White tribe's dream a bonded nightmare

Mini-Volkstaat | Afrikaner-only informal settlement is ensnared in debt and dissent.

THE mini-volkstaat of Kleinfontein, east of Pretoria, is on the verge of liquidation, threatening the livelihood and life savings of hundreds of pensioners.

The 800ha former farm is an informal settlement of Afrikaners. It is racked with debt and vicious infighting among its residents, the average age of whom is 65.

Kleinfontein is registered as a cooperative, a jointly owned residence democratically controlled by people who live together to fulfil "mutual economic, social and cultural aspirations".

But a splinter group has raised concerns the estate is bankrupt, accusing the current leadership of fraud, corruption and nepotism.

The Afrikaner stronghold has a VAT demand from the South African Revenue Service of more than R5.5-million and a R4-million bond with Absa, and it owes an affiliated cooperative credit union R30-million.

There is little money coming into the estate: the R23-million share capital from residents entering the enclave has been spent, and the R1000 monthly levy from each household is used to maintain the gravel roads and communal buildings, and finance the bond and loan.

The residents, many of whom are former state employees, have no title deeds to the homes into which they have sunk their pensions and rely on their leader, Jan Groenewald, to ensure the enclave is above board and solvent.

Not all agree with him, however. Sakkie Booysen, a resident, said Kleinfontein was run like a dictatorship. "The [members] don't know what's going on. You aren't allowed to dish out pamphlets or hold [public] discussions without the approval of the board."

To formalise Kleinfontein and make it legitimate would mean changing it from a cooperative to a residential area or a share block. And this would mean jumping through a number of onerous and expensive regulatory hoops. An environmental impact assessment would have to be done and approved, and certain contractual commitments, such as a sewerage system, street lights and tarred roads, would have to be built, all of which could run into hundreds of millions of rands.

Some residents said Groenewald was stalling and that it was in his interests to keep things as they were.

One of Groenewald's opponents is Albert Smit, whom the leader termed a "troublemaker".

Smit said Kleinfontein favoured the Groenewald family.

"Their business is development and commission," Smit said.

He said Irene Groenewald, Jan's wife, was an estate agent with the sole mandate for the estate, and the couple's son-in-law was the main developer.

They "reap the benefit through each transaction and through the developments", said Smit.

Groenewald responded by saying: "The family incurred a lot of debt [in establishing Kleinfontein]. We placed ourselves at risk."

About his wife's stranglehold on property sales, he said "all gated communities only appoint one agent" and that resales were not constrained by a sole mandate.

He added that the board of directors, which is chosen by the residents, had asked the family to take over sales.

But Booysen and Pieter de Bruin said many of the pensioners did not understand financial statements and avoided the meetings, instead sending proxies for the votes.

Last year, Booysen approached the registrar of cooperatives to establish the legality of the estate's affairs. In October, a damning preliminary report was issued and the Kleinfontein management was given until February 28 to respond.

Some members said they believed the "detrimental substance of the preliminary report" would see the cooperative being deregistered - in effect, liquidated.

Issues highlighted in the report included:

In the 2013 financial year each share - bought by residents for R1000 - was revalued at R1. The report deemed this to be "in contravention [of] the applicable international reporting standards", but Groenewald brushed this off as "a technicality to comply with the international financial reporting standards"; and

On the question of multiple bonding of the same assets through both the cooperative credit union and Absa, the report said this was "causing serious risks to investors (implying fraud)".

Groenewald denied that the same asset was being used more than once. He said each member's shares underpinned the cooperative credit union loans, whereas the value of the land was collateral for the Absa loan.

The outstanding contractual commitments to infrastructure - clearly not affordable under the current circumstances - did not faze Groenewald.

He said he was in touch with authorities in the area, who knew they were working towards becoming formalised.

"Anyway, there are thousands of informal settlements in the country," he said.

weavindt@sundaytimes.co.za