/ 7 June 2019

Corruption plagues land reform

Big Five co-operative members Weziwe Dinungu
Big Five co-operative members Weziwe Dinungu, Mpho Molaoa and Monelo Bongo may have to leave Nirwanda farm. (David Harrison/M&G)

For the past two weeks, Hazel Friedman has reported on the capture of land reform by private companies and connected politicians, known as ‘Luthuli House comrades-in-farms’. This week, she digs into a Special Investigating Unit probe into 148 land reform projects, which found that a quarter were corrupt and millions of rands have disappeared. The unit recommended that 42 people be charged under the Public Finance Management Act. But nobody seems to have been charged yet

The knives are out for a farming co-operative that has dared to resist alleged rampant corruption perpetrated by officials in the department of rural development and land reform. Last week a letter was circulated in the department’s Cape Town offices, authorising the eviction of the Big Five farming co-operative, the topic of a previous Mail & Guardian and Special Assignment investigation.

A letter to the acting director general of land affairs, Rendani Sadiki, stamped on April 2 and signed by the chief director of land affairs in the Western Cape, Juanita Fortuin, cites that the Big Five was “irregularly allocated the farm” and that eviction proceedings be instituted under the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act.

Members of the Big Five were officially appointed as beneficiaries and lessees on the farm Nirwanda by the national land allocation and recapitalisation control committee on July 25 2013. But they have never received a lease or funds promised by the department under its recapitalisation and development programme. They accuse the department of trying to impose an allegedly unethical multinational called Safe and its black economic empowerment (BEE) partner, Bono, on the farm as a strategic partner.

They also accuse the company of swindling the farm out of millions of rands of dividends, of bribing officials and of plundering the farm. Their accusations have been borne out by the findings of a damning forensic report that, in 2016, recommended criminal investigations be conducted into Safe and Bono, focusing not only on Nirwanda but also on other farms they have allegedly mismanaged or swindled out of the fruits of the harvest.

Internal correspondence in the department during May this year reveals its reluctance to take action against the company because it fears “Bono will not make full financial disclosure and will extract as much as possible to the detriment of the workers and the department”.

Bono’s financial statements reveal a steady decline in production and increasing financial losses since it took over as a strategic partner on the once-flourishing farm. More disturbing are memos showing attempts by officials to re-appoint Bono as the Nirwanda strategic partner in a deliberate effort to flout the report’s recommendations.

“We have received no notification [of the eviction letter],” says Big Five’s chairperson, Monelo George Bongo. “We were appointed at national level and have done nothing wrong on this farm, except refuse to be manipulated, so we are being punished for nefarious reasons.”

Several sources in the department agree. “It was a very clever move to slip in this eviction notice in the midst of a leadership transition within the department,” says an official, who requested anonymity. “The Big Five [members] have been a thorn in the side of the department because they refused to passively accept the corruption.”

The land department has been at war with itself for years. In April 2018, the National Education, Health and Allied Workers’ Union (Nehawu), which represents employees in the department, picketed outside its Cape Town offices, protesting against intolerable working conditions, nepotism and corruption. The employees cited examples of tender procurement violations and irregular spending on an abattoir called Osdam in Ceres in the Witzenberg municipality.

The union also accused Fortuin of “treating the department as her own property” and has demanded her suspension, as well that of other senior officials.

Nehawu has also expressed its support for the Big Five.

The alleged rot is not only at provincial level. Earlier this year, national department officials allegedly opened a case with the Hawks against Sadiki. The department has not responded to requests for comment.

The commission on restitution of land rights has consistently described the department’s financial performance and service-delivery targets as dismal.

According to a January report by the Special Investigating Unit (SIU) of its probe into 148 farms countrywide over a seven-year period, 25% of the department’s land reform projects show signs of fraud and corruption, with hundreds of millions of rands lost. This number represents just the surface of the cesspool. The SIU report also recommends that 42 individuals, including politicians, be prosecuted under the Public Finance Management Act.

But to date, despite Sadiki’s recent assurance during a 702 radio interview that “we have officials in jail as we speak”, only one department official has been convicted of fraud and theft. This was from a farm in Ladysmith that did not form part of the SIU probe.

The SIU confirms it is investigating nine land reform projects across the country, three of which are in the Western Cape. It says: “Extensive questioning of a number of role players [is] currently being conducted in terms of section 5(2)(c) of the SIU Act, with a view of instituting civil action, criminal and disciplinary referral.”

The three Western Cape farms are Nirwanda, Mont Piquet and Appelkloof. A fourth farm, called Wonderhoek, is in Mpumalanga. All these farms were at some point ontrolled or owned by Safe & Bono

On Appelkloof, for example, 202 farm workers obtained government funding in 2003 of about R4-million to purchase a 35% share in Appelkloof Ltd, a company set up by the farm’s previous owner. In 2008, the workers’ trust purchased the remaining shares in the farm, with a R7.6-million loan from Absa and R2.6-million from Safe.

Safe and Bono were managing the farm, operating through a shelf company called Mistico Trading. But, by 2011, Mistico was in debt to the tune of R7.6-million owed to Absa and R6-million to Safe. The multinational then converted its loan to shares, becoming a 75% shareholder and, in effect, took ownership of the farm. The land department intervened, ostensibly to prevent the workers’ trust from losing the farm, and in 2011 purchased Safe’s shares for more than R17-million — R5-million more than the original value of the farm. The trust then ended its relationship with Safe.

The land department had, in effect, purchased the farm twice, first through grants and subsequently through the emergency intervention.

The M&G has previously reported on how a similar scenario was allegedly played out at Nirwanda, in De Doorns in the Western Cape’s Boland region (Farm flipping: How land reform was broken by the elite). After recalling a loan and buying the cash-strapped farm for just more than R7-million, Safe, operating under a shelf company called Quickvest, sold the farm to the government for more than R19-million. It then re-entered the farm as a “strategic partner” under the mantle of Bono to benefit from further government funding. This practice is known as farm flipping. Safe refused to be interviewed about its involvement in this practice.

In Mpumalanga, a similar failure of land redistribution has left the Siyasebenza co-operative, consisting of seven households, on the verge of losing their claim to the 1 064-hectare Weltevreden farm. The M&G reported last week on how the land reform department has spent millions on the farm with little to show for that investment (The promised land becomes the land of broken promises).

Another co-op, on Weltevreden in Mpumalanga, faces losing its claim. (Delwyn Verasamy/M&G)

All of this comes at the same time as the land reform advisory panel, established to look into the large-scale failure of land reform, presents its findings to the president. Although the contents of the report are not known, it is believed that it includes recommendations for the government to halt new strategic partner deals, bring the culprits in the elites’ capture of land reform to book and secure long-term rights for land reform beneficiaries, either as private title deeds or long-term leases.