Alexkor / Richtersveld Community Deed of Settlement: DPE, COGTA, Treasury, DRDLR on completion of implementation; with Minister of Rural Development and Land Reform

Meeting report

Richtersveld Community and Contractors Forum presentation

Mr Henning Louw, Representative from the Richtersveld Contractors Forum (RCF), expressed gratitude to the Committee for the opportunity to present the problems of the Richtersveld community and contractors’ forum. He said the RCF were a newly constructed body formed by the Richtersveld community on behalf of contractors that had contracts with the Alexkor Pooling and Sharing Joint Venture (PSJV). He said they had engaged with the Alexkor PSJV management and board in terms of their concerns and discussions were still in progress.

The Chairperson said that all relevant stakeholders were called to attend the meeting due to the gravity of the issues affecting the people and it was noted with sadness that the Community Property Association (CPA) was not in attendance.

Mr Louw continued by stating there were structural issues crippling progress of the CPS and this was a shame. There were divisions because elections were supposed to be conducted for a new CPA. The Department of Rural Development and Land Reform (DRDLR) was approached to intervene. There was an issue regarding R45 million that had torn them apart. The aim of the Deed of Settlement (DoS) was not for the R45 million to be paid out to members. The payment was agreement between Alexkor and the community as rental for a 10 year period but there was no agreement on what would happen going forward as the period lapsed. The current CPA was unlawful and it deteriorated relations between the community and Alexkor. In 2014 the Minister OF DRDLR requested a meeting in Richtersveld but the issue of the payment of R45 milion was still not resolved. There was a big hype in the year about the payment and people opened bank accounts just to be informed that it would not be paid out. The Trust had accumulated R30 million in interest but the money was just sitting idly as it wanted for the CPA to be legally structured so that it could be paid out in place of the R45 million. Earlier in the year there was a meeting held by the Deputy Minister of DRDLR and divisions in the community were raised as a major concern. The issue of the structures and the CPA not being properly constituted prohibited developments. Elections were needed and the PSJV was requested to assist.

Mr Jacob Fredricks, Representative from the Contractors Forum-Alexkor PSJV-Richtersveld Community, said that the people in Richtersveld were suffering and dying - they needed to access the money by December and competent people had to be sent to conduct the elections.

Mr Ryno Thomas, Representative from Richtersveld Mining, said that the issue of divisions stemmed from CPA, as the mother body of all community areas, not being properly constituted hence other community groups under it were divided. Competent officials were needed to step in and intervene. There was restitution money which had gained interest and this had to be paid out to the community besides the R45 million. Divisions were so bad that people were afraid to walk around for fear of violent attacks. He urged the Minister to send competent people to hold the elections and constitute a proper CPA.

Mr Louw added that communities were tired of the fighting. Unity was needed to reach solutions urgently. It was important for the people to be paid the money before or during December.

Discussion

Mr Gugile Nkwinti, Minister of Rural Development and Land Reform, responded by saying that the issues raised when he last visited the community seemed to still be unresolved. The Minister was tasked with handling three issues (1) settlement model which was a big problem but there was agreement to change it - Treasury was supposed to handle this change, (2) forensic investigation to be conducted on allegation of R50 million embezzlement and (3) correct structural divisions in the CPA. The settlement model had to be resolved as this was the main issue keeping the money from being paid. The Department of Public Enterprises (DPE) presented a memorandum to Cabinet to change the model – this had to go to court to be effected but this had still not happened.

The Minister said that Richtersveld was a wide area and the CPA had to have proper representation of the area - he would make sure that was done. The Ministry would actively be there to engage and see through the process. The CPA had to be constituted as the scenario of R50 million embezzlement accusation on the previous CPA should not be repeated. Minister Nkwinti would engage the Ministers of Finance and Public Enterprises to ensure the payment issue was resolved. He apologised to the community for the predicament and assured them that the Ministry would work on it.

Mr Kgathatso Tlhakudi, DPE DDG: Manufacturing Enterprises, said that the CPA ought to have been in representation so its side of the story could be heard as the representation was from a faction of the community. The issue of the R45 million to be paid directly was something that the community asked for so as to bypass the property holding company that had its own issues. If the money was properly invested the issue of embezzlement could not have happened. DPE wrote to Treasury for clarity on the issue and was pleased a forensic investigation was to be conducted. A proper hearing on the matter had to involve the CPA as there was a lot of sabotaging from individual groups in the community and they needed a broad view from the community that was not one-sided.

The Chairperson said that regardless of the structures that had to be fixed, the main emphasis was on the changing of the model to ensure the money was paid out. The Committee once visited the community and the situation was dire.

Mr J Julius (DA, Gauteng) asked the DPE for clarity on why the current CPA did not want to have elections and when elections would take place. He inquired what the DPE did after having held a meeting with community. He also asked why Alexkor did not intervene as it was on the ground. The R45 million issue would only bring some relief but would not entirely change the people’s situation as there were 3 000 beneficiaries. He said other matters such as economic development had to be looked into by the new CPA as there was huge development potential in the area.  

