Repeal of Overvaal Resorts Ltd Bill: Department response to concerns & way forward

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Public Enterprises

30 May 2018
Chairperson: Ms L Mnganga-Gcabashe
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Meeting Summary

The Department of Public Enterprises (DPE) provided the information the Committee had requested:
• Names and Location of the eight Aventura Resorts sold to Forever Siyonwaba: Tshipise (Limpopo), Warmbaths (Limpopo), Swadini (Mpumalanga), Blydepoort (Mpumalanga), Loskopdam(Mpumalanga), Gariep (Free state), Pletternburg ( Western Cape), and Badplaas (Mpumalanga)

• Tagging of the Bill: The reason for tagging it a section 75 Bill is that none of the circumstances set out under section 76 of the Constitution applies to this Bill. The fact that one of the properties was registered in a name of a province is not one of the reasons set out under section 76. In applying the tagging test to the Bill, the question is whether the provisions in the Bill substantially affect a schedule 4 functional area. The tagging test focuses on all the provisions of the Bill to determine the extent to which they substantially affect functional areas listed in schedule 4 of the Constitution, and not an incidental provision. The substance of the Bill is not an item listed in Schedule 4 of the Constitution.

• Land claims on the properties (Blydepoort and Swadini): Although the land claims on these properties were successful, the land has not been transferred to the successful claimants (Mashilane and Moletele communities) by the Department of Rural Development and Land Reform due to ongoing disputes(feuding) in those communities; lack of registration of the affected land with the Deeds Office; and failure by the successful claimant communities to establish a structure that can hold the affected land on their behalf.

• Rental on properties subject to land claims (Blydepoort and Swadini): No rental has been paid by Forever Resorts on Blydepoort and Swadini. This is due to failure by government to resolve the land claims.
DPE has recently engaged Forever Resorts and the Department of Public Works (DPW) and both parties are prepared to conclude a lease agreement that will not short change the claimant communities.

Members requested proof of the transfer of property from Free State government and the Aventura sale agreement. Members were concerned about the lack of progress in the land transfer by the Department of Rural Development and Land Reform (DRDLR) and the failure of the DPW to conclude a lease with Forever Resort on behalf of the land claimants. A joint meeting with the three departments is proposed on 13 August. This would give DPE two months to consult with the Departments and come with a report addressing the Committee's concerns.  The Committee was not keen to conclude the Bill without sorting out the needs of the land claimants.

Meeting report

Department response to concerns raised about Repeal of Overvaal Resorts Limited Bill
Mr Denzel Matjila, DPE Director: Director: Legal, Governance and Risk, provided the additional information requested by the Portfolio Committee at the 25 April 2018 meeting on the Bill as follows:
Names and Location of the 8 Aventura Resorts sold to Forever Siyonwaba Consortium.
Tagging of the Bill.
Land claims on the properties.
Rentals on the properties subject to land claims.

Names and Location of the 8 Aventura Resorts sold to Forever Siyonwaba Consortium

  1. Tshipise (Limpopo)
  2. Warmbaths (Limpopo)
  3. Swadini (Mpumalanga)
  4. Blydepoort (Mpumalanga)
  5. Loskopdam (Mpumalanga)
  6. Gariep (Free State)
  7. Plettenberg (Western Cape)
  8. Badplaas (Mpumalanga).

Tagging of the Bill
The Portfolio Committee wanted to establish what the impact of tagging the Bill a section 75 as opposed to a section 76 Bill is as some assets (portion of land) at the Gariep Resort in the Free State was erroneously registered in the name of the Free State Provincial Government i.e. a Province is affected.

In Tongoane and other v Minister of Agriculture and Land Affairs and others 2010(8) BCLR 741(CC), the Constitutional Court pronounced on the test to be used when tagging legislation. The tagging test focuses on all the provisions of the Bill to determine the extent to which they substantially affect functional areas listed in Schedule 4 or 5 of the Constitution, and not on an incidental provision. The Chief State Law Advisor advised that as the Bill does not deal with a functional area listed in Schedule 4 or 5 of the Constitution, the Bill is correctly tagged section 75.

Land claims on the properties (Blydepoort and Swadini)
It has come to DPE’s attention that even though the land claims on these properties were successful, the land has not been transferred to the successful claimants (Mashilane and Moletele communities) by the Department of Rural Development and Land Reform (DRDLR) due to:
• ongoing disputes(feuding) in these communities;
• lack of registration of the affected land with the Deeds Office; and
• failure by the successful claimant communities to establish a structure that can hold the affected land on their behalf.

Pending the resolution of the land claims by DRDLR, Forever Resorts needs to enter into a lease agreement with the DPW (DPW) as the current holder of the affected land on behalf of government until the land claim is resolved and the lease is ceded to the claimant communities and Forever Resorts.

Rental on properties subject to land claims (Blydepoort and Swadini)
DPE has discovered that no rental has been paid by Forever Resorts on these two resorts. This is due to failure by government to resolve the land claims to conclusion in the affected areas.

