SIXTH REPORT OF THE COMMISSION APPOINTED TO ENQUIRE INTO ALLEGED IRREGULARITIES OR MALPRACTICES REGARDING THE ALLOCATION, LEASING, ALIENATION AND TRANSFER OF CERTAIN STATE LAND

TO THE PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA

Mr President

You deemed it expedient to appoint a Commission of Inquiry into alleged irregularities or malpractices regarding the allocation, leasing, alienation and transfer of certain State land under Presidential Act No 106 dated 27 July 1995. The appointment of the Commission and its terms of reference were published in Government Gazette No 16601 (Regulation Gazette No 5550) of 11 August 1995. Since the appointment of the Commission you have deemed it expedient to amend the terms of reference of the Commission by excluding land within the Province of the Eastern Cape. The Commission's terms of reference were also extended to include land held by the various Development and Housing Boards. The amendment of the terms of reference was done under Presidential Act No 228 of 10 June 1996 and the extension under Presidential Act No 373 dated 19 September 1996.

As the Commission's fifth report contains full particulars of its terms of reference it is not repeated in this report.

I have now the honour to present to you the Commission's sixth report. This report deals with the alienation of certain State farms by the Agricultural Credit Board.

Signed at Pretoria on the 13th day of June 1997.

O A DE MEYER
CHAIRPERSON

INDEX

Introduction
Background
Sale of Farms

1. Farm Groothoek No 139: District of Lydenburg
2. Subdivision 16 (of 4) of the Farm Helmsley Estate No 11667: District of Ixopo
3. Portions 2 and 3 (portions of Portion 1) of the Farm Fairfield 306 KQ: District of Thabazimbi
4. Farm Zewe Fountain No 9: District of De Aar
5. Farm Shalom 483 JU: District of Barberton
6. Remaining portion of Portion 5 of the Farm Cumberland: District of Thabazimbi
7. Hartbeesfontein 69 LQ: District of Ellisras
8. Portion 1 of the Farm Zandpan 63 LQ: District of Ellisras
9. Farms Perskeput, Pompfontein and Wolveleegte: District of Petrusburg

General
Recommendation
Annexure A

ALIENATION OF CERTAIN STATE LAND BY
THE AGRICULTURAL CREDIT BOARD

Introduction

1. The Commission's second report dealt with the disposal of agricultural state land by the Agricultural Credit Board [ACB] at Trichardtsdal and at Riet River. During that investigation the Commission also became aware of certain other farms which the ACB had disposed of. These alienations were investigated in order to establish whether it was done in a regular manner and whether applicable prescribed rules, regulations and instructions were complied with. Annexure A contains the particulars of the farms investigated. Those cases where the Commission did not find irregularities or malpractices are not discussed in this report. There are, however, a number of alienations which in the Commission's opinion necessitate further discussion and the circumstances under which these farms have been disposed of are discussed in this report.

Background

2. The Agricultural Credit Board was established in terms of the Agricultural Credit Act 28 of 1966. Section 10 of the Act authorises the ACB, subject to certain conditions, to render assistance to any person who carries on or undertakes to carry on farming operations:

• by way of a loan; and
• by selling or letting immovable property of the State.

3. The Act does not mention the price at which the ACB should sell State land. The determination of a selling price is left to the discretion of the ACB. According to members of the Board, who appeared before the Commission, the ACB in determining a selling price, did not see it as part of its functions to generate income for the State.

4. The policy of the Board has been to assist persons who have demonstrated an ability to carry on effective farming operations, and who are not in a financial position to acquire land for this purpose. The Board thus seeks to assist those who are not able to compete in the market, but who are able to become effective farmers with State assistance. Successful applicants are generally given assistance through one or both of the following methods:

• The purchase price is set, not at market value, but at agricultural productive value. This is usually substantially less than the market value. In most of the cases investigated by the Commission, the agricultural productive value tended to be about 60% of the market value.
• Successful applicants may be given loans at favourable rates and interest, and over an extended period.

5. In some instances where agricultural state land was no longer required for State purposes, such land was made available to the agricultural section In such cases the ACE normally offered the properties for sale as an extension to the owners of adjacent agricultural land or agricultural land close by. This meant that only certain persons could apply to purchase the land.

6. Where land was offered for sale as extension to adjacent owners or the owners of agricultural land close by, it was normally also sold at the agricultural productive value. A member of the Board, however, stated to the Commission that, although it was the ACB s policy to sell agricultural land at the agricultural productive value, an applicant's financial position and ability to pay more, could have an impact on the purchase price. This explains why in some cases the land was sold at agricultural productive value and in other cases for a higher price.

7. During the first half of 1992 the then Deputy Minister of Agriculture ordered that all economical units must in future be sold by public auction with a reserve price thereon. As far as uneconomical units were concerned' deserving interested owners of adjacent or nearby farms, had to be identified and after consultation with the local Agricultural Credit Committee and the local Agricultural Farmers Union such uneconomical units had to be offered to the most deserving candidates. Farms which had already been advertised for sale were excluded and had to be dealt with in terms of existing procedures. The farms mentioned in Annexure A were farms which fell within this last mentioned category.

8. Against this legal and policy background the Commission now deals with the sale of certain of the farms mentioned in Annexure "A".

FARM GROOTHOEK NR 139: DISTRICT OF LYDENBURG

9. The farm consists of two portions, namely Portion 1 in extent 549,9317 hectares and the Remaining portion of the farm in extent 786,8501 hectares.

10. The farm was originally bought during 1975 by the South African Development Trust for R124 948-00. As the land was no longer required for State purposes, it was transferred to the Department of Agriculture on 22 December 1990 to be made available to the agricultural sector.

11. In an agriculture potential report dated 23 July 1991, it was recommended that the two portions be consolidated and offered for sale to the owners of adjacent agricultural land or agricultural land nearby.

12. On 6 August 1991 the ACB approved that the properties be advertised for sale, as one unit or separately, as extension to owners of adjacent agricultural land or agricultural land nearby. The ACB's decision meant that only certain persons could apply.

13. The land was advertised in the normal manner and two persons, namely Mr P R B Nel and Mr L P le Roux applied. Mr le Roux was at the time leasing the one portion and was appointed as supervisor over the other portion. He, himself, did not own any agricultural land.

14. In a report dated 12 May 1992 and signed by Mr G H Ahlers, a member of the ACB, it was recommended that Portion 1 of the farm be handed back to the Department of Public Works and be sold to the former Self Governing Territory of Lebowa. He further recommended that the ACB decide to whom of the two applicants the remainder of the farm should be sold. It was also recommended that if neither of the applicants qualified to purchase the remaining portion, it should be sold by public auction.

