the head of national intelligence in both the Western and Eastern Cape, he was dismissed in 2002 because of his improper association with former Mafia boss Vito Palazzolo. He has since been involved in several questionable business deals and directorships, notably together with Zuma’s nephew Khulubuse Zuma in the Aurora Mines debacle.

“Luphungela called the shots in the DRDLR,” recalls a former official. “He acted on direct instructions from the former minister himself.”

Luphungela has since left the department and joined Nkwinti, who, in January 2018, was appointed water and sanitation minister. Neither he nor Nkwinti have responded to requests for interviews, despite requests for comment going all the way back to 2016.

The land department, in some cases, acknowledged receipt of the questions but then never replied.

The most damning findings against the multinational are contained in a forensic report that was conducted into Nirwanda during 2016. The report found that Safe and Bono were, in fact, one, that the directors of both were interchangeable and that, through dozens of shelf companies they had succeeded in concealing the dominant role of the multinational.

The report found that overt violations of the Public Finance Management Act have been perpetrated and that millions of rands were owed to Nirwanda. It recommended that criminal investigations be conducted into alleged corruption between the multinational and officials within the land department, as well as on other farms countrywide, where Safe and Bono have allegedly looted the financial fruits of the farm’s harvests. These recommendations would have gone to the department — and Nkwinti.

Hall says: “Safe and Bono are basically selling to themselves and failing to plough back dividends to the farms from which they receive government funding. They declare a loss at the farm gate. But by owning the packhouses where the fruit is packaged and logistics companies through which the fruit is exported, they control the value chain and are able to manipulate pricing and profits.”

In June 2017, Safe and Bono left the farm, and others that they are alleged to have mismanaged. At Nirwanda, electricity and water were cut off and the workers had to get jobs on other farms to survive. A small harvest was sold in 2018. The land is now dead.

Hall laments: “Valuable vineyards worth tens of millions of rand are going down the drain.” This is despite the beneficiaries having the skills to turn things around, she says. “What they are desperately in need of is proper government support to make the farm productive again.”

In that same month in 2017, Zuma issued a proclamation mandating the special investigating unit (SIU) to probe six farms, four of which were managed by Safe and Bono in the Western Cape. But these farms represent merely the surface of the cesspool that has reduced land reform to a contradiction in terms.

Between 2011 and 2017, the SIU probed 148 farms, finding hundreds of millions of rands lost in wasteful or fraudulent expenditure. In March 2018 the SIU handed a report to Ramaphosa in which it recommends 42 alleged culprits, including senior politicians, be prosecuted for widespread land reform scams. But to date no action has been taken.

In the wake of the Nirwanda forensic report, a senior official in the land department, Babalwa Magoda, was suspended. She has since been reinstated. Little else seems to have happened.

For Safe and Bono, it is business as usual. But for Nirwanda’s Big Five, the fruits of corruption in land reform have yielded a bitter harvest.

“Accountability for these scandals lies at the highest levels of the department,” says Bongo. “Instead, we have become collateral damage in one of the biggest travesties of post-apartheid South Africa.”

He adds: “We have been through the worst but we are still here and more determined than ever to make Nirwanda the farming success we always dreamt it would be.”

But, as Hall and the president’s land reform advisory panel have found, too many people are profiting from abusing land reform for the solutions to be quick, or simple.

The Dutch players behind Safe

South African Fruit Exporters (Safe) was established in 1997 by Dutch nationals Anton de Vries and Erwin Bouland in the wake of South Africa’s deregulation of the fruit industry. SAFE’s holding company is in the tax haven of Mauritius, and it has earned a fortune in revenue from exports worldwide.

Through its so-called black economic empowerment (BEE) partner Bono Holdings, which was formed in 2007, Safe has also earned scores of lucrative contracts on state-owned farms countrywide.

The chief executive of Bono is Evans Nevondo. Safe and Nevondo each held 50% of the shares in the company, with Nevondo’s being controlled through his BEE company, Fresh Solutions Trust.

Nevondo and De Vries are also allegedly the masterminds behind the farm-flipping formula, a model they initiated on farms in the Eastern Cape during the mid-2000s, when Gugile Nkwinti was MEC of the province.

Safe and Bono are linked to more than 80 corporate entities, and to at least 66 farm properties, whether as managers or purchasers, under shelf companies.