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Corruption Watch calls for enquiry into misadministration of mining royalties

JOHANNESBURG – Civil society organisation Corruption Watch (CW) has recommended that a commission of enquiry be established to determine the scope and degree of alleged misadministration and misappropriation of mining royalties.

The organisation on Tuesday launched its ‘Improving Transparency and Accountability in the Management and Administration of Mining Royalties and/or Community’ research report, which states that there is little transparency around how much royalty payments have amounted to or what that money has been spent on.

Prior to the gazetting of the Mineral and Petroleum Resources Development Act (MPRDA), and especially during the previous dispensation, the mineral wealth under a portion of land belonged to the land owner, explained Richard Spoor Attorneys’ Johan Lorenzen.

CW lead researcher Mashudu Masutha on Tuesday noted that the Bantustans, or homelands, of Bophutatshwana and Lebowa were located on immense mineral wealth. She explained that the leaders negotiated community royalties from mining companies operating within the homelands’ jurisdiction.

The new dispensation and later the MPRDA arranged for a continuation of these royalty payments, but under the auspices of the new provincial governments, in which the money from the royalties would be transferred into development accounts (D-accounts) held by a province’s Department of Cooperative Government and Traditional Affairs.

Masutha explained that the provincial government would recognise the traditional council, which typically comprised a 60:40 split between members elected by the royal family and members elected by the community, for a specific term, during which the council would act on behalf of the communities and petition to withdraw money from the D-account for the communities’ benefit.

She noted that the Lebowa Mineral Trust controlled 1 500 title deeds, valued at between R680-million and R700-million, and which reportedly paid out R40-million a year for the development of the communities.

Meanwhile, the North West has 947 title deeds, with a combined valued of more than R2-billion.

Despite this, communities that supposedly benefit from these royalties are still impoverished and, in many cases, no one can determine how much money is in any given D-account, who signs off on the royalty payments, what the money was allocated for and where the money has gone.

“The plunder of mining royalties may be the most appalling tale of corruption and maladministration in a country where such tales abound. It involves huge sums of money stolen from some of the most poverty-stricken communities in the country.

“And unlike the stories we read about and hear about every day, it is largely happening under the radar precisely because the affected communities have no voice,” CW executive director David Lewis commented.  

CW’s research is closely linked to the Maluleke Commission of Inquiry into the Bakgatla ba Kgafela community, former Public Protector Thuli Madonsela’s report on the misappropriated millions of the Bapo-ba-Mogale community, and the evidence brought by community members during the CW community consultative engagement meetings in the North West.

Masutha acknowledged that, in some instances, commissions of enquiry do not always work, but implied that the “veil of secrecy” – described as such by Madonsela in her Bpo-Ba-Mogale report – around financial information pertaining to these royalties, must be pierced.

The CW has also recommended that a mining royalties best practice guide be adopted, that a proper monitoring and evaluation system that penalises transgressors be implemented, that communities are supported to strengthen their negotiating position, and that there is greater collaboration with civil society to help build capacity.

Further, it called for better consultation strategies, mechanisms requiring audited statements from traditional councils, community trusts and mining houses, changes to the governance and composition of traditional councils, greater access to and transparency regarding financial documents and mechanisms to limit political interference.

“It is imperative that all stakeholders, including the communities themselves, take greater responsibility for addressing the needs of mine-affected communities, in the quest to support the development of impoverished communities living on land containing vast reserves of mineral wealth,” the CW stated.


Meanwhile, Department of Mineral Resources (DMR) policy development deputy director Sibusiso Kobese, who attended the report launch, stated that the department would review the report before deciding on a way forward.

However, he implied that some component of the lack of information surrounding the royalties could pertain to the transitional provisions, in Schedule 11 of the MPRDA, which state that traditional councils would have to approach the DMR and petition for the continuation of contractual royalties. After the initial five-year transitional period, the councils would have to approach the DMR on a yearly basis.

Masutha commented that the lack of oversight of both the provincial governments and traditional councils was problematic.

Lorenzen added that it imposed and reinforced a western ideal of absolute monarchy, on traditional councils that were effectively meant to act in the community’s interest.

CW chairperson and struggle stalwart Mavuso Msimangsaid the new dispensation was “mandated to fight for the uplliftment of the most vulnerable.”

He noted that progressive legislation had been introduced, but added that it was incumbent that parties who claim to act in the interest of the people, step in when there are things that are overlooked in the legislative process, so that government, and the judiciary can rectify the legislation to enable a more equitable system, where necessary.

He stressed that this “more equitable system is needed . . . because it is the [the communities’] land”.

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