15. In a submission dated 20 July 1992 to the ACB by the Department of Agriculture, it was pointed out that Mr le Roux Lid not qualify to purchase the land as he was not the owner of any agricultural land. It atlas also mentioned that it appeared that Mr le Roux intentionally made improvements to the property without the necessary permission, in order to establish a right to the land.

16. On 24 July 1992 the ACB decided not to sell the land to any of the two applicants and directed that it be sold by public auction. After this decision was taken, the Department drew the ACB's attention to the fact that in the light of the ACB's decision, the matter would in all probability have to be referred to the Advisory Committee on Land Allocation for a recommendation. The ACB as a result, considered amending its earlier decision to sell the land by public auction. A final decision was, however, not taken.

17. On a date unknown, Mr Ahlers was requested to urgently contact Mr S O'Reilly. It was simultaneously mentioned that if the farms were not sold to Mr le Roux, this could have political implications. Mr O Reilly was attached to the office of Dr L J Nell, a Ministerial Representative, who strongly supported Mr le Roux s application.

18. On 2 September 1992 it was noted by Mr Ahlers that he had been in contact with Mr O'Reilly and that, after the matter had been discussed with Mr Malan and Mr Oosthuizen, who were also members of the ACB. it was decided to consult the local Agricultural Credit Committee. On 3 September 1992 Mr Ahlers reported that the local committee was strongly in favour of the farms being sold to Mr le Roux. Mr Ahlers as a consequence. recommended that the farms be sold to Mr le Roux out of hand.

19. As a result of Mr Ahlers' recommendation, the ACB on 4 September 1992, reconsidered its previous decision and approved that the farms be sold to Mr le Roux.

20. On 2 October 1992 the ACB set the purchase price at R140 000-00. This, according to the ACB, represented the agricultural productive value of the land. The local Agricultural Credit Committee assessed the market value of the farms on 6 February 1991 at R242 000-00. Mr le Roux, according to his application, assessed the market value at R374 000-00. He. however, did mention that he had made substantial improvements to the property which should be taken into account when a purchase price was determined.

21. Mr le Roux was on 18 November 1992 informed of the ACB's decision and the fact that he could pay the purchase price in twenty-five (25) equal yearly instalments, plus 8% interest per year.

22. On 16 November 1992 Mr J de Villiers, the then Minister of Regional and Land Affairs on behalf of Mr P R B Nel enquired why the farms had not been sold to Mr Nell In reply the then Deputy Minister of Agriculture, Mr A T Meyer, inter alia stated the following:

"Na oorweging van die beskikbare inligting oor die landbou potensiaal van bogenoemde staatsgrond het die Landboukredietraad besluit dat dit te koop aangebied moet word as uitbreiding aan aangrensende boere met die voorwaarde dat die stoatsgrond met die koper se privaot landbougrond gakonsolideer meet word. Tydens 'n besoek wet lede van die Raad aan ander staatsgrond in die omgewing gebring het, het hulle ook die betrokke twee gedeeltes van Groothoek besoek. Na aanleiding hiervan het die Raad die Landbouvoorligter te Lydenburg versoek om 'n nuwe potensiaalverslag ten opsipte van die staatsgrond uit te bring. Volgens hierdie verslag blyk dit dat die landbou potensioal van die staatsgrond sodanig is dat dit wel lewensvatbaar geboer ken word. Die Raad het gevolplik besluit dat ancer applikante waaronder mnr W P le Roux, en nie slegs aangrensende boere nie, ook kwalifiseer om vir die staatsgrond in aanmerking te kom. Na sorgvuldige oorweging van die aansoeke het die Raad bevind dat alhoewel 'n konsolidasie van die staatsgrond en mnr Nel se aangrensende privaat grond, naarr.lik die pleas Tygerhoek sinvol sou wees, hy nie volgens sy aansoek oor die betaalvermoe beskik en ook nie in staat sal wees om die addisionele skuldlas wet die aankope en ontwikkeling van die staotsgrond meebring, te ken dra nie. Voorts het die Raad bevind dat mor W P le Roux die meer geskikte kandidoat is en besluit om die grond aan hom te koop te bled."

Discussion

23. As Mr le Roux was not the owner of agricultural land, he did not qualify to purchase the land in terms of the ACB's policy at that time and the ACB in the first instance correctly decided that the farms could not be sold to him. After the ACB considered Mr Nel's appliication, it concluded that he also did not qualify to purchase the farms. In coming to this decision the ACB acted within its powers and after having considered both applications. To this extent the ACB's decision can not be faulted and it, in the Commission's opinion, correctly decided that the farms should rather be sold by public auction. This would have allowed other parties who might have been interested in the land and who were in the first instance excluded from applying, to compete for the farms. The ACB, however, due to outside intervention and for no acceptable reasons, decided to rescind its decision and to sell the farms to Mr le Roux out of hand. In doing so, the ACB did not require Mr le Roux to pay the market value, but determined a price based on the agricultural productive value of the farms, which was much less than the market value. Mr le Roux was favoured by the ACB's decision and allowed to purchase the farms at a very favourable price, without having to compete with others. The ACB's decision to sell the farms to Mr le Roux out of hand not only deprived other interested persons who were in the first instance disqualified from applying, but also prevented Mr Nel from competing for the farms.

24. The ACB's decision to sell the land out of hand was also against the Department s policy not to dispose of vacant State land out of hand. The Department s policy was to adhere to the principle that any interested person who may have a reasonable claim to being a candidate for such land, be afforded the opportunity to compete in one way or another for the acquisition thereof. This policy was not adhered to by the ACB.

25. In disposing of the State land in the manner it did, the ACB, in the Commission's opinion dealt with the matter unfairly and in an irregular manner. The true facts were also not conveyed to Mr cle Villiers. In the letter it was stated, inter alia, that the ACB decided to remove the restriction that only adjacent-owners could apply in order that other applicants, including Messrs le Roux and Nel, could qualify. It was further stated that the ACB, after careful consideration of the applications received, considered Mr le Roux to be the more suitable candidate for the farms. This created the impression that other persons were also given the opportunity to apply and that their applications were considered. The factual position, however, is just the opposite, as the land was sold to Mr le Roux out of hand without him having to compete with others. Although the letter to Mr de Villiers was signed by the Deputy Minister it is reasonable to assume that the facts contained therein were obtained from the ACB and/or the Department. The fact that the true facts were not conveyed to Mr de Villiers must leave a question-mark as to the motive behind the ACB's decision to sell the farms to Mr le Roux out of hand.

SUB-DIVISION 16 (OF 4) OF THE Fit HENLEY ESTATE NO 11667: DISTRICT OF IXOPO

26. The above-mentioned farm in extent 161,8489 hectares was transferred to the Department of Agriculture to be made available to the agricultural sector.

