Repeal of the Overvaal Resorts Limited Bill: briefing & consideration of submissions

Meeting report

Opening Remarks by the Chairperson

The Chairperson opened the meeting and expressed her disappointment in the low number of Committee Members that were present. She commented that this was a reflection of a lack of commitment to the cause.

Briefing by the Department of Public Enterprises on the Repeal of the Overvaal Resorts Limited Bill

Adv Melanchton Makobe, Acting Deputy Director-General: Legal and Governance, DPE, said that on 22 August 2001, Cabinet took a decision to dispose Aventura Resorts. This motion was driven by the fact that the enterprise was running at a loss.

Mr Denzel Matjila, Directorate: Legal Services, DPE, indicated that the government’s policy in 2001 was to restructure State-Owned Companies (SOCs). The underlying objectives were to raise fiscal funds and reduce the national debt, empower previously disadvantaged groups and exit sectors that were both loss-making and non-core to government. The Aventura Resorts, amongst other hotel and leisure enterprises, were considered to be non-core to government and loss-making, thus the Cabinet’s decision to dispose of it. Aventura had a total of 15 resorts at the time; seven of the resorts were sold to different purchasers and the remaining eight were sold to one bidder, Forever-Siyonwaba Consortium, in 2003.

He  indicated that the challenges encountered by the Department were incorrect descriptions of the Aventura Resorts by the Deeds Office, and land claims as well as pending legal actions aimed at interdicting the transfer of the said properties which delayed the transfer of the eight resorts to Forever Siyonwaba Consortium. The eight resorts are in Mpumalanga (in Blydepoort Dam, Swadini, Badplaas and Loskop Dam), Free State (in Gariep), the Western Cape (in Plettenberg Bay and Warmbaths) and Limpopo (in Tshipise). The land claims pertained to the resorts in Blydepoort Dam, Badplaas and Tshipise. There was also a rectification claim of the sale agreement transfer of properties allegedly sold by government to one bidder but transferred to another. Some resorts were registered in the name of government as opposed to Aventura as at the date when the transfer was sought to be effected. In order to address these challenges and to fast track the transfer an addendum to the sale agreement seeking to rectify property descriptions was entered into in 2007. Notwithstanding this, challenges of improper property description and loss-making kept on recurring, leaving government with no option but to consider an alternative way of disposing Aventura – a liquidation process.

Following a lengthy and protracted process in 2012, the then Minister of Public Enterprises passed a special resolution at an AGM to eventually place Aventura under liquidation. Liquidators were appointed and the process was completed. As part of finalising it, Aventura’s founding legislation, The Overvaal Resorts Act 127 of 1993, still needed to be repealed.

Mr Matjila explained that the Bill was 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 are situated. He added that the Bill was approved by Cabinet on 29 March 2017 for publication in the Government Gazette to invite public comments. It was then published in the gazette (Government No 40921 Volume 624 of 15/06/2017) from 15 June 2017 to 15 July 2017 but no public comments were received. The repeal will bring finality to the liquidation of Aventura that begun in 2001.

Discussion

The Chairperson asked if the land claim issues with the resorts were going to affect the repeal process and how the rights of the claimants were going to be protected.

Mr Matjila replied  that there were three resorts that were subjected to land claims. These resorts were in Tshipise, Badplaas and Blydepoort

For the resort in Badplaas, an attempt has been made to resolve the matter and the latest update revealed that the resolution of the matter had progressed to an advanced stage and a settlement had been drawn up with the claimants’ community; however, a later update revealed that the community was divided and the list of claimants was ruled to be invalid by the Court.

In the case of the resort in Tshipise, there had been breakdown in communication with the Land Claims Commissioner of Limpopo in trying to obtain a progress report. The last update indicated  that the claim process was above board which meant that  there was only a pending settlement agreement between the land owner and the claimants.

