Sol Kerzner’s grim Wild Coast legacy
Red tape, infighting and hidden agendas continue to snarl up a land claim that could unlock wealth on the Wild Coast and serve as a model for restitution. Meanwhile, land anger burns from below
In 1992 Sun International signed a remarkable document with the Transkei government. It granted the hotel and casino group the exclusive right to use 640ha of some of the most spectacular seafront real estate in the world for the princely sum of R2,500 a month.
The document was an addendum to a 50-year lease that former Transkei ruler Kaiser Matanzima had signed more than a decade earlier with Holiday Inn, which built a luxury resort on the land. Matanzima’s lease, which stipulated that his government would "remove from the leased property all existing farmers and inhabitants", contained no escalation clause. It also committed the former apartheid homeland to compensate the group for improvements — today worth an estimated R1.2bn — when the lease expired.
By 1992 hotel magnate Sol Kerzner had channelled R2m into Transkei Prime Minister George Matanzima’s pocket for exclusive gambling rights in the homeland. Matanzima later went to jail for receiving a bribe, and a corruption case was opened against Kerzner, though charges against him were eventually dropped.
Kerzner, who headed Sun International at the time the addendum was signed, knew Transkei’s days were numbered, and he didn’t trust the new ANC leadership to honour the original agreement with Matanzima. He slipped in the addendum to the lease two years before Transkei — along with the nine other homelands — was incorporated into the newly democratic SA.
Kerzner’s addendum kept the rental at R2,500 a month, retained the compensation clause and allowed Sun International to extend the lease by 50 years to 2079. Though it allowed for a 5% annual rental escalation, this would be capped at 15% once the original lease expired in 2029. In effect, Kerzner was getting the land for his casino resort — which today generates R480m a year — for virtually nothing.
After 1994, the 117-household Mgungundlovu community, which had been evicted to make way for the casino and golf course, filed a claim under the new Restitution of Land Rights Act. Their claim was investigated by the Eastern Cape land claims commission and gazetted as valid in 1996.
The law allows South Africans dispossessed through racist laws under apartheid to lay claim to the land they lost. If it’s feasible, the land is returned to them. If it’s not, because improvements have made the land too expensive for the state to buy, the claimants receive cash compensation or form partnerships as landlords with the commercial farmers or lodge operators on their land.
But the process has stalled in a quagmire of red tape and state inefficiency. It has been bogged down by squabbles between competing interest groups, including claimant communities, and what seems to be a knot of corruption among officials, politicians and land owners. The result, decades later, is that communities such as the Mgungundlovu are still waiting to get back their land.
In cases where land has been handed over, the cost to the state often outweighs the benefit to claimants. The most dramatic example was in 2013, when former rural development & land reform minister Gugile Nkwinti blew almost all of the department’s land reform budget that year by paying R1bn for the MalaMala game reserve in Mpumalanga. Such actions have drained a budget that is urgently needed for wider reform of racially skewed land ownership, including for housing in peri-urban areas, which is becoming one of the most explosive and divisive issues in the country.
The Mgungundlovu community has travelled a long, hard road since its land claim was accepted 22 years ago.
Sun International said it was notified of the claim in January 1996, but it took more than seven years before the land claims commission contacted the group to begin negotiations. Even then, the commission took months to respond to correspondence. Chronic staff and skills shortages at the commission only partly explain its tardy response. Frustrated rural researchers and community members surmised that corruption and vested interests also blocked progress.
Once talks finally began, Matanzima’s lease became a sticking point. Sun International initially offered to buy the land from the community for R7m. When this was refused, it suggested paying the claimants R5,000 a month, in line with the escalated lease rental, an offer it later increased to R7,400 or a total of R89,000 a year.
When law firm Webber Wentzel was asked in 2005 for an opinion on the offer and the lease, it pointed out that comparable deals were far more generous. For example, Wilderness Safaris and Mantis had offered claimants 9% of turnover from a proposed deal at the nearby Mkambati nature reserve, which would have amounted to about R4m a year at the time.
The firm also noted that the lease’s compensation clause was "extremely prejudicial to the owner, to say the least" and cast doubt on its legality because of the "significant allegations of bribery and corruption surrounding the negotiation and signature of the lease at the time".
What it means
Frustration is rising as model land claim deal keeps getting delayed
Another obstacle was that less than half the land was used by the casino, but Sun International wanted to enforce a clause allowing it to veto any development on the rest of the land to ensure the resort retained its rustic character.
