R51m needed to rescue Magwa

According to court papers, it will cost some R51-million to patch together the ruined tea estate outside Lusikisiki which once produced 70% of the country’s total tea production.

Placing the estate into business rescue will give it some breathing space to get its house in order and start over with what ECDC CEO Ndzondelelo Dlulane refers to in court papers as a “clean sheet”.

The government has, since the 1990s pumped hundreds of millions into the poorly managed and ill-fated company, with very little to show for it.

Between 2004 and 2007 alone it funded the project to the tune of R41-million.

An Indian concern, GV Gokal, had some success in assisting a turnaround and by 2010 things looked a little rosier with “close to break even” production being reached, according to court papers.

The project was by then producing some 2700 tonnes of tea a year.

But in 2010, simmering labour unrest again boiled over, infrastructure was trashed and top management violently ejected. The tea estate, which seems to have always been steeped in controversy, was back on skid row. By 2014 it barely produced 100 tonnes of tea.

Dlulane said middle managers now ran the show and there was no systematic accounting or record keeping.

Acceptable levels of governance had been rendered impossible and despite significant state expenditure urgent intervention was now required.

It had been resolved that the Eastern Cape Rural Development Agency (ECRDA) would take over responsibility for both Magwa and Majola tea estates.

He said rural development and agrarian reform MEC Mlibo Qoboshiyane had agreed to make R17-million immediately available to pay salaries and settle liabilities of both Magwa and Majola tea estates.

In the new financial year the project would require another R34-million for the business rescue process, operational costs and to pay creditors.

“To walk away from the problem and the challenge would amount to a dereliction of the constitutional and social obligation of the provincial government,” he said.

But DA chairman Athol Trollip said the provincial government was throwing good money after bad unless things changed drastically.

“This is a national asset gone to rack and ruin, firstly under the department of agriculture, then the ECDC and now under ECRDA.

“More millions will be pumped into it and it will collapse again,” he said.

This would remain the case until clear ownership was established and the estates were properly run by competent, accountable management.

He said Qoboshiyane had last year countered his sharp criticisms by inviting him to “relax and come and have a cup of Magwa tea”.

“Where is my cup of tea? Magwa hasn’t produced tea for over a year-an-a-half.”

Qoboshiyane’s spokesman Mvusiwekhaya Sicwetsha said the business rescue proceedings were just part of a longer-term plan.

It was hoped ownership of the estate would ultimately be transferred to the department. In the meantime the business rescue practitioner would bring it back into operation.

“We have already offered Mr Trollip a cup of tea but he rejected it. Hopefully he will have an appetite for it soon.”