Alexkor & Richtersveld Community Deed of Settlement progress report

NCOP Public Enterprises and Communication

08 June 2022
Chairperson: Mr Z Mkiva (ANC, Eastern Cape)
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Meeting Summary


The Select Committee convened on a virtual platform for an update on the stabilising of the Community Property Association (CPA) by the Department of Agriculture, Land Reform and Rural Development (DALRRD) and for the Department of Public Enterprises (DPE) and Alexkor progress report on implementation of the eight obligations of the Richtersveld land claim deed of settlement.

DALRRD noted the bloated and complex structure of the Richtersveld CPA. It consisted of two trusts and six companies with poor communication and limited accountability that impacted negatively on the survival and effectiveness of the CPA which is currently under adminstration. It is recognized as the primary reason for the levels of conflict in the Richtersveld community. The nine structures need to be reviewed by the administrator and the CPA Executive Committee. Appointment of independent directors is cumbersome without administration support staff and budget for these entities.

Committee Members were not happy with the nominations of local government councillors to serve on the Richtersveld Investment Trust. They argued that politicians cannot be part of a project that was sponsored and meant to benefit communities.

Committee Members complained that every time Alexkor appears before them there is no progress. It had been going on for over a decade and everyone should be ashamed. The State Capture Commission findings and recommendations about Alexkor and the CPA were raised and presenters were asked about the way forward on this. Also discussed was the need for a review of the CPA as a property holding instrument.

Meeting report

The Chairperson welcomed Alexkor and the DPE and DALRRD teams. Apologies from both Ministries were noted.

Community Property Association (CPA) progress report
Mr Mooketsa Ramasodi, DALRRD Director-General, accompanied by the Chief Land Claims Commissioner and Chief Director of DALRRD Northern Cape, briefed the Committee on the development of the Richtersveld CPA and the work the Department has done on it. The CPA has received a lot of attention and there have been engagements on it. CPAs are products of statute and there is a way that they function, and the Department intervenes whenever there are challenges. The Department's intervention would be pointing to the nine entities within the Richtersveld CPA and how they have been assisted.

• Honey Attorneys were appointed as Judicial Administrator represented by Attorney (Mr Don Madjiet) for a period of three years, in line with Section 13(2) of the CPA Act.
• In terms of the court order of 28 February 2020, the Judicial Administrator is required to exercise powers of the Executive Committee of CPA and perform all functions assigned to him in terms of the court order.
• The Administrator has met with representation from all the areas of Richterveld and development work plan which has been approved (as part of the court order)

Richtersveld CPA: status of entities established
• To protect the interests of the community, the DoS sought to create a very comprehensive yet complex structure of Trust and companies to house the interests of the Community.
• The DoS signed by the parties in 2007, directed that at least two trusts and six companies must be established to manage and operate the business dealings and the CPA: and
• Consequently eight entities were established under the Richtersveld Community Claim.

Status of entities established as a result of the land claim settlement
An elections agency (EIFSA) was appointed by DALRRD to assist with elections of the CPA Executive Committee which took place in November 2021, and by-elections in January 2022.

• Dynamics of the Richtersveld entities (no staff to support directors, limited financial benefits, bloated and complex structure, poor communication and limited accountability although created to protect the assets) impacting negatively on the operation, survival and effectiveness of the Richtersveld CPA. It is recognised as the primary reason for the levels of conflict in the Richtersveld Community.
• Richtersveld project requires sufficient human resources to address the needs in the DoS.
• The nine structures require dedicated specialist officials to support the structures until such time the structures are reviewed. Appointment of independent directors is cumbersome without administration support staff and budget for these entities.
• The CPA general meeting held on 1 December 2021 dealt with elections disputes and presentations for by-elections.
• Elected members have appointed their own attorney to intervene in most matters, without them having to be directly involved as elected representatives working together.
• In April 2022, members of the nine entities held an induction workshop regarding the different roles provided for in the DoS and training on RCPA compliance and Governance.

See presentation for further details

Mr C Smit (DA, Limpopo) asked which criteria were used to determine the beneficiaries. How do these beneficiaries opt out of the CPA and do they lose their benefits if they go and look for other opportunities elsewhere? What actual proof do these beneficiaries have to prove that they are CPA shareholders and are entitled to a portion of shares?

Mr A Arnold (EFF, Western Cape) said that in a previous meeting it was noted that the challenges led to the CPA being put under administration. It seemed as if they were going to sit with challenges when it comes to the CPA especially when they have politicians such as councillors sitting on the CPA. Will this not further affect the work of the CPA? The entities were created to protect the interests of the community. How can they move forward without the necessary human resources? It will put a strain on the progress the entity is aiming to achieve. There must be a solution to this matter.

