Transformation poster child goes to the wall
Solms-Delta wine estate in picturesque Franschhoek was the poster child of the transformation of the wine industry in the Western Cape.
It was owned by Mark Solms, the Richard Astor family and a trust supposedly representing workers. It was widely touted as a means of bringing marginalised people into the economy.
With its museum honouring all the workers who toiled on the farm — including slaves — a music programme and tours of workers’ homes, it had a happy tinge of rainbow nationism.
All the workers were on medical aid, their children attended model C schools and the trust hired two permanent social workers to attend to generational social ills prevalent in rural communities.
This dream was rudely dashed in the Western Cape High Court when Solms-Delta recently applied for liquidation. Court papers reveal a business that hardly made a profit but was wracked by mismanagement, incompetence and alleged governance and ethical violations. There are also questions about the involvement of the department of rural development and land reform and the National Empowerment Fund (NEF).
Solms and Astor bankrolled their version of transformation by placing a third of the farm in the Wijn de Caab Trust for the workers. This was increased to 50% in 2016 when the department of rural development and land reform and the NEF pumped R63m into the operation.
This seemed like throwing good money after bad when Solms-Delta was placed in business rescue in 2017. It appeared that a failed venture based on good intentions did not undergo enough scrutiny by its funders.
Court papers paint a picture of failed transformation and confusion about when the farm should have been placed in business rescue.
An affidavit by Jafta Karoles, the only worker who was a director of the company, says the trust did not represent Solms-Delta’s workers. It was established for "community development for poor and needy persons … and anti-poverty initiatives … the socially, economically or politically disadvantaged individuals, farm workers and inhabitants of the Franschhoek and Dwars River valleys, Western Cape …"
But Solms-Delta workers were told they owned 33.3% of the farm and this increased to 50% following the investment by the state and its entity.
Solms was a shareholder of the Solms-Delta Wine Estate and the Wijn de Caab Trust — an inherent conflict.
Circumstances leading to the business rescue are mired in confusion. Karoles claims he was not notified of the meeting that took this decision.
The NEF’s representative director, Nthabiseng Ntsele, was also not at the meeting yet agreed to the business rescue three days later, reported the Daily Maverick.
With business rescue seeming to have failed, the farm was placed under liquidation. Its workers are fighting this decision in the courts, saying they were assured by the government that their tenure on the farm is secure. Karoles says he bears Solms no ill-will as he believes his heart was in the right place when he started the venture. He is disappointed that the workers were not more involved in the executive management of the farm, as they love the place and could have been part of the solution.
Solms says he has no regrets about the path of transformation he undertook but he wishes the outcome could have been better.
The plan put forward to stave off liquidation accelerates transformation of the business, with Astor and Solms giving up their 95% shareholding and the state holding the remaining 5%.
Solms and Karoles believe the only solution is that the state intervenes to save the business.
The failure of Solms-Delta is not just a blow for agricultural industry transformation but also for workers hoping to earn a decent wage and enjoy benefits.
It is a failure by Solms-Delta management to run the farm as a business instead of as a charity. It is a failure of government institutions in doing due diligence when investing taxpayer funds and in implementing policy.
It is a failure of modelling and research on transformation of the agriculture sector. It is a failure by workers who passively believe the right decisions will be made about their future and fail to learn more about the business that employs them.
It is not a failure of worker ownership and management — only the way it was implemented on Solms-Delta.
SA has so few examples of transformed farms that when the poster child fails, there is little doubt it will tarnish all change with the same brush.
Luckily, the Bosman Wine Estate in Wellington is also part owned by its workers and the department of rural development and land reform could study it as a successful, transformed operation.
Land and agricultural reform is needed. Owners of agricultural land need to understand there has to be real alternatives to the status quo. Not doing anything only worsens the problem.
Good intentions are not good enough. Proper theory, modelling, financing, research and monitoring along equitable and fully inclusive business principles should be the foundation of transformation.