In the Blydepoort situation, an agreement had been entered into with the community when the resort was sold. However it needed to be endorsed by the Minister of Land Affairs. The Minister was not satisfied with the agreement, stating that the community were being ripped off and subsequently halted the process. The DPE engaged the Department of Public Works (DPW) because the land on which the resort resided was still under the management of the DPW until it was transferred to the community. The DPW were then in position to enter into a lease agreement with Forever Resorts until the dispute was resolved. The DPW had a meeting with the DPE to find out certain information about Forever Resorts in order to determine the market value of the lease. This was information such as how much the company was investing in the area and how much it would be investing going forward.

Mr O Sefako (ANC; North West) welcomed the presentation by the Department. He then asked if all Aventura Resorts were located on land that was under the oversight of the DPW. He also indicated that there is a community in Bela-Bela that has, with the Communal Property Association called Makula, claimed some pockets of land in the area. Will the nearby resort fall under these claims?

Mr Matjila clarified that in most cases the land cannot be transferred because of the land claim disputes amongst the communities. Until the transfer occurs, the land is held by the Department of Public Works, on behalf of government; Blydepoort is an example of such a case. Where there are no disputes, the land was successfully transferred. In the case of the resort in Warmbaths there were never any land claims.

The Chairperson asked why state-owned resorts do not prosper as much as private ones. Why are the Department officials not working to improve this reality?

Mr  Matjila affirmed that the empowerment of black people was never in the plans of Aventura Resorts; since the inception of the company, the resorts were intended to benefit the white people. The private sector primarily focuses on the bottom line whereas the Department  also prioritises skills development of their staff bodies.

The Chairperson commented on the attitude of some of the public servants working at various public enterprises such as South African Airways, stating that how they treat consumers also contributes to the underwhelming overall performance of these entities.

Mr Sefako raised a concern about the conflicts arising amongst community members over land claims. What could be done by the relevant politicians and stakeholders to regulate and resolve these conflicts?

Mr J Julius (DA; Gauteng) commented on the Broad-Based Black Economic Empowerment (BBBEE) system and expressed that although he felt that the initiative was necessary within the South African context, he still did not understand why it continued to empower those who already have power. When will there be due diligence on the background of the beneficiaries of the BBBEE to ensure that they fit the description of its mandate? There are many impoverished communities that need help, why are these successful entrepreneurs being given more benefits than they need?

Adv Makobe replied  that there is a competitive process that openly and fairly allows individuals to bid; this makes it hard to tailor it for a specific group.

The Chairperson suggested that there should be local governing bodies attending to the housing matters within communities  to regulate and ensure equal and fair opportunity for people to own houses and ultimately to remove corruption.

Mr Julius agreed with the Chairperson and highlighted that the biggest problem that was preventing the effectiveness of the BBBEE system was the corruption by the government officials as well as the beneficiaries who were empowering themselves rather than the people of South Africa. There was not enough supervision upon the Department to ensure that officials are properly carrying out their mandate.

Mr Eric Boskati, Content Advisor, Parliament of South Africa, indicated that on the Repeal of the Overvaal Resorts Limited Bill, the Committee received only one public comment and it was from the Forever Consortium Broad-Based Black Economic Empowerment Forum. When government decided to dispose of Aventura Resorts, a transformation consultative forum was created to ensure the formation of an employee share ownership scheme amongst other things. The sale of the resorts was also to meet the BBEEE requirement. The Forever Consortium complained that after the sale, it appeared that the Siyonwaba Consortium (BEE partner of the Forever Resorts), was actually a front.  This was the allegation that Forever Consortium made as seen in the minutes that they obtained which also stated that Mr Kobus, the Managing Director of  Forever Consortium revealed that the intentions of Forever Resorts was to own all the assets of Aventura Resorts, with a disregard to the BEE partnership. As a result, the Forever consortium then had to buy the Siyonwaba Consortium shares of 30%, at about R16 million, in 2008.

The submission to the Committee was that in terms of the Forever Resorts Act, the Committee should appoint an inspector to investigate matters concerning the financial interests of the company as well as its shareholding structure.

