The Overvaal Resorts Limited Act, 1993 (Act No. 127 of 1993), had been enacted to establish Overvaal Resorts Limited as a public company to hold and manage public resorts on behalf of the Government. The name of the company, Overvaal Resorts Limited was later changed to Aventura Ltd. In 2001, Cabinet took a decision to dispose of Aventura resorts which had acquired 14 resorts at the time. Six of the resorts that were not making a profit were the first to be disposed of to two different buyers. The remaining eight resorts were sold off to one bidder, an American company called Forever Resorts Ltd. Difficulties were however encountered in transferring these eight resorts to Forever Resorts Ltd.
An amendment was made to the sale agreement between Government, Aventura and Forever Resorts Ltd, in 2007, to solve these challenges and fast track the process. Despite this measure, certain challenges recurred, and therefore liquidation was found to be the only viable option to successfully dispose of Aventura Resorts. In 2012, the former Minister for Public Enterprises passed a special resolution for the liquidation of Aventura which was eventually put into liquidation that same year and the liquidation process was finalised in 2017. Considering this, the legislation that established Aventura was no longer relevant, hence the need for the repeal of the Act.
The repeal Bill was developed after consultation with the Department of Rural Development and Land Reform. Clause 1 of the Bill seeks to repeal the Act while Clause 2 of the Bill seeks to provide for the savings to retain Section 3(2) of the Act, which seeks to ensure the State would not lose its rights to servitudes in respect of those resorts mentioned in the Section because of the appeal. Clause 3 provides for the short title and commencement of the Act.
Members sought more information on the employees’ scheme; why the entire Act was being repealed while the matter of land claims had still not been fully resolved; whether the land rentals were paid to the community and how that process was conducted and about the current situation relating to the claimants and those who had won their land claims, and if there were any partnerships between them and the company.
Briefing by the Department of Public Enterprises: Repeal of the Overvaal Resorts Act 127 of 1993
Mr Denzel Matjila, Director: Legal, Governance, and Risk, DPE, told the Committee that it was Government policy in 2001 to restructure State Owned Companies (SOCs). The Government’s objective was to raise funding for the national fiscus, reduce the national debt, exit sectors that were loss making and non-core to Government, and empower previously disadvantaged individuals (PDI’s).
The restructuring process consisted of the Government disposing of some of the SOCs, particularly those in the hotel and leisure industry, which was considered non-core to Government functions.
The Cabinet decided in 2001 to dispose Aventura Resorts Ltd, which was loss making at the time, and had a total of 14 resorts at the time, six of which were disposed of to different buyers. The other eight were sold to one buyer in 2008, Forever Siyonwaba Consortium, an American company that had high levels of black ownership that received 30% of the shares.
Several challenges emerged out of this sale, which affected the transfer of the eight resorts to the Forever Siyonwaba Consortium. Among these challenges was the incorrect descriptions of Aventura resorts by the Deeds Office. Some of the resorts had been registered in the name of the Government, national and provincial, instead of Aventura Ltd as at the date of transfer. Some of the resorts were not registered at all. Land claims begun to crop up after the sale, many of which were still currently ongoing. It was also difficult to establish who were the rightful owners of the property.
There were a few pending legal actions aimed at interdicting transfer of the properties. Action had been instituted claiming rectification of the sale agreement and transfer of properties alleged to have been sold by the State and Aventura to one bidder but transferred to another.
An addendum to the sale agreement was entered in 2007 to try and address some of these challenges and fast track the transfer. Despite all this, challenges of improper property description kept recurring, forcing the State to consider alternative means to dispose of Aventura. Liquidation was decided to be the best option as it was deemed to be a faster and cleaner process.
After a lengthy process, the Minister of Public Enterprises passed a special resolution in 2012 at an Annual General Meeting (AGM) to liquidate Aventura and place it under liquidation. Liquidators were appointed to wind up the company from 2013 until the liquidation process was finalised in 2017.
Since the process was completed, it was then necessary to repeal Aventura’s founding legislation, the Overvaal Resorts Act 127 of 1993, since Aventura now had no assets. The repeal would be done through another Bill, the Repeal of the Overvaal Resorts Bill which was approved by cabinet for publication in March 2017 in the Government Gazette (Government Number 40921, Volume 624 of 15/06/2017) to invite public comments. The Gazette notice ran for one month, from 15 June 2017 to 15 July 2017, however, no comments were received from the public on the Bill.