This placed the casino at odds with community leaders, who wanted to develop their own commercial tourism ventures on the steep forested hills overlooking pristine beaches that are safe for swimming.
When the FM spoke to land claimants more than a decade ago, frustrations were already reaching boiling point. Elias Ogle, the claimant leader at the time, vowed to take up arms and plough up the casino’s golf course if the land was not returned to the community.
Like many, his anger was fuelled by the brutality of the evictions. Ogle recalled villagers being given 24 hours to vacate their homes. He arrived from a job in Durban to find grave sites and houses demolished by bulldozers, and was forced to spend the night in the bush.
The impasse led to the case being referred to the land claims court.
In 2014 a settlement was reached that was thought to satisfy all parties. It provided for land returned to the claimants to be held by a communal property association (CPA); a new lease allowing for R4m in annual rental that would escalate in line with inflation; a 28% stake in the Wild Coast Sun, paid for by the state at a discounted rate of R11.6m; a R27m development grant; and cash grants of R96,000 for each household. The claimants would also be given preference for jobs at the casino.
The land claims commission appointed an advisory firm, Vumelana, to help devise a workable development plan, and Richard Spoor Attorneys to set up the legal frameworks.
Jubilation greeted the signing of the settlement, which was made an order of the court.
After some haggling Sun International made an important concession by increasing the portion of land the claimants could develop. It also agreed to fund the salaries of the professional directors of the community’s commercial structures.
The five-year development plan, to be funded by the claimants’ R27m grant, is impressive. It proposes spending R6m on a luxury tented beach camp that can sleep 40 guests, which is expected to create 50 permanent jobs. The camp is seen as a temporary measure while investors are sought for a R175m, 250-bed eco-lodge that is expected to create 125 jobs once it’s fully operational in four years.
Another proposal is for small-scale tourism ventures, including a zip line in the spectacular Mzamba river gorge, a boat launch site for fishing charters and cruises, as well as a fish farm to supply the local market.
The agreement could be a model for land reform, but the claim that was lodged 24 years ago has yet to see deliver anything tangible
The plan also allows for houses to be built on serviced freehold stands on 8ha of the land near the main arterial road. It has been mooted that the claimants be allowed to trade these properties, which could lead to wealth accumulation and alleviate urban land hunger.
Thamsanqa Malusi, an experienced land claims lawyer with Richard Spoor who acts for the CPA, describes it as "one of the best restitution deals I’ve seen".
It could be a model for land reform, but it’s four years since the settlement was signed, and the claim that was lodged 24 years ago has yet to deliver anything tangible.
The biggest issue is that the state has failed to transfer the land to the new legal owner, the CPA. This is partly because the land is being surveyed and portions must be set aside for roads, a police station and a clinic. This requires co-operation by different local government entities, a process that the land claims commission should be driving. The claimants won’t benefit until it does so.
Conflict among the claimants, who accuse each other of trying to loot the development funds, hasn’t helped either. One group has threatened to enlist the EFF to apply pressure.
"Our main issue is the transfer of the land," says CPA secretary Mpendulo Simamane. "The commission is delaying this and dividing our community."
Sun International says it is as keen as the claimants to get the show on the road. "Sun International is not the cause of any perceived delays in the implementation of the settlement agreement," says spokesperson Zoleka Skweyiya. "In fact, over the past few months, the parties have worked extensively to close the gap to implementation and we are almost at the point of signing."
Chief land claims commissioner Nomfundo Ntloko-Gobodo concedes it has taken too long to transfer the land. "We acknowledge we have created delays. I’m also frustrated," she says.
But she bridles at the suggestion that the blame lies solely at her door. The complexity of surveying communal land, setting up governance structures and infighting have all had an effect.
"Every CPA, once there is money and development, starts fighting," she says. "We need to fix that. We had land invaders, who we are obviously not going to evict. And we need the framework to be right.
"It’s easy for me to just transfer the land and walk away, but that doesn’t prepare the community for development. That’s exactly what we are doing."
Like Sun International, Ntloko-Gobodo is confident the wait is almost over. "The land will be transferred in July or August," she says emphatically.
The claimants, who have been fed empty promises for decades, will no doubt want to hold her to her word.
* This article was edited to correct a factual error. Wilderness Safaris does not operate a lodge at Mkambati nature reserve, but had merely been in negotiations for a potential deal.