DPE has recently engaged Forever Resorts and DPW and both parties are prepared to engage in negotiations to conclude the lease agreement. Forever Resorts is prepared to negotiate the lease (on the basis of a market related rental) with DPW provided the improvements that Forever Resorts has made to those two resorts ever since it took over are taken into account during negotiations. DPW has advised that it needs to engage first with the political principals in this matter. DRDLR is a critical player to any negotiations to ensure that the successful claimant communities are not short-changed in the lease agreement that will be concluded on their behalf by DPW and Forever Resorts.

Parliamentary Legal Advisor on the way forward on the Bill
Ms Fatima Ebrahim, Parliamentary Legal Advisor, said that the original Act dealt specifically with one issue and that was the incorporation of the company. What DPE wanted was to repeal that Act because in actual fact, the company did not exist anymore as it was sold.  She did not foresee a problem with the repeal of the legislation. It was clear that over and above the repeal, there were other matters at work. What the Committee needed to decide was if it wanted clarity on how those are going to be resolved before the repeal of the Bill or after the repeal of the Bill as a matter of oversight.

Her understanding was that nothing in the repeal of the Act would affect any of those matters at all which were outside of the Act. If the Committee is willing to proceed with the repeal, it would adopt the motion of desirability and thereafter deliberate. The deliberation would not take long as it is a repeal bill. The only thing that the Committee needed to satisfy its mind was that the company truly no longer existed and there was no need for this company going forward. The Committee needed to resolve if it wanted to concurrently deal with the matters or first deal with the land claims and rental issue with DPW. That was for the Committee to decide. Some of these items could be caused by the fact that this Act was still on the statute book.

The Parliamentary Legal Office agreed that it was indeed a section 75 bill. The only item under schedule 4 that the Parliamentary Legal Office picked up which could have a bearing was tourism. The repeal of the Bill does not affect tourism because tourism is a provincial competence and this was never a provincial enterprise either. Thus it agreed that the Bill should be dealt with as a 75 bill.

Mr N Singh (IFP) asked DPE to explain how the registration was going to be sorted out. The one property was registered in the name of the Free State provincial government. The national government cannot transfer property that is not registered in the name of national government. 

Mr Matjila replied that this had already been resolved. It was a conveyancing process. What happened was that it had to be transferred back to the national government and then from there it could transferred to Forever Resort.

Mr Singh asked DPE to provide the Committee with a document with the evidence that the property was no longer registered in the name of the provincial government.

Mr Singh said that it was not clear how the land claim was sorted out. It could be that the Land Claims Commissioner did compensate the community. He asked what was the nature of the settlement was.  

Mr Singh referred to rentals on the properties and said that government should not be passing off its responsibility to the community.  DPW and the tenants needed to come to an agreement. There needs to be an agreement in place instead of just leaving it to the community to sort the matter out. He asked for DPE’s opinion on that.

Ms D Rantho (ANC) asked DPE if, when giving the land to the communities, it had an obligation as government to help the community develop the land and not let the community do whatever it wants to do. This is because the land was a tourism spot or a place where development could happen.  The understanding is that there is lack of skills and high youth unemployment as well as other categories of people. One way of compensation was by helping to develop the land. She asked DPE to explain what type of compensation was being given to the community.

Mr Matjila replied that the community in Blydepoort and Swadini instituted a claim before the resort was sold, but nonetheless the resort was sold. The claim was validated by the DRDLR. An agreement was entered into between Aventura, the community and DRDLR. The agreement included the following:  There was going to be restitution. The land had to go back to the community. There was an amount of compensation to be paid to the community. Over and above that, there was an amount that had to be paid by Forever Resort to government up until the community had its structure in place. But that did not happen. Government should have stepped in on behalf of the community until the issues the community was having among itself was resolved. The government normally intervenes through DRDLR.

As the land had not been given to the community yet, national government in the form of DPW needed to step in and conclude a lease that will not short-change the community. Later on, when the community has got its house in order, the lease will be transferred to the community.

He said that when one succeeds in a land claim, three things can happen. There is either restitution or compensation or sometimes, one could be part restituted and part compensated. DRDLR has the obligation to help the community. It is the responsibility of DRDLR and the Commission on Restitution of Land Rights to help the community settle, develop and improve the situation. In this particular case, it has not happened.

Mr Singh was worried about the unfinished business that the government had. It did not seem proper to repeal the Act and then let this unfinished business sort itself out.  Parliament needs to help out the community with this unfinished business. He proposed that the Committee should give DPE some time to sort this out with DPW and everybody else to get this lease agreement in place. It is about time the Committee ensure that assistance to the community was provided. He was worried about the tension that DPE could unwittingly allow to continue between the community, who legally owns the land, and Forever Resort who want to use the resort for income generation.

Ms Rantho agreed that this was critical and needed the Committee’s full attention. The Committee might want to take it upon itself to involve the relevant Portfolio Committees, Public Works and Land Reform. There was a trend where claims were not going anywhere such as Alexkor and these communities. They needed to involve these Committees to speed up the process. She suggested that there should be a joint Committee meeting that will help the process to go forward.