27. After the ACB decided to sell the farm, applications were invited in the normal manner from the owners of private land adjacent to or in the vicinity of the State land. Only one person, namely Mr C A Knight, applied and the ACB decided to sell the farm to him.

28. The local Agricultural Credit Committee during 1990 assessed the market value of the farm at R140 000-00. During 1991 the Local Committee submitted another valuation and valued the property at R138 250-00. In coming to the valuation the Local Committee took into account:

• that the land was wedged in between the farms of the two adjoining farms and was not a viable unit on its own;
• that it is a very steep farm and extraction of any valuable crop would be difficult
• that there were no buildings or improvements on the property; and
• that there was no access road or right of way through the two adjoining farms, to the farm.

29. On 12 April 199:1 the ACB placed a provisional reserve price of R80 000-00 on the property. On 23 June 1992 Messrs Ahlers and Oosthuizen, who were members of the ACB, in a submission to the ACB, suggested that a price of R80 000-00 was possibly too high and recommended a selling price of R60 000-00. The main motivation for their recommendation was that Mr Knight was the only applicant, that Mr Knight estimated the value of the property at R60 000-00 and that access to the property was only available from the adjacent farm. The ACB accepted the recommendation and the farm was sold to Mr Knight for R60 000-00.

30. In the submission to the ACB it was mentioned that according to Mr Knight's application his credit balance was R1,075 million and that he expected a gross income of R905 600-00 for the year 1992.

Discussion

31. In the Commission's second report it was mentioned that some of the Trichardtsdal farms were sold at the agricultural productive value, whilst others were sold at the market value or a more market related price. The explanation given at the time for the difference in the selling prices was that although it is the ACB's policy to sell farms at the agricultural productive value in order to assist, especially, beginner farmers, a successful applicant's ability to pay coulcl, however, have resulted in him having to pay a market related or more market related price. The policy to sell at a price based on the agricultural productive value was decided upon to ensure that a successful applicant will after buying the farm, be left with sufficient capital to develop the farm and become an independent farmer. It was also during the present investigation stated by members of the ACB, that it was not the ACB's function to generate income for the State. Mr Jacobs, a member of the ACB, also again confirmed that although it is the ACB's policy to sell agricultural land at the agricultural productive value, an applic:ant's financial position and ability to pay more would have an impact on the purchase price. He also conceded that in view of Mr Knight's financial position, the farm should have been sold to him at market value.

32. As the ACB acted within its powers in determining the selling price, it can not be said that they acted irregular in deciding to sell the farm for less than the market value. The Commission, however, [Finds the ACB's inconsistent application of its policies unacceptable. In the Commission s second report mention has already been made of the ACB's inconsistent approach to matters. The matter under discussion is yet another example thereof.

PORTIONS 2 AND 3 (PORTIONS OF PORTION 1 ) OF THE FARM FAIRFIELD 306 KQ: DISTRICT OF THABAZIMBI

33. The above-mentioned subdivisions, in extent 165.2971 hectares, were acquired by the Directorate: Financial Assistance of the Department of Agriculture by public auction for R280 000-00 to safeguard bonds held by the State.

34. The ACB approved in terms of the Agricultural Credit Act, 1966 that the subdivisions be sold together as one unit as extension to the owners of adjacent agricultural land or agricultural land situated close by.

35. The land was advertised in the normal manner without mention of a selling price and three (3) applications were received.

36. One of the applicants was a Close Corporation, T and J Boerdery CC. The Close Corporation was formed by the previous owners Messrs J H and E J Hudson and their sons.

37. According to a submission by the Department of Agriculture to the Board, the Magistrate at Thabazimbi had indicated that this farm would not reach more than a price of R200 000-00 on an auction. He was therefore of the opinion that if the land was to be sold to the Close Corporation it would be to the benefit of the State.

38. The ACB after having considered the applications on 1 November 1994, approved that the farm be sold to the Close Corporation for an amount of R280 000-00 on condition that the selling price be paid in cash and that the production loans as well as overdue interest to the Directorate: Financial Assistance must be redeemed by the Hudson brothers. The Land and Agricultural Bank was prepared to grant the Close Corporation a loan of R200 000-00. The Close Corporation had to provide the balance.

39. When the matter was submitted to the Deputy Minister of Agriculture the officials concerned with the matter raised a number of questions regarding the ACB's decision to sell the farm to the Close Corporation which was formed by the previous owners. The Deputy Director-General for instance remarked that he did not follow the Board's logic. As a result of the questions raised the ACB was requested to reconsider its decision. The

ACB, however, after reconsidering the matter re-affirmed its previous decision. As the Deputy Minister we, not satisfied with the decision to sell the land to the Close Corporation, which in effect would have meant selling to the previous owners who could not pay their debts, the sale of the land to the Close Corporation was not finalized and the land will now be dealt with in terms of present policy.

40. Although, if the farm was sold to the Close Corporation, the State would not have lost anything, this case is another example of the ACB's inconsistent approach to matters. Neither the Close Corporation nor its members were the owners of agricultural land and consequently did not qualify in terms of the conditions laid down by the ACB, to apply for the land. The ACB, however, ignored its own restrictions as to who may apply, and approved that the farm be sold to an applicant who did not qualify. What the ACB should have done in this regard was to comply with the restrictions and to re-advertise the farm. This would have entitled other interested parties, who were previously prevented from applying, to compete for the farm. By ignoring their own restrictions and selling the farm to an applicant who did not meet with the requirements laid down by the ACB, the ACB acted unfairly and irregularly.

FARM ZEWE FOUNTAIN NO 9: DISTRICT OF DE AAR

41. The above-mentioned farm consisted of two portions, namely, the Remainder of the farm Zewe Fountain No 9, in extent 2672,3370 hectares and the Remainder of Portion 1 of the farm, in extent 2544,5427 hectares.

42. As the properties were no longer required for State purposes they were transferred to the Department of Agriculture to be utilized for agricultural purposes.

43. After the transfer of the land to the Department of Agriculture, the ACB decided to offer these portions as one unit or separately as an extension to adjacent or nearby owners of agricultural land. Although if the farm was sold as one unit it would have been an economical unit, the AC2B decided to offer it to adjacent or nearby owners only and to exclude other persons who might have been interested in the farms if they were offered for sale as one unit.

44. The local Agricultural Credit Committee assessed the market value of the two properties at R939 060-00 or R180 per hectare. An independent valuator valued it at

R1 000 000-00 or R195 per hectare. The Land Affairs Board on 14 January 1991 accepted the valuator's valuation and determined the market value of the properties at R1 000 000-00.

45. The farms were advertised in the normal manner without mentioning the selling price. Fifteen (15) applications were received.