Mr O Sefako (ANC, Free State) said it would have been better if some of the leadership who engaged in the February 2017 meeting were in attendance. He reiterated that the CPA had to be inclusive of all areas and look at sustainability for future generations as the area had very good potential in agriculture and mining.

Mr L Gaehler (UDM, Eastern Cape) agreed with the three issues raised by the Minister. The community had to shoulder some of the blame as it was responsible for making sure the CPA is running according to its needs. He asked the DPE what it was doing to monitor and ensure processes were running smoothly. The community needed to be actively involved in monitoring the CPA election. He emphasised the need for a timeframe so that these matters could be monitored.

Dr H Mateme (ANC, Limpopo) asked how long the embezzlement had been going on and what mechanism was put in place after it was observed certain members of the CPA were sabotaging efforts. She also asked what the Portfolio Committee had done as it was the first line of defence.

Mr O Sefako (ANC, Free State) asked the DPE to clarify the actual figures and assets available for the community.

Richtersveld Land Restitution Claim presentation

Ms Nomfundo Ntloko Gobodo, Chief Land Claims Commissioner, Commission on Restitution of Land Rights (CRLR), gave a background of the land claim and said that a Deed of Settlement (DoS) and Memorandum of Understanding (MOU) was signed with Alexkor in 2007. The Richtersveld Community Trust (RCT) was obliged to distribute the income from the Richtersveld Self-Development Company (RSDC) to CPA members. Since reconstituting of the CPA in 2011, there had always been two dividing factions which resulted in the land claims commissioner implementing a regularisation programme. 

Attempts to bring peace failed and it became apparent that the DoS was un-implementable. The issue of the R45 million required the funds to be paid to the Property Holding Company which is not operational despite funds being made available by Alexkor. Direct payment was being worked out by a government task team as it required a variation of the DoS which must be applied in court. The DRDLR was planning to assist the CPA with elections to be held on 9 December 2017.

Some of the recommendations included rationalising all structures of the settlement agreement, the DRDLR and DPE to work in collaboration to resolve the strife within the community, the DRDLR to request the Land Rights Management Facility (LRMF) to nominate a panelist to serve on the CPA on behalf of the Department or alternatively a nominated Department official etc.

She concluded by calling for a community meeting to be held with the Ministers of DRLDR and DPE in order to communicate the action plan.

Ms Ruwayda Baulackey, Director, Regional Land Claims Commissioner, read out an email on new developments in the Richtersveld matter. She said the community asked for the R45 million to be paid out before the Annual General Meeting (AGM) and that there would be a meeting on 8 December 2017. 

An official from the RLCC informed the Committee of the money paid out from 2007, when the DoS was signed, in response to Mr Sefako. The information could be shared with the Committee.

Presentation on money held on trust by Richtersveld Investment Trust

Mr Johan Redelinghuys, Asset and Liability Division, National Treasury, informed the Committee of the role of Treasury in the matter and outlined the structure of the Investment and Community Trust. A R50 million development grant and R190 million settlement compensation were received in terms of the DoS and the compensation followed a distribution policy that was approved by the beneficiaries. A dividend of R30 million was declared in January 2016 and a few matters had to be resolved before the money was paid out. These matters included the CPA being constituted, CPA and Minister of RDLR nominating and appointing independent trustees, bank details of beneficiaries being provided etc. The Trust was not fully constituted to make decisions, there was distance between trustees and infighting in the community impacted the work of the Trust among other challenges. The Company and the Trust were ready to participate in interventions proposed by the CRLR and contribute to resolving the unrelenting conflict within the CPA and the community.

Presentation by Alexkor

Ms Hantsi Matseke, Chairperson: Alexkor, said that only three of the many deliverables agreed on in the DoS had not been met and these were the R45m that had been invested in a Trust, municipality infrastructure transfer and historical rehabilitation. She said that Alexkor convened a meeting with the community and they agreed that the CPA had to be reporting on use of funds for transparency.

She said that Alexkor noted the complexities created by the legal mechanism in the process and now they had an interim board that will stay active until the AGM is done. She said that the company employs about 400 permanent employees and it would be important to keep things running smoothly as many mining companies had shut down in the area. She remarked that they had R9m spent on corporate social responsibility but there were security issues she had to raise with threats to lives of employees being made. She urged that the sooner the issues were resolved the better it would be for the company.  

MSA Verification of services upgrade as per Deed of Settlement between the Richtersveld Community and Alexkor

Mr Ntandazo Vimba, Acting MISA CEO, said that the DoS contained two conditions relevant to the support requested - these were that the mining town be converted into a formally established town, this was met in 2013, and that that the engineering services infrastructure be upgraded to that required for a township establishment standard- this had to be ironed out with Alexkor.

It was agreed that Alexkor would upgrade the infrastructure required for the Richtersveld local municipality to officially take over responsibility for providing engineering services. In 2017 the municipality had not yet taken over custodianship of Alexander Bay because the municipality had not been able to conduct an assessment of the services installed. A joint committee was held in January 2017 to determine ways of expediting handover. The Richtersveld local municipality was not eager to take over responsibility for road upgrading due to potential high costs and agreement had not been reached with Alexkor to resolve it. MISA suggested that a disciplinary task team be established at a meeting arranged for stakeholders on this matter.  

