A R100m agricultural empowerment project in Mpumalanga which came under investigation after complaints from beneficiaries is now planning to set up a new employee trust to address past concerns — this time with their own money.
The matter goes as far back as 2008, when the department of rural development and land reform bought a 30% share in farming company Alzu Investment Enterprises for R100m. The government’s shareholding became a trust for 465 beneficiaries, consisting of farm workers, farm tenants and Alzu employees in Middelburg.
For the next 10 years, beneficiaries each received R42,000 in annual dividends payouts. After the 10 years, Alzu offered to buy them out with an additional R45,000 cash each. Those negotiations started in 2018 and concluded in 2020 but remains a bone of contention for some beneficiaries, who turned to the BB-BEE commission complaining their interests are being misrepresented.
Beneficiaries believe they are owed more since the government initially invested R110,000 per beneficiary when it bought the 30% share for R100m.
“We were failed by Alzu, the government and the trustees,” said former beneficiary Stanley Mokoena, who acts as spokesperson for a group of disgruntled beneficiaries. “How can an investment of R100,000 be worth less than that after more than 10 years, while the company continues to grow?”
In May 2022, according to a letter to Alzu from the B-BBEE commission, it threatened to lay criminal charges against the trustees, saying they wrongly took a decision to sell the shares in 2018.
After the letter, Alzu appointed an independent consultant, Mogokare Richard Seleke, to help mediate the situation between the company, the beneficiaries and the B-BBEE commission.
“A mediation process was initiated in February. The process led to a conclusion where Alzu was given a chance by B-BBEE commission to submit a proposal to remedy the issues identified in the report for consideration by the commission,” Seleke told TimesLIVE Premium.
According to Seleke, a new employee trust will replace the dissolved Alzu Employees Trust.
“The new trust will seek to achieve the intents and purposes of the BEE goal and strive to re-engineer the vision that was intended for the Alzu Employees Trust, now defunct, with a trust deed that will be crafted in consultation with the B-BBEE commission’s advisory team,” Seleke said.
“Once the employees trust is formed, R25m will be invested in capital stock funding of the start-up and operation of the business in which the new employees trust will have an 85% shareholding.”
He says the stock investment capital will consist of farm produce such as eggs, chicken and livestock feeds. According Seleke, the new trust will enter the already existing market under its own branded name.
“Successful implementation of the proposals will deem the matter to have been closed by the B-BBEE commission.”
Alzu director Ben Myburg said the company’s financial situation was worsened by several factors.
“In 2019 we had a massive outbreak of bird flu which cost Alzu R50m. The next year Covid came. Markets fluctuate. My Steinhoff shares that I bought for R70 per share are now worth 50c each. These Alzu shares could have been worth much more or much less in 20 years’ time. Nobody has control over the market.”
Myburg says beneficiaries who chose not to accept the money in 2018 can still change their minds.
“The money is still in the trust. There is about R500,000 left. If people change their minds, they can still take their money.”
But Myburg says Alzu remained committed to supporting land reform and black empowerment.
“We are far along the road of negotiations with the B-BBEE Commission and the department of land reform and rural development in building a new project. We are awaiting the final contract as we speak.”
This time, Myburg says, Alzu will use their own money.
“We will invest R25m as seed money for the new project. We did not walk away from this thing. It didn’t work out the way we wanted it to, but we did not fail our beneficiaries deliberately; it was the consequence of circumstances,” Myburg said.
Reggie Ngcobo, a spokesperson for the department of rural development and land reform, said: “The process was guided by the share equity policy and everything was complied with as required by policy. The employee-beneficiaries became shareholders in the company and received dividends at the end of the year depending on the financial performance of the company.”
He said the dividends would fluctuate as markets dictate.
“It is also important to note that some of the beneficiaries sold their shares. The way shares were paid out and how beneficiaries would sell their shares was outlined in the shareholder agreement,” Ngcobo said.
He also denies Mokoena’s claims that the beneficiaries were kept in the dark by Alzu and the department.
“There were regular meetings with all parties from the inception of the project. However, when it was time to change the trustees for the workers, some of the workers kept disrupting meetings,” Ngcobo said.
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