46. On 20 October 1992 a meeting in connection with the farms took place between members of the ACB and the local Agricultural Credit Committee. The farms were also visited. Messrs Ahlers and Du Preez were the members of the ACB who attended the meeting. On 13 November 1992 they submitted a report to the ACB in which they inter alia stated:

• that the farms concerned were very suitable (goeie) for farming and much sought after;
• that the grazing was of a good condition;
• that the boundary fence between the two portions of State land was removed and will have to be re-erected at high cost;
• that the infra structures, such as inner fenced kraals and watering-places for animals were in a poor condition and would have to be erected at substantial cost; and
• that the Municipality of De Aar holds certain servitudes over the properties.

47. The Selection Committee appointed by the ACB to consider the applications, recommended to the ACB that unit 1 be sold to Mr E L de Rock and unit 2 to

Mr P G Marais. The Committee also recommended that the farms be sold at an adjusted more market related price and suggested a selling price of R80 per hectare. Although the valuation reports were attached to the submission to the ACB for its information, the Selection Committee did not state how it arrived at a selling price of R80 per hectare.

48. The Selection Committee's recommendations were accepted by the ACB and the ACB approved that the farms be sold to Messrs de Kock and Marais at R80 per hectare.

49. Mr de Rock at the time was a final year theological student, who had inherited the farm adjacent to unit 1 from his father. His mother, however, had the usufruct of the farm. Mr Marais was the owner of the farm adjacent to the unit allocated to him. The ACB was of the opinion that by selling the two portions to the two successful applicants it would have resulted in their farms becoming economical units.

Discussion

50. The selling price of R80 per hectare was only 41,02% of the market value determined by the independent valuator and accepted by the Land Affairs Board.

51. It is not clear what the Selection Committee had in mind when it recommended that the land be sold at an adjusted more market related price. What the Committee presumably meant by this was a selling price less than the market value. but higher than the agricultural productive value at which the ACB normally sold State land. In cases investigated by the Commission, the agricultural productive value tended to be about 60% of the market value. This being the case, it is inexplicable how the Committee and the ACB could have arrived at a selling price of R80 per hectare.

52. The policy of the ACB has been to assist persons who have demonstrated an ability to carry on effective farming operations, but who are not in a financial position to acquire land for this purpose. The ACB seeks to assist those who are not able to compete in the market, but who are able to become effective farmers with State assistance. It is also the ACB's policy to assist farmers who are farming on uneconomical units by selling to them adjacent State land when it becomes available, in order to make their farms economical units. In the case under discussion Messrs de Kock and Marais already had farms and can not be regarded as beginner farmers falling within the first category of persons who needed assistance. What is more, Mr de Kock did not have to purchase the farm he farmed on but inherited it.

53. It is not the function of the Commission to "second guess" the ACB as to the allocation of the farms, in as far as question of judgement is concerned. The Board has the statutory duty to assess the applications, make judgements as to the relative merits of applicants, and then make allocations. It is also within the ACB's statutory power to determine the selling price. The Commission did not investigate the wisdom or otherwise of the ACB's decision to allocate the farms to the two gentlemen concerned. However, the available evidence raised the question whether the ACB in determining the selling price exercised its discretion in a proper manner. When one has regard to the independent valuator's and local Agricultural Credit Committee's valuations as well as the fact that this farm was much sought after and the Selection Committee recommended a more market related price, a selling price of R80 per hectare can hardly be justified and the question must be asked whether the ACB applied its mind properly to the matter when it decided on a selling price and exercised its discretion in a proper manner. In the absence of any recorded reasons for its decision it can hardly be said that the ACB in this matter exercised a proper discretion. When a statutory body such as the ACB does not exercise its discretion in a proper manner it can lead to unfairness and that persons may acquire State land at prices which can not be justified. When this happens, it cannot be said that the ACB acted in a regular manner.

FARM SHALOM 483 JU - DISTRICT OF BARBERTON

54. The above-mentioned farm, in extent 305,0767 hectares, was acquired by the Department of Agriculture by public auction for R420 0(10-00. The farm had belonged to Mr J J von Landsberg, who had gone insolvent, and was purchased to safeguard the bond held by the State.

55. After acquiring the farm it was leased to Mr D Botha for a period of three (3) years. After the lease expired, Mr Botha was appointed supervisor over the farm.

56. At the time the farm was bought by the Department a large portion of the farm was under irrigation. The irrigation equipment was, however, during the lease period, apparently unlawfully, removed from the farm.

57. During April 1991 the local Agriculturai Credit Committee assessed the market value of the farm at R1 200 000-00. The Committee in its report also made the following remark:

"Hierdie eiendom grens aan die Komatirivier en beskik oor hoe potensiaal landbougrond. Met die moontlikheid van 'n tweede suikermeule in die Onderberg-gebied, wat naby hierdie eiendom behoort te wees (+5 km) ken hierdie in 'n spog suikerplaas ontwikkel word. Ook geskik vir sub-tropiese vrugte."

58. The Magistrate, Barberton who was the Chairman of the local Agricultural Credit Committee in response to a telephone conversation which Mr Ahlers, who was a member of the ACB, had with him on 10 July 1991 reported:

• that all the irrigation equipment had been removed from the farm and that no land was under permanent irrigation;
• that in assessing the value of the farm his Committee regarded 250 hectares of the land as potentially irrigable;
• that the Committee stood by its previous valuation of the property; and
• that this was a farm with a very high potential.

59. After the ACB had approved that the farm be sold, during September and October 1991 it was advertised country-wide without mention of the purchase price. No restrictions as to who could apply were imposed, and anybody interested could apply to purchase the farm.

60. Fifteen (15) persons responded to the advertisement and applied to purchase the farm.

61. A decision as to whom the farm was to be sold to, was not taken Immediately.

62. On 9 September 1992 the ACB decided to call for an agricultural potential report on the farm.

63. According to a note dated 9 October 1992 on the departmental file, the Magistrate of Barberton phoned and informed the Department that although the local Agricultural Credit Committee had nothing adverse to report on the applicants who were on the short list, the Committee felt that the farm should rather be sold by public auction. The reason for this was that there was a lot of public interest in the farm and that the State would be able to obtain a much higher price if the farm was sold by public auction. The same sentiments were expressed at a meeting (date unknown) which took place between members of the local Agricultural Credit Committee and members of the ACB.

64. The ACB, however, decided to sell the farm to one of the persons who had applied.

65. Messrs Jacobs, Ahlers and Kriel who formed the Selection Committee which considered the applications on 4 November 1992 recommended that the farm be sold to Mr J S Vermaak. They motivated their recommendation as follows:

"Die keurkomitee is van mening dat beide applikante Vermaak en Butler oor die finansiele vermoens sower as die kundigheid beskik om die pleas Shalom tot 'n produktiewe eenheid te ontwikkel.

