BATTLE TO RECOVER R3.5M VAT REFUND

Empowerment fund criticised for not helping community projects

THE NATIONAL Empowerment Fund (NEF) is fighting to recoup just over R3.5 million paid back as a VAT refund to one of its beneficiaries, and was expected to take the matter to court today.

The Orange Farm Community Trust received funding to the amount of R50m from the NEF towards the acquisition of a 10 percent stake in a shopping mall in the area, valued at R500m in 2014.

Four other stakeholders own the rest of the shares.

Set up in 2011, the trust had as its objective the desire to see to the socio-economic needs of the beneficiaries, the community of Orange Farm, a township in the Vaal area south of Joburg.

At the heart of the matter is the allegation by the trustees that the NEF had never disbursed any funds to them to assist with setting up community projects in Orange Farm.

One of the trustees, Suzan Nteboheleng Mosia, deposed an affidavit last year, stating that “the loan agreement does nothing more than causing immense harm to the interests of the Orange Farm community”.

The trustees allege that any money that should accrue to the trust from their shares of the local Eyethu Mall should not go to anyone but the trust.

Members of the community come to the trust each time they need help towards any of their needs, but to their dismay, they invariably find that the trust is in no position to help them.

In her affidavit, Mosia says: “The trust has no money at all. The trust has no money to rent and pay for offices; no money to organise community meetings to inform them about the status of the loan agreement through radio and print announcements, among others. Simply put, the trust is dysfunctional.”

She adds: “This is mainly because the applicant is in full control of the financial administration of the loan agreement, much to the unlawful exclusion of the other party to the loan agreement, the trust.”

When rental collection agency Broll Property gets the monthly revenue from the tenants and distributes it to the shareholders, not a cent comes into the coffers of the trust, the trustees say.

They allege the money goes to the NEF, who do nothing for the community. This, the trustees say, “flies in the face of the objectives upon which the National Empowerment Fund was founded”.

NEF spokesperson Moemise Motsepe says: “Driven by the NEF’s mandate of growing black economic participation in South Africa, the investment rationale was for the purpose of supporting local economic development, promoting entrepreneurship, property development and ownership, enabling skills transfer and employment creation, and facilitating sustainable commercial value for the community.”

He is unable to say which specific projects, if any, the NEF’s help has established in Orange Farm.

Motsepe says of the matter: “The business has grown appreciably over the past four years, and the NEF has relied on its vast experience and expertise as a leading development financier to help maximise benefits for the community, an objective to which we are steadfastly committed.”

The trustees believe none of this is true. They claim their attempts to settle their loan agreement with the NEF have been ignored.

Says Motsepe: “As a publicly funded development finance institution, the NEF has the moral and legal obligation to ensure that the resources entrusted to its care are used judiciously and diligently.”

But it would appear that the money intended to benefit the community of Orange Farm is excluded from this fiduciary role that the NEF champions.

Instead, all they seem intent on doing is to decide on the composition of the trust’s board, which is hardly their province.

The disputed windfall has been frozen and sits in a Nedbank account.

The bank is also cited as a respondent in the NEF summons to recover the funds.