Ms Fatima Ebrahim, Legal Advisor, Parliament of South Africa, indicated that the submission has been considered as received. She explained that there is a piece of legislation, the Overvaal Resorts Act 127 of 1993 that sets up the establishment of the Aventura Resorts. The purpose of that Act was merely to allow government to run the company and to hold its assets. The government then subsequently took a policy decision to no longer be in the business of resorts and the company was eventually liquidated. The government does however still have the right of servitude over some of the pieces of land that belong to the company. The problems associated with the sale that of Aventura many years ago have no bearing on the repeal of the Overvaal legislation. A legal decision to not support the repeal would not assist the claimants. The repeal matter should not fall off the agenda of the meeting because the Department of Public Works (DPW) has a constitutional duty of oversight in that the DPE was justified in not solving the problems that were meant to be addressed by the DPW.

She stated that the liquidation process was done in accordance with the Act and Parliament cannot only now rectify any outstanding problems related to that process. The land claims could be submitted to the relevant court. She advised that the Committee should proceed with the repeal and that there should be continued oversight to monitor the resolution of these outstanding issues.

Mr Matjila assured the Committee that the DPE would not be turning a blind eye to the land claim matters; it will be redirecting them to the DPW and following up on their progress. He then mentioned that he would be meeting with the complainants, including the Forever Consortium, on 4 March 2019 to give them feedback.

The Chairperson remarked and emphasised the importance of helping the complainants as part of improving their standard of living.

Mr Julius expressed that he would like to see more public participation in the form of comments on the Repeal of the Overvaal Resorts Limited Bill.

Ms  Ebrahim clarified that the document the Honourable Julius was referring to was actually a Department Bill. The Department has a procedure that it follows in calling for public participation; however, in this case no comments were received. She recalled that when the matter was first introduced in Parliament and to the National Assembly at the time, about three or four submissions were received but there were no oral hearings because they were deemed unnecessary.

Mr Julius remained adamant that he did not recall any call for public participation by the Committee. He also highlighted the fact that it was the Department that was in charge of the entities and not otherwise.

Ms Phumelele Sibisi, Secretary, Select Committee on Communications and Public Enterprises, explained that the Committee called for public participation and received one submission from one entity in the form of three documents. The invitation was open from December 2018 until January 2019.

Mr Julius stated that public participation is usually advertised in different media platforms and with stakeholders. He added that the month of December is not the best time for this process because it is a holiday season and therefore it is difficult to get a lot of participation.

Ms Ebrahim advised the Committee that calling for more public participation would not add any value at that point; instead, the process would bring more costs and consume more time.

Mr Matjila further elucidated  that once Cabinet approves that a bill must be taken through Parliament, the Department is required to gazette it for public comments where it will be publicised for a total of 30 days. It  was then taken through the Parliamentary process and the Portfolio Committee on Public Works decided, out of its own wisdom, to call for public comment once again; only one comment was submitted. The Department was then instructed to separately address all other complaints that were raised. On 28 February 2019 the Department would then present a progress report to the Portfolio Committee on Public Works.

Mr Sefako commented that the Bill was obsolete. He also felt that the public comment process has proven to not be sufficiently effective in this context. The Committee should consider the Bill but also recognise that the Committee did not constitute a quorum today and therefore could not proceed with the meeting.

Mr Julius expressed concern about the possible future negative impact that the tabled Bill might have on other ones and on the Committee. It was unfair on the Committee, which was soon ending its term, to have to clear the Department’s backlog because the Bill had not been raised for a long time. He affirmed that the Committee legally has to do its own call for public comments and that call should be thorough.

The Chairperson suggested that there can also be an invitation for presentations of comments before the Committee and the Department.

Ms Sibisi asked the Department if the Committee was expected to invite the Forever Consortium to do their oral presentation to it.

Ms Ebrahim explained that the complainants are usually invited for presentation when there is a need for further clarification of their submission. After the presentation, the Members are free to ask questions to the presenters as well as to the legal advisors and Content advisor. If satisfied with the responses, the Committee can then proceed with a line-by-line reading for adoption; otherwise, the respondents would typically be asked to conduct more research and submit the responses at a later time.

The Chairperson acknowledged the explanation and proposed that the Committee should invite Forever Consortium for a presentation given that both the Committee and the Department have some concerns.

The meeting was adjourned.