Ms T Modise (ANC, North West) referred to the managerial changes causing the delay in the handover of the municipal responsibility. Were the managerial changes from Cooperative Governance & Traditional Affairs (COGTA) or Alexkor? It could be ideal that the Richtersveld community is well capacitated to carry out municipal duties. How many of the youth are skilled and capacitated for this?

Ms M Mokause (EFF, Northern Cape) said there had been a Committee resolution to have a physical interaction with the Richtersveld community. The Committee must visit the Richtersveld community to interact with them and understand the issues they are facing. Her observation is that there is political interference and some of these squabbles might be sponsored. They cannot have politicians on a project that was sponsored and meant to benefit the community. She lamented that it is not the first time the Committee receives a report from Richtersveld that is not progressive. There is no intervention from both the provincial and national government. It might be a national government project however it is located in the Northern Cape. The province should have intervened and tried to get things in order as this is not the first resettlement project in the province.

Mr M Nhanha (DA, Eastern Cape) said the reason people are dragging their feet is that there are diamonds involved. Having served in Parliament from 2009 to 2014 in the Portfolio Committee on Public Enterprises, gives him a deep sense of shame and the Department and Alexkor should all be ashamed. He agreed about politicians being involved and unfortunately people’s lives are being compromised. Most of what was presented today was already mentioned back in 2009. There seemed to be no progress and politicians will have to resolve Richtersveld community challenges. He is not saying this to score political points, but history will judge all of them. It cannot be that every time Alexkor appears before the Committee there is no progress. It has been left far for too long and something has to be done. He seconded going to Richtersveld and getting information themselves because their only source right now is the Department and Alexkor. He asked Alexkor and the Department about the Zondo Commission report findings. How prevalent was state capture in Alexkor? If there are Commission recommendations, what has been done about those and what is the plan to prevent something similar happening in the future?

The Chairperson pointed out that some of the questions were political and it is for this reason that the Committee prefers the political head or the deputy of the department to be present. He agreed with the Department observation that a CPA by its very nature is conflict-ridden. That statement is very important because this CPA instrument is brought into question by the Department itself. He asked for clarity why DALRRD is saying the CPA is conflict-ridden by nature. What are the steps being taken to transform the instrument so it is stable and able to deal with the tasks it is expected to do? If the Department can make such an observation this proves that something is wrong with this instrument.

The broad structure of the Richtersveld CPA looked very complex and bloated and therefore a recipe for conflict. He was not referring to the whole instrument but to the eight entities that are subsidiaries of the holding entity which makes more conflict for the community. It should be stabilised and fit for purpose so that it yields the expected results; otherwise next year they will be discussing the same thing. The critical question is: "Is there a way of capacitating the CPA and its sub-divisions to ensure they do the expected tasks for the benefit of the community?”

The legality and morality of making local councillors part of this was a strategic mistake. It will not be useful but rather escalate the problem. This matter should be reviewed and reconsidered. Councillors should be protected and not dragged into these structures then later they are seen as problematic. They must do the work they are assigned which is to lead the frontline of service delivery in their communities and not run these structures.

Looking at this bloated structure, he asked if the people who sit as board members or trustees are remunerated or if it is just community service. When these instruments were created, they were intended to benefit community members. With these ongoing fights will the community realise what they are supposed to get out of this or is the programme created to benefit people of the political class and the connected. Given the matter has been ongoing for quite a number of years what can the Committee do to assist the Department? Perhaps the Northern Cape Provincial Government (NCPG) has to be brought in to assist? Is there a role it can play seeing that there is a dire need for a strategic intervention to ensure this vehicle moves forward and does what it is expected to do?

DALRRD response
The DALRRD Director-General replied that the Chairperson was correct on the political outlook required from the principals. He will have engagements with the principals and imprint the concerns raised by the Chairperson and the Committee. He had taken notes on what Members had raised.

