How farmers pocket worker’s millions

Hundreds of millions of rands in government funding meant to empower poor farm workers ended up benefiting farmowners.Picture: Henk Kruger/Independent Newspapers

Hundreds of millions of rands in government funding meant to empower poor farm workers ended up benefiting farmowners.Picture: Henk Kruger/Independent Newspapers

Published Oct 24, 2023


Hundreds of millions of rands in government funding meant to empower poor farm workers ended up benefiting farmowners.

This was revealed when Corruption Watch (CW) hosted a listening session of its new podcast series titled Watch (CW) hosted a listening session of its new podcast series titled Land and Corruption: Story of the Marginalised on Monday, and simultaneously released a research report addressing the intersection between land, corruption, and discrimination.

CW’s work focused on the plight of people who live and/or work in farming communities, specifically in the Western Cape.

The research builds on a 2019 CW report, Unearthing Corruption in the Land Sector, which illustrated the scale of the problem.

Based on 706 submissions received in a six-year period between 2012 and 2018, that report found evidence of a wide variety of corrupt practices, including bribery of public officials, embezzlement, misuse of public procurement processes, and distortion of laws and policies by political elites to facilitate the capture of land by business for development purposes.

“Based on a report reviewing Farm Worker Equity Schemes, referred to as the ZALO Capital Report, we expose the rot that officials have been seeking to hide while protecting private interests,” said co-author and CW senior researcher, Melusi Ncala.

“When we think of all these depressing occurrences, and if we are honest with ourselves, we would acknowledge that these ailments are indicative of the fact that while the political and economic elite devised creative solutions as a response to the land question, they were even more creative in their corruption schemes.”

In the 1980s, it was estimated that “60 000 white commercial farmers owned 12 times as much land as the 14-million rural poor”. To redress the imbalance and overcome a torrid history of racial segregation, the state embarked on a progressive programme of land restitution and redistribution.

One of the earliest measures to be introduced was Farm Worker Equity Schemes (FWES). These schemes seek to support beneficiaries to become shareholders in a farm, typically in an area of high agricultural value, while equipping them with the skills and support necessary to establish their own livelihoods.

While farm worker equity schemes have been around since the early 1990s, public information on them is limited, according to the report.

“An unpublished government report obtained by Corruption Watch does, however, provide some insight. Since their introduction, hundreds of equity schemes have been rolled out, a majority of which are located in the Western Cape. By 2013 almost R700-million had been paid to privately owned farms,” the report read.

“Although the exact terms of each scheme differ, beneficiaries under the FWES are expected to receive dividends, corresponding to their share. However, several participants reported seeing few, or no benefits from the scheme. In one case, it was reported that workers received a payment in the mid-2000s and did not receive a second until 2022.

In other cases, dividends were paid seldom and irregularly. Despite raising concerns, beneficiaries at several farms did not receive an explanation for the low rate of payment.

“While some interviewees were occasionally provided financial statements (displayed on screens during meetings and presentations) this was a rare occurrence. When workers raised their concerns, they were often ignored, being told that ‘business was not looking good’ and that they should sell their shares if they were not happy.”

Several participants also expressed concern regarding a lack of transparency and access to information relating to the running of the business. In one example they simply received papers, which they were told to sign so that the farm owner could receive government funding.

Women on Farms Project (WFP) co-director Carmen Louw said the scheme was set up in a way that saw the government invest millions in shares, but these shares were tied to the business, not the land itself.

“Then many farmers made these shareholders (farmworkers) sign for loans. Then they said the business is not making profit because they’re paying off the loans. Very few workers benefited from the scheme.

Sometimes the state bought a farm for farm workers but part of the deal the previous white owner had to be the mentor, that owner had control of the funds and resources. (In) many cases the mentor applied for loans for the business but the money would go for the mentor’s salary, vehicles etc. Then the farms were not profitable. In some cases, the government paid between R25 000 to R26 000 per share, then 15 years later when the farmer paid out the worker’s share he paid out the same amount no matter if the business increased in value. In some cases shares never paid out,” said Louw.

Chief negotiator for the Labour Association Workers Union (LAWU) and formerly the Rural Agriculture and Allied Workers Union (RAAWU), Nosey Pieterse described the schemes as a “complete scam” and called on the government to take action.

“I still need to find out which farmworker really got real returns from their so-called investment in the company. What happens (is) farmers need markets, additional water.

“They go to the government in the name of the workers for whatever they need. They get these things. We have put it to the Minister, they must do an audit on all farms who received support. We want audits done in those schemes.

Government must... then act,” he said.

The Department of Agriculture, Land Reform and Rural Development (DALRRD) did not respond to requests for comment by deadline on Monday.

Cape Times