Applikant Vermaak behaal die hoer punt hoofsaaklik as gevolg van sy jonger ouderdom, sy vrou se deelname in boerdery, sy posisie as leiersfigour in die samelewing asook sy praktiese blootstelling aan boerdery vir sy eie rekening. Wat kapitaalnorme betref asook kennis en beplanning. persoonlike indrukke en komitee aanbevelings is dear geen verskil tussen, die twee applikante nie.

Beide applikante het n komponent van gevestigheid asook geholpenheid in die beroepe wet hul tans beoefen.

Dit sal jammer wees as daar teen 'n applikant van Vermaak se kaliber gediskrimineer moet word as gevolg van sy beroop en sy gevolglike verbintenis as Landdros met die regering van die dag asook die werking van die Landboukredietraad en kredietkomitees.

Indien laasgemelde verbintenis nie as beswarend deur die Raad beskou word nie, is hy beslis die sterker van die twee kandidate vir moontlike toekenning van die staatsgrond."

66. The questionnaire completed by the Selection Committee in respect of Mr Vermaak contained the following remarks:

''Applikant is 'n Landdros van beroep en bedryf sedert 1981 'n beesboerdery op huurgrond en was ook in saai en piesangboerdery betrokke waarin by 'n kwart aandeel besit het wat intussen verkoop is. Hy het 'n voordelige balans van R595 500 waarvan R200 000 kontant beskikbaar is. Hy meld dat by sy vee (R260 000) maklik sal verkoop wat hom seam met sy pensioengratifikasie 'n kontant bedrag van R500 000 sal gee om die plaas te ontwikkel. Sy beplanning vir die Staatsgrond strook met die algemene riglyn en praktyke in die gebied. Hy word sterk deur die plaaslike Landboukredietkomitee aanbeveel en behaal 88 punte (A-simbool). Kan verder oorweeg word."

67. The local committee to which reference was made, is not the local Agricultural Credit Committee for the district of Barberton where the farm is situated, but the local committee for Magudu where Mr Vermaak was a resident and a Magistrate. The Commission's efforts to obtain that committee's complete report were unsuccessful.

68. On the same day. namely 4 November 1992 on which the Selection Committee recommended that the farm be sold to Mr Vermaak the ACB approved that it be sold to Mr Vermaak for R450 000-00. It was also approved that Mr Vermaak could pay the purchase price in twenty-five (25) equal yearly instalments plus 8% interest per year. The sale was made subject to the condition that Mr Vermaak could not sell the farm for ten (10) years without the Minister of Agriculture's written consent.

69. In approving the sale of the farm to Mr Vermaak, the Chairman of the ACB remarked as follows:

"Met in agneming van die Keurkomitee se aanbeveling en m.b.t. moontlike kritiek wet mag voortspruit uit toekenning aan 'n amptenaar keur die Raad goed dat die plaas Shalom aan J S Vermaok verkoop word teen R450 0OO, met 'n D.F.B. lening. Nie verkoops-klousule van 10 jaar."

70. Mr Vermaak was informed of the ACB's decision on 12 November 1992 by letter. The offer was accepted by him on 13 November 1992. The farm was registered in his name on 5 February 1993. This was unusually speedy.

71. On 9 March 1993 Mr F J Joubert, the Chairman of the Onderberg Farmers Union, addressed a letter to Mr C G van Veyeren in which he mentioned that members of the Union were dissatisfied with the fact that the farm had been sold to Mr Vermaak. Mr van Veyeren was requested to take the matter up with the Minister of Agriculture. In the letter Mr Joubert stated that although he could not vouch for the truth of the allegations, the following which was conveyed to him contributed to the dissatisfaction that existed:

• that Mr Vermaak was at the time a Magistrate at Pongola and as such an official of the State who held a full-time post as Magistrate;
• that Mr Vermaak was a part-time cattle farmer, who from time to time leased land from the State where he carried on his cattle farming;
• that the Department of Agriculture on a previous occasion allocated a farm to Mr Vermaak or his brother under similar circumstances; and
• that it was understood that Mr Vermaak is related to one of the members of the ACB.

72. It was also stated in the letter that as a result of the farm's location and the fact that there were water rights from the Komati River for 200 hectares and the farm was only approximately eight (8) kilometres from the new sugar-mill, R1,5 million would be a conservative estimate of the farm's market value.

73. Mr van Veyeren referred the letter to the Minister, who in turn forwarded it to the ACB for comments. The members of the ACB denied that Mr Vermaak was related to any of them and the Chairman of the ACB remarked that a failure by Mr Joubert to substantiate his allegations could lead to individual members of the Board instituting claims for defamation.

74. The Deputy Minister of Agriculture in his reply to Mr van Veyeren did not deal with the allegations. He merely stated that the farm had already been transferred into Mr Vermaak's name, that he was satisfied that all the applications were considered properly, that Mr Vermaak was the most suitable applicant and that there was no favouritism.

75. After ABSA Bank had granted Mr Vermaak a bond over the farm for more than R2 million. Mr Vermaak paid the State the amount he owed it and the mortgage which the State held over the property was cancelled.

Discussion

76. The Commission could find no evidence that Mr Vermaak is related to any of the persons who were at the time members of the ACB.

77. It is correct that Mr Vermaak at the time farmed on land that he leased from the State. Members of the Board who appeared before the Commission also agreed that State land had been sold to Mr Vermaak's brother. This in the Commission's opinion does not, however, mean that Mr Vermaak could not apply to buy the farm concerned and be allocated the farm. Neither was he disqualified as a result of the position he held at the time. It was open to any interested party to apply.

78. The ACB considered all the applications and was aware of the fact that Mr Vermaak was a Magistrate. In deciding that he was the most suitable candidate for the farm the ACB exercised its discretion and acted within its powers. It can consequently, to that extent, not be said that the ACB acted irregularly in deciding to sell the farm to Mr Vermaak. What the Commission, however, finds totally unacceptable is the ACB's inconsistent approach to matters. If all applicants are not treated in the same manner it can lead to unfairness.

79. During the Commission's investigation of the allocation of farms in Trichardtsdal it was found that some of the applicants who appeared to have been well qualified were not considered for farms, because they were employed and held good positions and therefore in the opinion of the ACE, did not require any assistance. One of the applicants for the farm Zewe Fountain (discussed earlier) was not considered for similar reasons. In that case the Committee who visited the farm remarked as follow:

'Die applikant het 'n goeie werk, en met sy werk en deeltydse boerdery doen by goed. Indien by die Staatsgrond sou kry sal hy sy work bedank, en dit sal nie die regte besluit wees nie. Toetrede tot 'n voltydse boerdery sal hierdie applicant benadeel. Sy grond is nie direk aangrensend aan die Staatsgrond nie. Word nie verder oorweeg nie."