Ms Nomfundo Ntloko-Gobodo, Chief Land Claims Commissioner, highlighted that Richterveld's land claim lodged before the 19998 cut-off was settled through a court process and the settlement was signed in 2007. How they nominate the beneficiaries is based on original deposed individuals at that point in time. Family trees are identified, and if it is a community claim they are able to point out the number of households that were affected. Once verification happens through the community itself identifying who was dispossessed and also looking at historical documents that are available, the CPA will be able to hold the land on behalf of those households. The CPA has a constitution that governs how the affairs of the CPA are run. The households are the owners and also the shareholders of the CPA. The constitution guides on how committees are nominated, their responsibilities, how to remove committee members, who votes when, and how. The community has the right to change the terms of the constitution as long as they comply with the CPA Act. The Act implies that they need to have a quorum, annual general meeting and ensure they are compliant for changes to be made. The CPA itself is structured similarly to how a private company would be obligated to do things when it needs to amend changes. The CPA becomes the land holding entity and the other entities referred to are authorised by the CPA to do various activities on behalf of the CPA beneficiaries.

If a beneficiary resides outside Richtersveld and is employed elsewhere, that person is still entitled to benefit the same way as a person who resides in the area. It is important to ensure that the project is sustainable which is being dealt with by DALRRD. If a settlement agreement needs to be reversed, it has to go through the court.

Previous committee meetings had given an instruction that the claim and the nature in which it was settled was too complex for the type of communities they are dealing with. The key issue is a review of the structures. The CPA should be set up in a way that is simple and that it can be managed by the community itself to derive meaningful benefit. She agreed that ensuring this is core. Secondly, one needs to ensure that all the items identified in the deed of settlement are done. This includes paying the households what is due to them. Thirdly, if any investigation needs to be done on any maladministration associated with the settlement from 2007, then it must be done. This is to ensure that the community beneficiaries and owners of the settlement benefit in the manner that they should have benefited from 2007.

Mr Kgotso Moeketsi, Chief Director: DALRRD Northern Cape Office, replied that once a land claim has been settled by the Commission on Restitution of Land Rights (CRLR) and the community has opted for a CPA legal entity, then the role of the DALRRD Director-General comes into play. The main duties of the DG according to the Act are to ensure that CPA is compliant with legislation and also its own constitution.

The role of the Department is limited, especially if the CPA constitution as in the case of Richtersveld states that the municipality must nominate two councillors to be part of that. If Richtersveld feels that the local municipal government should be a part of it and their view is that the nomination of politicians is correct, then there is nothing the Department can do. The beneficiaries in line with their constitution have nominated the politicians. From time to time while trying to monitor and provide support, the Department can make suggestions as it also agrees that the nominations were not proper considering there are already concerns with the nominations of the two councillors. However, this is a municipal council decision and the Department does not have a say in that. These nominations were done in accordance with their constitution adopted in a properly constituted meeting.

The current administrator is working with the CPA Executive Committee and they are hoping that at a later stage they will make recommendations and proposals. However, the role of the Department is simply as intervention only. The reason the DG went to court was to oppose that the CPA is non-compliant with its own constitution and the Act. He requested that the CPA be put under administration and the court granted the request.

He was not aware of a process initiated by NCPG through the Office of the Premier. NCPG was requested to serve in the structure that dealt with transfer of properties in the Richtersveld local municipality which Alexkor and DPE were also part of. As mentioned at some point it should be considered to approach NCPG through the DG in the Office of the Premier. DALRRD's duty is to ensure that the CPA is regulated and complies with the Act. There are other stakeholders in this such as the NCPG, DPE and Alexkor.

On the CPA structure, there is a directive from the court that the Department must assist the community in reviewing some of these sub-structures. The administrator and the community are in the process as reported during a workshop where they agreed that this review process will be set in motion and issues considered.

On remuneration, the understanding is that once these structures are properly constituted normally a board of directors will get a sitting allowance. However, at the moment this is not the case as some of the structures are not yet fully constituted. The administrator is working hand in hand with the community to consider matters.

The DG indicated that there were few policy issues with the CPA as the land holding entity. DALRRD is currently busy regularising the CPA. The administrator is now able to assist the community to shape the structures within the CPA. There is a need for them to agree with the CPA and opt for a simpler version on how to deal with business issues. DALRRD could assist with the process however due to the CPA Act the focus will be on CPA itself under the guidance of DPE. This will help to rationalize the business operations and ensure a structure that will deliver the maximum benefit for the community.

The DG said that he would not like to comment on politics however where a governance issue is raised, the separation of duties will always be chosen from the governance point of view. This point was referred to so that there is no inference that there might be influence coming elsewhere into the CPA. There must be clean governance and separation of duties and responsibilities. This process needs to be looked at by the administrator and it will be highlighted to the community as it was raised by the Committee.