The Chairperson acknowledged the proposal that the Committee should take this further with the Departments of Public Works and Rural Development and Land Reform. She suggested that the joint meeting should happen on 13 August. This should give the three departments two months to put together a report. She encouraged DPE to do whatever it could to further consult with the community together DPW and DRDLR. She asked DPE to bring to the document evidence showing the property was now in the name of the national government and not in the name of the Free State provincial government.

Mr Singh added that the report should include an idea of how the land claim was to be sorted out between the community and DRDLR.

The Chairperson invited the legal advisor to respond about the legislative process. The Committee needed to have an idea of what would happened during the process and how long the process would take.

Ms Ebrahim explained that the Committee need to adopt the motion of desirability in terms of rule 268. The motion of desirability is an indication by the Committee that it is desirable for the Bill to be considered. This was a repeal bill so it was different from other bills. Once that was done, the Committee would then deliberate. The Parliamentary Legal Office already had received public participation submissions. In the next meeting there will be comment from the Committee Content Advisor on the submissions and a response from the Department on the submissions after which the Committee can then decide whether they would want to call those persons who have made submissions to make oral submissions to the Committee. There is no law that required those persons must be given an opportunity to make oral submissions. The determination is whether what is written on paper is sufficient to proceed with or if the Committee would like to give members of the public an opportunity to come and speak and that would give the Committee an opportunity to put questions to them and to interrogate the submission. The time frame for processing the Bill she did not foresee as being too long because it is a very short bill.

The Chairperson asked if it was possible to conclude this process by the time Parliament rises in December.

Ms Ebrahim responded that it is completely doable.  The only item when discussing the Bill itself is whether the repeal was supported or not. If not supported, the Committee was not in a position to amend the Act because the company in the Act did not exist any longer. 

The Chairperson wondered if the Committee could still proceed even if the joint meeting did not happen.

Ms Ebrahim replied that there is still a duty to ensure that those matters are attended to. However those matters fall outside the scope of the Portfolio Committee on Public Enterprises. Originally it was in this Committee because the company was set up as a public enterprise. But now, these land claims matters fall more within the space of Public Works and DRDLR. There seemed to be no role for DPE going forward.

The Chairperson asked if it would be better for the Committee to dispose of this work and transfer it to the relevant departments of DPW and DRDLR.

Ms Ebrahim said that she did not see any executive role DPE would have in the matter going forward. They do not seem to have powers to do anything even presently other than getting the relevant parties together to resolve these outstanding matters. Unless DPE indicates it has any other role.

 The Chairperson asked DPE to indicate if it had any other role.

Mr Matjila confirmed that there was no other role for DPE. Everything was within the scope of Public Works and Rural Development.

Mr Rodney Mnisi, Committee Content Advisor, asked DPE to provide clarity on employer share ownership in Aventura. This was to be empowerment share holdings and agreements for increasing participation of BEE companies. There was a problem with compensation of employees and the former owner. How were these resolved?

Mr Matjila responded that he was not aware of any employee share ownership in Aventura but DPE could double check and report back to the Committee. When government sold Aventura to Forever Resort, there was a requirement that Forever Resort had to have a 30% BEE component. 30% of Forever Resort was given to a black owned company called Siyonwaba. In terms of the sale and purchase agreement entered between government and Siyonwaba and Forever Resort, Siyonwaba was under obligation to hold that 30% for at least five years. After five years, the BEE consortium can decide what they wanted to do with that 30%. Siyonwaba decided to sell the 30% to Forever Resort, probably due to financial constraints. Currently, Forever Resort is a 100% shareholder because Siyonwaba has gone. The sale and purchase agreement says that if Forever Resort has to dispose of that 30% again, It has to dispose it to a strictly BEE company. Forever resort is still looking for a BEE company but they were currently 100% shareholder. 

Ms Rantho said that it was unfortunate that the matter did not belong this Committee as she would have loved tofind out the reason why it had to dispose of that 30%. She said that Forever Resort is very productive. It means that those people were not supported, they were not given enough skills to run together with Forever Resort.  It seemed as if Forever Resort made sure that whatever they gave to Siyonwaba would  come back to them.

She suggested that this point be raised when giving over the work to the relevant Portfolio Committees. This was because it seemed like companies were playing with the opportunities that were given to the people. The government had failed the community by failing the BEE component of Forever Resort.

The Chairperson asked if the community that DPE was referring to was in the Free State.

Mr Matjila responded that the 30% was for the whole consortium, all eight resorts. As government we have an opportunity to ensure that that 30% is given to Siyonwaba or to another BEE company.

Mr Singh asked DPE to bring a copy of the sale agreement as well to the Committee.

Mr Singh was worried that the matter was becoming more and more complex. He asked DPE to organise its colleagues in DPW and DRDLR and come back with a solution to this problem. The matter involved a lot of money. The resorts are worth R200 million. They were discounted and sold for R100 million. 30% of that is R30 million for the community. The government could not just throw that out and repeal the Act. Two months should give DPE an opportunity to settle this with its colleagues and come with something that will convince this Committee that DPE is doing the right thing on behalf of the community.

The meeting was adjourned.

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