The Bill is aimed at repealing the Overvaal Resorts Act 127 of 1993 in its entirety except for Section 3(2) under which Government acquired servitudes over land on which certain Aventura resorts were situated. The servitudes continue to be of force and effect despite the repeal of the Act.
The repeal of the Act was aimed at bringing finality to the liquidation and disposal of Aventura which begun in 2001. This would give effect to a Cabinet decision to dispose of Aventura.
The Chairperson expressed that the Department should have been constantly updating the Committee throughout the liquidation process and wanted to know why the process took very long, from 2012 to 2017.
Mr N Singh (IFP) expressed interest in finding out the amount of money that was paid by the new owners, Forever Resorts Ltd., to the land claimants, and why the liquidation process was so lengthy. He asked that the response indicate how the claims were settled and whether there were other entities in the Department with similar cases as the one of Aventura, that the Committee needed to consider.
Dr Z Luyenge (ANC) asked about the current situation relating to the claimants and those who had won their land claims, and if there were any partnerships between them and the company. He enquired what was the role of the community in the company.
Mr Matjila responded that the remaining eight resorts had been sold for R200 million and that the Aventura employee scheme was then discounted from the sale amount to the tune of R100 million. The price had to be discounted because of the land claims. He added that the Department of Public Enterprises entered into a lease agreement with the successful claimants and there were no other entities other than Aventura Ltd.
Mr Singh sought more information on the employees’ scheme and why the entire Act was being repealed while the matter of land claims had still not been fully resolved.
Mr Matijila responded that the land always belonged to the community and always would, hence only the business was sold off, but not the land.
Mr Melanchton Makobe, Chief Director: Legal Counsel, DPE, added that the principal legislation established Aventura as a State entity, but now that it had no assets, the legislation would have to be done away with because Aventura no longer existed. He emphasised the point that the State never actually owned the land, rather only owned the business part of it.
Ms D Rantho (ANC) asked about how the State related to the community’s land and how it intervened to protect communities from being exploited and abused by the company and business. He queried about the ‘Local Standing’ and the role of the Government in the relationship between Aventura and the community.
Mr Matijila replied that the State had no role in that relationship and did not get involved.
Ms G Nobanda (ANC) enquired whether the land rentals were paid to the community and how that process was conducted.
Mr Matijila responded that the rentals were indeed paid directly to the communities.
Dr Luyenge requested clarity on his previous question on how the repeal of the legislation could be undertaken while land claim matters were still not fully resolved.
Mr Matijila explained that Aventura was owned by the Government through DPE, but land claims only emerged after the sale had been done. The buyers had thought they were buying both the company and the land, however, the land always belonged to the communities, and that was the reason the buyers were refunded and discounted R100 million.
Mr Makobe reiterated that the Government only intervened to ensure the community was paid the market rated rentals for their land and were not cheated or taken advantage of by corporations.
The Chairperson remarked that the land commissioner and the Rural Development and Land Reform Department had a responsibility to the community.
The Chairperson raised an issue about the presentation noting that it did not list the names of the eight resorts and properties sold to the American firm. She inquired why some properties were registered under the Provincial Government, some under the National Government, while yet some were not registered at all.
Mr Matijila recited the eight resorts and their locations, and promised to provide a copy of the list after the conclusion of the meeting. He committed to checking with the Rural Development and Land Reform Department on how rates were paid to the communities.
The Chairperson noted that if a property was registered under the Provincial Government, then the legislation should be tagged as Section 76 instead of Section 75. What was the reason behind that move?
The Chairperson informed the meeting participants that the Committee would be meeting with its own legal advisors before the next Committee meeting, and would, therefore, give the State law advisor time to consult and do a presentation at the next Committee meeting, in a weeks’ time. She further directed that the document listing the names and locations of the eight resorts sold to the American company be provided by 1 pm that afternoon. She encouraged the legal team at DPE to consult with the Committee’s legal advisors.
The Chairperson informed Members that timelines were tight because of the looming parliamentary recess and there was a need to publicise the matter to the public on radio, so the public could get involved and follow up with the process. There would be a call for public hearings as public participation was required by the Constitution, and would run the various processes in parallel with each other to save on time.
The Chairperson indicated that the next meeting would be held on 2 May 2018 at 10h00 instead of 09h30, at the request of the Minister of Public Enterprises, who requested the late start, so he could attend a meeting of the Cabinet.
The next meeting would be a joint meeting between the relevant National Council of Provinces (NCOP) and the National Assembly (NA) Committees.
A bigger venue would be sought for the next meeting to accommodate the larger delegation in the joint session.
The meeting was adjourned.
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