The Zondo Commission findings reference Alexkor and malpractice and that there needs to be a follow up on Alexkor. However, it will be left for the court to deal with. DALRRD and DPE are aware of a company without a licence was appointed and purportedly undervalued the diamonds bought from the Alexkor joint venture. This matter is what the law enforcement agency would be responsible to look at.

In broad terms, the discussion on the CPAs was a very topical issue and the concerns raised by the Committee on whether the CPA is the right land holding entity. The Minister is currently engaging with various CPAs to look at models available as land holding entities. The Minister, Deputy Minister and the Commissioner have already been to North West, Mpumalanga and Free State to engage on this matter. All other provinces will be visited too. The CPA issue was also raised and ventilated at the Communal Land Administration and Tenure Summit (CLATS) that was held by Inter Ministerial Committee led by the Deputy President.

The CPA Act says where there is another entity that exists and can provide similar work there can be consideration of that. This is a topical issue and the Department is giving attention to it. At the end of the process of engaging on CPAs, it will be able to table a report on the overview of the CPAs. However from the three provinces that they have already engaged, there are emerging trends that already indicate CPAs that function very well.

The Department is responsible for the Richtersveld CPA and must ensure there is proper administration. The administrator is regularising it so that upon the administrator exit next year, they will have a proper functioning CPA with structures that will support it. This will ensure a maximum benefit to the Richtersveld community.

Alexkor response
Ms Trish Hanekom, Alexkor Interim Board Chairperson, reported that the interim board was appointed four months ago and it took over after the resignation of the former CEO who had also been the chairperson of the accounting authority.

The interim board has not been there for long so their first order of business was to appoint Interim CEO Mr Butler. He has been appointed on a renewable six month contract. This is to regularize both governance arrangements and compliance issues both in the letter and spirit of the deed of settlement and the unanimous resolution that gives rights to the Pooling and Sharing Joint Venture (PSJV) that Alexkor and the Richtersveld mining company have an interest in.

Ms Hanekom addressed the flow of benefits to the Richtersveld community from the mining operation as a result of the land claim settlement. In reality, the mining over the years has been done by contractors. The cost of mining exceeds the income of mining and that needs to be turned around if there are going to be benefits flowing to the community. In the four months that the board has been appointed there are certain irregularities that they are aware of and non-compliance with the deed of settlement unanimous resolution. They are working systematically to resolve those. There is an investigation underway at present by the Special Investigating Unit (SIU) and she referenced the Fourth Report of the State Capture Commission.

She confirmed their concerns about the complexity of the institutional arrangements which have not only financial but also time implications. The complexities of these arrangements are immense. There are expectations of participation as non-executive directors in these various companies and they discovered that four directors appointed by the court to start the mining company have been remunerated. However the company itself has not been in compliance with the unanimous resolution of the PSJV. All these issues need to be resolved as it does not make sense that they have the parallel structures of a PSJV and Alexkor board which contributes in completely unsustainable ways to the financial implications of the mining activities.

The court case referred to had a sitting on 3 June about an intervention application from the representative of some of the community members that needed to be heard prior to that matter. The case was postponed to 5 August. This was to ensure that the economic activity in the mining area and other economic activities under the ambit of the CPA generate benefits for the community. This was the intention of the settlement and as far as they can tell it has not materialized.

DPE presentation
Ms Morongwa Mothengu, DPE Senior Mining Specialist, on the status of implementation of the Land Claim Deed of Settlement obligations. There were eight obligations of which two were outstanding which were the town and its infrastructure handover and the transfer of properties.

In terms of the Order the Richtersveld Land Claim Settlement comprised the following:
a) Transferral and restoration of portions of land by the State and Alexkor to the RVC
b) The transfer of Alexkor’s land mining rights to the RVC, and the setting up of a Pooling and Sharing Joint Venture (PSJV). The state would capitalise Alexkor to contribute R200 million to the PSJV to set up a sustainable mining venture.
c) The transfer of Alexkor’s mariculture and agricultural assets to the RVC
d) A sum of R190 million to be paid as reparation to the RVC’s Investment Holding Company.
e) R50 million development grant to be paid as a lump sum development grant to the RVC’s Investment Holding Company for agriculture and mariculture
f) R45 million to be paid to the RVC’s Property Holding Company as compensation for Alexkor’s occupation on transferred residential properties for ten years
g) The establishment of a township at Alexander Bay
h) Environmental rehabilitation.

The Richtersveld community (RVC) received the mineral rights; the sum of R190 million was advanced to the Richtersveld investment trust; the various assets have been transferred. Also the different structures were established to look after the interest of the Richtersveld community.