Discussion

Mr Sefako said Treasury needed to ensure risk was managed with investment and comparative studies had to be made to establish a balance of risk and return. He asked for the Committee to have access to the statements of investments made during the first CPA as the embezzlement of funds had to be looked into. He asked what was making it impossible to come up with CPA and asked the stakeholders to come up with an agreement and timeframe from that meeting to establish a CPA. He asked Alexkor if the communities of the area were benefiting and if wealth creation was evident among the people in local businesses. What was being done to counter the issue of death threats? He told COGTA to expedite the process of municipality take over and actively take part in it – there must be timeframes to make sure this was achieved.

Dr Mateme said the presentations showed there was no coordination on the stakeholders as none knew what the other was doing. The issue of death threats and divisions showed mistrust and that the community was not moving at the same pace as other entities. He suggested all participants must find a way of communicating problems in a user-friendly manner to enable masses on the ground to be able to move with them. COGTA and Alexkor seemed not to be talking enough among themselves and the problems of not putting timeframes delayed progress. Heads of Departments must be meeting at least once a month to make sure they touch base. She urged everyone to join hands for the sake of the people on the ground. She asked if the settlement plan considered the people on the ground and how often the collective in the room interacted with the Portfolio Committee as it was the first line of defence. 

Mr Gaehler said that a resolution was needed immediately because the people needed it. The settlement model needed to be relooked and redefined. Infrastructure development had to be relooked by finance. He requested a forensic audit with a timeframe. He told COGTA to resolve the issues raised within a timeframe.  Alexkor or the Trust had to employ a quantity surveyor and money must be put into the trust account as a guarantee fund. The CPA had to be established and DPE must be put to task to spearhead the four key issues - by January, there must be a progress report. He urged Alexkor and COGTA to resolve its issues and a report must be prpvided in Janary on when COGTA would take over. 

The Chairperson asked who was responsible for monitoring the money on the allegations of the embezzled R50 million. The Committee saw that there was huge agricultural potential when it visited the area but infighting prevented development. The community must bring stability so that potential of the area could be unlocked. She asked for feedback with regards to the model that was holding the funds as the people needed to access the money. Alexkor could not fund everything – other Departments would needed to be looked at to fund and finance some of the projects as the community was entitled to benefits as South African people. She asked Alexkor who was responsible for paying the fees if an entity was taking it to court.

Mr Sefako emphasised that a forensic audit was needed. He asked Alexkor for clarity on where the R6 million legal fee was being paid from.   

Response

Mr Shawn-Dirk Uys, Representative from the Richtersveld Contractors Forum, said that contractors wrote a letter to Alexkor PSJV and were invited to a meeting. A task team was set up to raise issues on how the community could be empowered and kept in the loop on progress.

Mr Fredricks said the main issue was funding and funding was needed to progress businesses. The settlement model was good because it was protecting the community but the problem came when the issue on how to deal with the R45 million started.  The model could not be changed because it was embedded in the CPA’s constitution. The R50 million was given to various entities and the embezzlement issue came up because the previous CPA was running around with stories that the money was misused. Alexkor assisted the municipality despite all the other issues.

Mr Thomas said the R45 million was outstanding for a long time and people outside the community could not understand. He urged that the officials should have arranged for the R30 million interest to be paid out and the R45 million to be used for sustainability projects. He asked the Department to appoint an independent person to oversee the elections.

Ms Ntloko Gobodo said that DRDLD and CRLR were different in that the Commission was supposed to acquire the land and the Department to follow through with agreements and development. Regardless, the Commission was committed to supporting the course to ensure matters were resolved. It seemed one of their officials was at fault and the Commission would work on putting together competent officials to ensure progress was made. The Commission was trying to regularise the community since 2011 but had not been successful. Community representatives had to go to the AGM to present a united front but there was no coordination. The CPA leadership and members must take responsibility and own up to make sure the community was served.

Mr Tlhakudi clarified that the DPE’s work was not something which could be conjured up. The directive to pay the R45 million to the community came from the Minister. The Department noted the directives and the timelines given and would take it up. The forensic investigation would be done to understand how the funds were disbursed and used. They noted issues between COGTA and Alexkor and were coordinating meetings. The matter of contractors was being worked on and the matters will be reported in January. He assured the Committee that DPE and DRDLR was coordinating to work at the same pace. They had to deal with the forum that was there until the proper CPA was constituted.

Mr Mervyn Carstens, CEO, PSJV, said with regards to death threats, they had engaged the SA Police Service and provided the written evidence addressed to various members being threatened. They were providing security to the best of their ability to employees affected.

The Chairperson urged Alexkor to draw up a proper business plan.

Mr Redelinghuys said that he would convey the proceedings and the proper support would be provided.  

The meeting was adjourned.ncil that is chaired by the presidentartment of economic development is also represented. th