Apology to Kleinfontein

ON February 9, we published “White tribe’s dream a bonded nightmare”, an article about Kleinfontein, a mini-volkstaat east of Pretoria, and its leader, Jan Groenewald.

A number of inaccurate and unsubstantiated statements were made in the article. We also failed to seek comment from Groenewald for several allegations made against him.

The story referred to a draft report by the registrar of cooperatives. The “report” was in fact a letter seeking response from Kleinfontein directors to claims the registrar had been asked by a splinter group to investigate.

We also incorrectly stated that the “report” said multiple bonding of the same assets was “causing serious risks to investors (implying fraud)”. In fact, this statement was made by a member of the splinter group in a letter to the Independent Regulatory Board for Auditors.

We reported that members of the group raised concerns that the estate was bankrupt and accused its leadership of fraud, corruption and nepotism.

The financial statements, in fact, show the cooperative is not insolvent and is still generating positive cash flow.

The allegations of fraud were based on the refinancing of members’ shares from R1 000 to R1 (which would affect the value of collateral for loans) and on the multiple bonding of the same property to Absa and the cooperative union.

Kleinfontein said in a letter from its lawyer that the value of the shares and the rights that attach to them remained the same. It said the change in the presentation of the shares in the financial statements had been made to conform to international financial reporting standards.

With regard to the multiple bonding, Kleinfontein does not owe the cooperative credit union R30-million, as reported, although it does have a R4-million bond with Absa. Debt to the credit union is debt taken on by members of the cooperative in their individual capacities and not by Kleinfontein. Members of the cooperative do not have formal title deeds because ownership of the land does not rest with them, but with the cooperative.

The nepotism allegations rested on the fact that Groenewald’s wife, Irene, had the sole estate-agent mandate for the estate and that his son-in-law was the main developer. Although we reflected Groenewald’s response to his wife’s position, we failed to ask him about his son-in-law’s position. His son-in-law is a building contractor, not a developer.

The allegation of corruption rested on allegations that pensioners are not aware that they own their properties. The allegation that this makes Groenewald guilty of corruption has no factual basis and we retract it. It must be noted that the terms and conditions of ownership are set out in the contract with the cooperative signed by the member. The contract is further explained to a prospective applicant by a screening committee prior to the approval of membership.

Furthermore, although it is true that the South African Revenue Service has demanded payment of R5.5-million, Kleinfontein is appealing against this assessment.

We failed to ask Groenewald for his response to an allegation by one of his critics that he runs Kleinfontein like “a dictator”.

In fact, the directors of Kleinfontein are elected democratically. Each shareholder, regardless of the number of shares he or she holds, has only one vote. The board can be recalled by the shareholders.

The directors are in the process of formalising Kleinfontein and say that, contrary to our report, an environmental impact assessment has been done.

We failed to ask Groenewald for his response to allegations by the splinter group that he was stalling the formalisation process and that it was in his interests to keep things the way they are.

Members of the splinter group said that the “draft report” indicated Kleinfontein was on the verge of being liquidated. We failed to seek comment or substantiation, and we retract the statement.

We apologise to Kleinfontein and to Jan Groenewald for the unsubstantiated statements and allegations made against them.