Implementation becomes complex as it is not only DPE and DALRRD that are involved in this process but it also extends to other departments such as National Treasury and the Provincial Government for the establishment of the township of Alexander Bay. Overall the implementation is almost complete except for the two provisions. R45 million was to be paid to the Richtersveld property holding company. The delay was caused because the property holding company had only one director and the compliance requirement was for it to have four to six directors. For a number of years, DPE attempted transfer but it was a bit cautious considering the R50 million that disappeared a while back. DPE was waiting for the Richtersveld property holding company to be regularised and have the required number of board members to ensure the interest of the community members is taken care of.

On the investigation of corruption emanating from the State Capture report, the SIU has been authorized to investigate the maladministration and corruption at Alexkor. It also extends to investigating corruption in the CPA structures. The investigation has commenced and hopefully, in a few months, there will be a report on the investigation itself.

Alexkor presentation
Mr Trevor Fowler briefed the Committee on the progress of the municipal town handover and Alexkor obligations.

• The town of Alexander Bay was originally developed as a mining town to provide accommodation and services to the employees of the Alexkor state-owned enterprise (SOE) in mining for diamonds in the Richtersveld Local Municipal area.
• Alexander Bay is situated in the Richtersveld where one of the biggest land claims in the history of the country was lodged.
• A court order settled the land claim, leading to an agreement between Alexkor and the Richtersveld Local Municipality on the town and its infrastructure handover to the municipality.
• The Deed of Settlement led to the establishment of the Richtersveld Mining Company and ordered that the Pooling and Sharing Joint Venture undertake mining of both land and marine resources.

Deed of Settlement: Clause 7
The parties agree to a formal township establishment of the existing Alexander Bay Village and portions of two farms to establish the formal township of Alexander Bay all at the cost of the State through Alexkor. To enable the township establishment to take place, municipal engineering services have to be upgraded to municipal standards. The Richtersveld Local Municipality is to take over public services and to fulfill all actions of a local authority.

Alexkor Obligations
To date, Alexkor, through the state, has spent approximately R66 million in town hand-over obligations/upgrades. The upgrades included borehole installations, raw water reservoir, bulk water meters, pump station upgrade, new wastewater treatment works, electrical meters and transformers, painting road marks/patching of potholes.

See presentation for further details

The Chairperson thanked and excused both Departments and Alexkor.

Committee minutes
The Chairperson announced that the minutes have been shared in advance for Members to go through to consider for adoption. He checked with the secretary if they constitute a quorum for the minutes to be adopted.

The secretary confirmed that they form a quorum; however, one member excused herself so they were eight members instead of nine.

The Chairperson concluded they still formed a quorum because they were nine initially.

Mr Smit pointed to a message in the chat group that explained the voting process of provinces versus individual members for a Select Committee.

The Chairperson rebuked Mr Smith for bringing a message from the chat group into the meeting. It was not an item on the agenda but an informal message and cannot be considered in the meeting. It will be discussed at a different platform not this meeting. What matters is that they form a quorum and the minutes will be adopted. Mr Smit must not be difficult about the matter.

Mr Smit argued that they cannot form a quorum based on provinces but on individuals. He asked him if his decision to form a quorum was based on provinces or individual members. They were at loggerheads on this issue.

The Chairperson was not pleased with his remarks and stated that Mr Smit must not be mischievous as Members "do not fall from the sky but come from provinces" and are also members of the Committee.

The Chairperson requested movers for the adoption of the minutes. Ms Modise moved and Mr de Bruyn seconded.

Mr Nhanha objected and said he hopes the Chairperson is aware of the problem they are faced with if the opposition does not want to partake in the adoption of the minutes. They must tread very carefully as the Chairperson uttered two contradicting statements. Initially he said it was by membership they are adopting minutes. Afterwards he made a cynical addition that they do not fall from the sky but come from provinces. It was unacceptable and should they decide to keep quiet, the minutes will not be adopted. He cautioned the Chairperson and insisted they be treated like adults otherwise they will be hostile towards him and the ANC so that there may be no progress in the committee.

The Chairperson insisted that he had conducted himself in a proper manner and dealt with the matter accordingly and had no intentions to offend anyone. He explained that the reason one person was missing to form a quorum was due to network connectivity and that cannot prevent them from adopting minutes.

Mr Smit strongly suggested that next time to avoid such inconvenience the Committee must conduct their meetings physically because this virtual arrangement was just a temporary solution.

The Chairperson noted his suggestion and ended the dialogue.

The minutes were adopted and the Chairperson adjourned the meeting.


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