80. In view of the abovementioned recommendation the Selection Committee recommended that Mr Venter's application not be considered any further. If the criterion referred to above had been applied in Mr Vermaak's case, he would not have been considered for the farm. He was favoured by the fact that a different test was applied in his case.

81. Although the ACE acted within its powers in determining the selling price, it is most alarming that such a valuable farm was sold at such a low price. The selling price is only 37,5% of the market value determined by the local Agricultural Credit Committee and 30% of the value mentioned in the letter of the Chairman of the Onderberg Farmers Union. It can also not be argued that they overvalued the farm if cognisance is taken of the fact that ABSA Bank was prepared to grant a bond over the farm in excess of R2 million, and that Mr Vermaak himself assessed the value of the property at R901 000-00.

82. It is further alarming that, although the farm was sold for R30 000-00 more than the State paid for it, an amount of R145 403-00 which the previous owner owed the State, had to be written off. Whilst it is true that it is not a function of the ACB to generate income for the State, it is equally true that when a body such as the ACB disposes of valuable State assets, such as this farm, it should, when a selling price is determined. also have regard to the State's interests and not only those of the applicant. If the State's interests are ignored it can hardly be said that the ACB exercised a proper discretion.

83. If all facts are taken into account, the Commission can not find that the price at which the farm was sold, was fair and justified. Mr Jacobs and Mr Ahlers, the members of the ACB who appeared before the Commission and who are co-responsible for decisions taken by the ACB, could also not advance any acceptable facts to justify the price at which the farm was sold.

84. Everything taken into account it can hardly be said that the ACB in this matter, when it determined the purchase price, exercised its discretion in a proper manner. The result is that Mr Vermaak acquired valuable State land at a price which can not be justified. It is not surprising that there was dissatisfaction among the members of the farming community, who know the farm.

REMAINING PORTION OF PORTION 5 OF THE FARM CUMBERLAND: DISTRICT OF THABAZIMBI

85. The above-mentioned farm, in extent 315,4461 hectares, was on 20 January 1989 acquired by the Department of Agriculture by public auction for R100 000-00 to safeguard the bond held by the State.

86. The ACB on 19 January 1989 placed a value of R85 000-00 on the property. The price paid for the property was R15 000-00 more than the ACB's valuation.

87. On 16 July 1991 the local Agricultural Credit Committee assessed the market value of the property at R160 000-00.

88 After the ACB had approved that the land be sold as extension to the owners of adjacent agricultural land or agricultural land close by, applications were invited in the normal mariner without mention of the selling price.

89. Four applications were received. On 25 September 1992 the ACB, after having considered the applications, approved that the farm be sold to Mr D F Greeff for R85 000-00.

90. The previous owner's account with the State was credited with the amount the State had paid for the farm. His debt was as a result reduced by R100 000. The balance of the debt, namely R294 871-00 was written off after the Treasury's approval was obtained. This amount did not include the R15 000-00 lost on the sale of the farm.

Discussion

As in other cases which have already been discussed, the ACB acted within its powers when it determined the selling price. It is, however, disturbing that land which was bought to protect the State s interests, was sold at a loss. This is even more so if regard is had to the fact that the successful applicant already owned a farm which was also bought with State assistance and that one of the other applicants had indicated that he had R100 000-00 available to pay for the farm.

92. When land is sold to a beginner farmer at a reduced price, such sale can still be justified. When land is, however, sold to a person who already owns a farm at a loss to the State. it is difficult to justify such a decision, even if it was done with the intention to make the purchaser's farm a more economical unit.

HARTBEESFONTEIN 69 LQ: DISTRICT OF ELLISRAS

93. The Remainder of a portion of Portion 1 of the farm Hartbeesfontein 69 LQ, in extent 435,5652 hectares, was acquired by the Department of Agriculture from the insolvent estate of a departmental debtor on 26 March 1988 to safeguard the State s interests. The purchase price was R140 000-00.

94. On 5 April 1988 the Chairman of the local Agricultural Credit Committee reported that the past seven (7) years had shown that the farm was not suitable for irrigation and that it should in future rather be used as a cattle farm and for grazing. He also stated that neglect had already started to set in and that some of the equipment, such as pumps and electric motors had been removed.

95. The Local Committee assessed the market value of the farm at approximately R150 000-00.

96. Although it was initially the intention to sell the farm, it was decided not to do so but to put the farm out for lease until an investigation into the future use of the farm and other farms along the Limpopo River, could be carried out. It was also decided to sell the spindle head which was still on the farm on tender.

97. The investigation revealed that although 100 hectares of the farm were in the past used for irrigation from the Limpopo River, the lands were covered with natural pastures. It was also found that as a result of the drought which the area experienced for 6 - 7 years and the fact that many dams had been built higher up in the Limpopo River, the water reserves for irrigation on the farm had become very risky. It was recommended that the lands on the farm be changed over to dry lands and that the farm not be sold as an irrigation unit.

98. On 23 October 1990 the ACB approved that the farm be offered for sale as extension to adjacent owners or owners of land nearby.

99. The farm was advertised without mention of a selling price and three (3) applications were received.

100 On 25 September 1992 the ACB approved that the farm be sold to Mr J A le Roux for R70 000-00. Mr le Roux had to provide his own finances.

101. Although the debtor's account was credited with R140 000-00 which the State had paid for the farm and an amount was recovered through the sale of the spindle head, an amount of R176 936 owed by the debtor still had to be written off with the Treasury s approval.

Discussion

102. As in other cases already discussed, the ACB acted within its powers and it can not be said that it acted irregularly. What has, however, been said about the selling price in respect of other farms equally applies to this farm, except that in this instance there was a change in the purpose for which the farm can be used. This in all probability, had a negative effect on the value of the farm. The selling price was, however. still only 50% of what the State paid for the farm and a substantial amount had to be written off as bad debt.

PORTION 1 OF THE FARM ZANDPAN 63 LQ: DISTRICT ELLISRAS

103. The above-mentioned farm in extent 179,9494 hectares was on 4 May 1987 acquired by the Department of Agriculture from the insolvent estate of a departmental debtor for R105 000-00. The ACB at the time assessed the value of the farm at R110 000-00.

104. On 10 March 1988 the ACB approved that the farm be advertised for sale as an uneconomic unit at a selling price of R105 ()()()-00. At that time the selling price was still mentioned in the advertisement. Later on farms were advertised for sale without mention of the purchase price.

105. In a report dated 7 May 1988 it was mentioned that the fixed improvements on the property were in a state of decay and that pumps used for irrigation as well as the main irrigation line had been stolen. (The theft was reported to the Police). It was further mentioned that the 80 hectares of irrigable land was covered with grass and that at times when the Limpopo River was in flood, the lands were completely under water. The local Agricultural Credit Committee as well as the members of the Ad Hoc-Committee which visited the farm as a result recommended that the farm no longer be used for irrigation, but rather for grazing alone. In view of the fact that the farm could no longer be used for irrigation, it was revalued and the market value thereof was assessed at R72 000-00.

106. The farm was as a result not advertised for sale, but leased to another farmer.

107. On 3 September 1991 the ACB approved that the farm be advertised for sale as extension to the owners of adjacent farms or farms close by, without mention of the selling price.

108. The farm was advertised during October and November 1991 and four (4) applications were received.

109. The Local Agricultural Credit Committee was requested to submit a new valuation and they assessed the market value of the farm at R72 000-00.

110. One of the applicants Mr L P Deysel passed away before a decision was taken by the ACB. After receiving a request from his widow to be allowed to purchase the farm, the ACB on 29 January 1993 approved that it be sold to her for R3G 000-00 which could be paid over twenty-five (25) years plus interest.

Discussion

111. The ACB s decision to sell the farm to Mrs Deysel and to allow her to submit an application after her husband passed away can not be faulted. However, whilst the ACB acted within its powers in determining a selling price of R30 000-00, the price, as in other cases already discussed, causes concern. The farm was sold for approximately 41,7% of its market value to a person who already owned a farm. After the departmental debtor was credited with R105 000-00 which the State had paid for the farm, he still owed the State an amount, which he is at present paying off. It is, if all these facts are taken into account, difficult to find justification for the price at which the farm was sold. What was said in this regard earlier in this report, also applies to this farm.

FARMS PERSKEPUT, POMPFONTEIN AND WOLVELEEGTE - DISTRICT OF PETRUSBURG

112. The above-mentioned agricultural land consisted of four portions, namely:

Unit 1: The farm Perskeput A 1023, in extent 105,8673 hectares;

Unit 2: The Remainder of the farm Pompfontein 320, in extent 66,2974 hectares;

Unit 3: The Remainder of the farm Pompfontein 287, in extent 126.5126 hectares: and

Unit 4 Subdivision 2 of the farm Wolveleegte 278, in extent 146,7180 hectares.

113. During 1991 the Land and Agricultural Bank attached the farm as the owner could not meet his liabilities.

114. On 19 April 1991 the ACB, on the strength of a valuation report dated 19 February 1991 submitted by the local Agricultural Credit Committee, placed a value of R220 000-00 on the property. The ACB also recommended that the Department of Agriculture should not bid at the auction. At that stage the debtor owed the Land and Agricultural Bank R198 386-00 and the Department R182 262-00. Notwithstanding the ACB's recommendation, the Department of Agriculture decided to acquire the land to safeguard the bond held by the State and purchased the farms on the auction for R200 000-00.

115. In order to prevent neglect it was decided to lease the farm until such time as a decision regarding to its future use could be taken.

116. On 22 July 1991 the Magistrate at Petrusburg reported that neglect had already started to set in and recommended that the farm be leased for three (3) years. On 6 August 1991 the ACB, however? decided against leasing and ordered that the farms be offered for sale as one unit or separately as extension to owners of adjacent farms or owners of farms in the vicinity.

117. The land was advertised in the normal manner without mention of the selling price. Two applications were received. On 31 March 1992 the ACB approved that the land be sold to Mr T S Botha for R200 000-00. Mr Botha had a farm approximately 40 kilometres from the land concerned.

118. After Mr Botha had been told that he could purchase the land for R200 000-00 he requested Mr Nel of the Regional Office and Mr Kotze, an extension officer, to accompany him to the farm. During this visit Messrs Nel and Kotze came to the conclusion that the portions of farms that had previously been used for irrigation were no longer suitable for that purpose and that the farms were only suitable for grazing.

119. In view of the fact that Mr Botha would in future only have been able to keep a number of cattle on the farms and felt that he could under the circumstances not afford to pay R200 000-00 for the farms, he requested the ACB to consider reducing the selling price.

120. Mr Nel, also as a result of the visit to the farm' submitted a second agricultural potential report to the ACB in which he inter alia stated:

"Die aanvanklike potensiaal bepaling is gemaak vanuit die perspektief dat 'n applikant die plaas sou bewoon en optimaal kon benut sonder 'n beperking aan kapitaal. Ten spyte van hierdie optimistiese siening, was ons egter steeds van mening dat die eenhede afsonderlik en gesamentlik nie voldoen aan die minimum vereistes vir ekonomiese plaasgrootte nie.

Na 'n besoek aan die plaas saam met die voornemende koper het daar uit die aard van die sank ander proposisies ontstaan wet ook die waardebepaling in 'n ander lig gestel bet. Dit illustreer maar net die feit dat elke plaas gekoppel aan 'n spesifieke jokkie 'n spesifieke potensiaal bet". (emphasis added).

121. In the report it was also stated that Mr Botha would have had to manage the farms from a distance as his own farm was about forty (40) kilometres away. He also did not have the necessary implements to cultivate grain and lucern on the farms. The farms could consequently only be used to keep a number of cattle on them. It was also stated that the land with the bore-hole which in the past was the main water source for irrigation. had been excised from the farm and belonged to another farmer.

122. On 16 October 1992 the ACB decided that Messrs Ahlers and du Preez, who were members of the Board should visit the farm. Mr Ahlers confirmed that the farms were no longer suitable for irrigation.

123. On 30 October 1992 the Magistrate in a report to the Director Financial Assistance, Department of Agriculture reported that the farm Pompfontein was in a serious state of neglect, that the established pastures no longer existed and that the lands were reverting to natural pastures. He also confirmed that water for irrigation was no longer available.

124. On 29 September 1993 the ACB on the strength of the new agricultural potential report and a new valuation report submitted by the local Agricultural Credit Committee decided to reduce the selling price to R100 000-00. The ACB also directed that the Treasury should be approached for its approval to sell the farm at the reduced price. This indicates that the ACB was of the opinion that the selling price was less than the market value.

125. Before the sale of the farms could be finalised Mr Botha experienced serious financial problems and the sale was not proceeded with. The land will now in all probability be dealt with in terms of present policies.

Discussion

126. It would appear that due to the fact that the usefulness of the farm had changed, the ACE was justified in reducing the selling price. Whether a 50'No reduction was justified is, however, an open question. Although the sale of the farms did not materialise, the Commission none the less finds it disturbing that the ACE, to a great extent relied on an agricultural potential report which was initiated by the prospective purchaser and which was clearly not an objective evaluation of the true agricultural potential of the farms. The remark: Chit illustreer maar net die feit dat elke pleas gekoppel ado 'n spesifieke jokkie 'n spesifieke potensiaal bet;'' clearly indicates that the prospective purchaser's personal circumstances had an influence on the evaluation of the farms' potential. If the buyer was someone else the agricultural potential of the farms in all probability would have been different and would have had an effect on the selling price. This is an unacceptable situation. The agricultural potential of a farm should be the same and the personal circumstances of the purchaser should have no effect thereon.

GENERAL

127. The Commission's investigation also revealed that when farms were acquired to safeguard the State's interests. an exceptionally long time elapsed before decisions as to the future use of such farms were taken. When a decision was eventually taken there was normally a further long delay before the land was finally disposed of. Because of these delays some of the farms laid vacant. This resulted in the deterioration and plundering of the farms. Valuable equipment, such as water pumps and irrigation systems. was unlawfully removed. The fact that in certain cases supervisors were appointed or that the farms were leased to neighbouring farmers did not always prevent the aforementioned from occurring. These factors had to be taken into account by the ACB when a selling price had to be determined and had a negative effect on the selling price. This was also advanced by witnesses as a reason for the apparent substantial difference between the purchase and selling prices. This is a most unsatisfactory and unacceptable situation especially if one has regard to the fact that the farms were purchased with the sole purpose to protect the State's interest therein. If it becomes necessary in future to acquire land in order to safeguard the State's interest therein, a decision as to what should be done with such land should be taken without any unnecessary delay, to prevent any neglect and that the infrastructures fall into disrepair or are removed unlawfully.

128. It was also stated by witnesses that in many cases the fact that a farm in which the State had an interest was to be sold on public auction, only became known at a very late stage. As a result there was very little time within which to decide whether such farm should be acquired to safeguard the State's interest therein and up to what price the Department should bid at the auction. Such decisions very often had to be taken on outdated information. Whilst there is understanding for the dilemma which faced those who had to make the decision, it remains an unsatisfactory situation that such important decisions had to be taken on outdated information. This could have led, and in all probability did lead, to the State paying too high a price for a particular farm. To avoid decisions being made on outdated information, steps should be taken to regularly update information regarding farms over which the State holds bonds, which will ensure that whenever a decision regarding such farm has to be taken, it is not taken on outdated information.

129. Treasury Instruction F 1.3.1 states that all cases of alienation of immovable State property at lower than market value must be submitted to the Treasury for approval. Where State land has in the past been sold by the ACB for less than the market value, the Treasury's prior approval was not obtained. As the question of selling State land by the ACB at less than market value was discussed in the Commission's second report, the Commission does not deem it necessary to repeat what has been said previously. It should, however, be mentioned that since the Commission's second report the Department of Agriculture requested the Treasury to grant a blanket approval to the ACB to sell State land at less than market value. The Treasury was, however, not prepared to grant such a blanket authority and directed that it should be approached with each case individually. The Treasury also directed that in those cases where the sale of land had already taken place without Treasury's approval, reasons should be advanced as to why those cases should be regarded as exceptional and which would justify the granting of ex post facto approval.

130. According to information presented to the Commission the Treasury has, as far as the farms mentioned in this report and which were sold at less than market value, been approached for ex post facto approval in respect of the farm Hartbeesfontein. only. The other cases are still to be submitted to the Treasury.

Conclusion

131. The ACB has the statutory duty to access applications, make judgements as to the merit of applicants, make allocations and determine selling prices. Although opinions will no doubt differ as to the merits or wisdom of particular decisions. this does not mean that the ACB. in such cases, did not exercise a proper discretion and/or acted in an irregular manner. The Commission's investigation, however, revealed that in some of the cases discussed in this report the ACB for no apparent reasons deviated from policy, and an apparently inconsistent policy was followed with regard to certain allocations and determination of selling prices. In at least two cases, namely the allocation of the farms Fairfield and Groothoek the ACB in the Commission's opinion acted in an irregular manner. The irregularities et cetera and the consequences thereof have been pointed out during the discussion of the various farms and are not repeated.

Recommendation

132. The Commission recommends that:

132.1 Whenever decisions regarding the disposal of State land are made, the ACB or any other authority which deals with the disposal of State land, should always record the reasons for decisions which are made. This applies to decisions to allocate land to an applicant or to decline an application, or to set the purchase price and other conditions of sale. This should be done with particular care when there is an apparent deviation from norms, or where the decision is apparently inconsistent with other decisions.

132.2 Active steps should be taken to ensure that the process of allocating State land to members of the public is not only fair but is seen to be fair.

132.3 In order not to have to take decisions on outdated information steps should be taken to ensure that material information regarding farms over which the State holds a bond to safeguard its interest, is obtained at regular intervals.

132.4 In view of the ACB's policy to assist those who are not able to compete in the open market, it is difficult to understand why farms, especially those that were acquired to safeguard the State's interests, were sold to persons who already owned farms at prices that were substantially less than the market value and/or the price paid by the State. The Commission consequently recommends that if it is decided that land should be sold to established farmers, it should be sold on the open market. Uneconomical units should be dealt with in terms of the guidelines laid down during 1992 by the then Deputy Minister of Agriculture, if such economical units can not be made available to beginner small farmers.

132.5 With the exception of the farm Hartbeesfontein, full particulars of all the other farms mentioned in this report and which were sold for less than market value, should be submitted to the Treasury without delay, to enable the Treasury to decide whether ex post facto approval for the sale of these farms should be granted. It should also be considered to forward a copy of this report to the Treasury.

132.6 If it becomes necessary in future to acquire land in order to safeguard the State's interest therein, a decision as to what should be done with such land should be taken without any unnecessary delay, to prevent any neglect and that the infrastructures fall into disrepair or are removed unlawfully.

132.7 To avoid decisions being made on outdated information, steps should be taken to regularly update information regarding farms over which the State holds bonds, which will ensure that whenever a decision regarding such farm has to be taken, it is not taken on outdated information.

133. Valuation is not an exact science. It is a field which requires both expertise and experience. A proper assessment of the core unit of comparable sales requires this expertise and experience. For this reason it is recommended that, if it is decided not to sell State land, especially valuable land, on the open market, an experienced independent valuator should be requested to value the land, instead of merely relying on the experience of the members of the decision making body and/or a body such as the local Agricultural Credit Committee.

134. The sale of land out of hand, whereby other interested persons are excluded from competing for the land, should be avoided wherever possible.

ANNEXURE A

ALIENATION OF STATE LAND BY THE AGRICULTURAL CREDIT BOARD