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Did greed kill the yacht club?

Transnet eventually makes a move against non-paying tenant after losing R3.6m in rent.
Members of the Mossel Bay Yacht and Boat Club, which was formed in 1956, say several such clubs have failed or been changed to drinking and dancing venues in recent years. Image: AdobeStock

The ongoing tale of woe at the former premises of the Mossel Bay Yacht and Boat Club (MBYBC) has entered a new stage.

Two and a half years after the Transnet National Ports Authority (TNPA) evicted MBYBC and awarded a rental contract for the property to a small private company, the authorities have started the legal process to evict the new operators.

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It came to light that the new occupant, Mossel Bay Waterfront (Pty) Ltd, has not paid any rent, nor did it bother to pay the initial deposit.

Despite TPNA neglecting to collect the deposit of more than R1 million from Waterfront at the beginning of the rental period, it apparently allowed the tenant to occupy the premises. Waterfront has been squatting there since February 2019.

This was disclosed in an email sent to Moneyweb by a whistleblower, who attached a statement of all transactions to the end of August 2020. At that date, the outstanding balance exceeded R2.4 million.

That it took TNPA more than two years to take corrective action stands in stark contrast to the quick and severe action Transnet management and its legal team took to evict the yacht club.

A thick pile of court documents shows the lengths to which TNPA has gone to ensure that the premises went to Waterfront.

MBYBC argues in court documents (asking for a review of the process when Waterfront got the contract) that the yacht club has been paying its rent every month for more than 60 years. When TNPA refused to extend the club’s rental agreement, the rent amounted to more than R108 000 per month.

It seems like easy money to earn, but TNPA elected to call for tenders and picked a bad contender.

History

MBYBC members were surprised when a tender for a new lease agreement in 2016 was awarded to the newly-formed private company.

The yacht club had had a rental agreement with the port authorities since its formation in 1956, and all the buildings and facilities were built by members at their own cost over the years.

The then South African Railways & Harbours Administration offered 15- and 20-year rent contracts and charged nominal rent, as responsible governments do to support beneficial activities like sporting bodies.

The rent increased slowly over the years, and then sharply after Railways & Harbours morphed into Portnet.

According to a newsletter sent to members towards the end of 2018: “When the last long-term lease ended in 2004, the club was given only a 5-year lease and the rental for the premises increased drastically from R17 000 per year to R17 000 per month. This amount has now escalated to R74 000 per month for the club’s premises, excluding the mooring rental fee of R35 000 per month.”

By then, in late 2018, the club was embroiled in a three-year legal battle to try to hold on to the property in which members have invested maybe millions over the years.

Surprise

The surprise came when TPNA announced the result of the tender in 2016. In short, MBYBC added the normal 10% escalation to its existing rent to its bid, offering to pay rent of just less than R118 000 per month.

The club’s committee probably thought it was good enough for a property that the club could argue ‘belonged’ to them, seeing that all the buildings and improvements were paid for by members. A history of the club notes that the club started off on nothing more than a rocky shore and built everything itself.

These improvements included not only the large clubhouse, bathrooms, storage space for equipment, and reclaiming land from the sea to build a new pier and slipway, but also R1 million spent on a floating dock inside the harbour that contained 50 convenient walk-on moorings.

Unfortunately, the unknown Waterfront tendered R200 per month more and won the tender.

TPNA has subsequently lost out on more R3.6 million in rent since evicting MBYBC (based on a 10% escalation). This is a small amount in comparison to Transnet’s annual fruitless and wasteful expenditure of billions, or taxpayers’ continued support to the tune of billions.

Read: Transnet still suffers from state capture’s harmful impact (Oct 2019)

Mossel Bay Waterfront

Waterfront belongs to Verna Durand, the wife of a former member of the yacht club.

Durand convinced TNPA that the company was largely black-owned and committed to transforming the yacht club’s overwhelming white membership.

MBYBC called for a review of the tender, arguing in court documents during the review and subsequent appeals that Waterfront failed to comply with most of the tender conditions. The most compelling argument was that Waterfront could not prove that it would be able to pay the rent.

Waterfront did not submit three years’ worth of audited financial statements as required by the tender conditions, its tax affairs were unknown, and it could not provide any guarantee or surety that rent would be paid.

‘Fair’ process

Durand countered that members would support a new club and that membership fees would cover the rent.

TPNA submitted to court that it is nonsensical to expect a new, female-owned company with largely black shareholders to submit three years’ worth of financial records.

The courts, all the way to the Cape Town High Court and the Supreme Court of Appeal, ruled against MBYBC by saying that the process was fair.

MBYBC’s pleadings that it was a non-profitable organisation in good financial standing fell on deaf ears and the club was finally evicted at the beginning of 2019.

Meanwhile, TPNA and the courts failed to pick up that Waterfront didn’t have any black shareholders.

The Companies and Intellectual Property Commission (CIPC) database show Durand as the only director and only shareholder of Waterfront in its initial registration.

More telling about the standing of Waterfront is that it never submitted any of the required returns after the initial registration.

Durand did not respond to questions about its black economic empowerment (BEE) standing.

Sailing came to a halt

Yacht club members didn’t take kindly to the hijacking of their club and most of the 700 MBYBC members refused to join the new club under the umbrella of Waterfront.

Neither Durand nor any official of Mossel Bay Waterfront responded to queries about the club and its membership. It is unclear if the new club was formally founded.

The Waterfront website and Facebook page do not mention a club committee, election of office bearers, member meetings or a constitution – as one would normally expect when looking at sporting bodies.

After nearly three years, the website contains mostly lorem ipsum text (meaningless placeholder or dummy text to fill a space in DIY website templates) and the Facebook page largely advertises food, drink and rock bands.

The Waterfront club is also not affiliated to SA Sailing, the controlling body of sailing in SA that ensures safety standards and regulates sailing.

National and international sailing events were cancelled and the development sailing initiative at the club came to a halt.

Some owners of larger boats moved to other yacht clubs, while most refused to accept a new rental agreement for their moorings. Boat owners had previously paid a refundable capital contribution to MBYBC to secure a mooring and paid around R600 per month in rental.

Durand said these rights lapsed and demanded R2 200 annual membership fees for membership of the new “club” and monthly rental of R1 800 per month for a mooring.

Uncertain outlook

The future for the MBYBC, the yacht club without a home, remains uncertain.

Evicting Durand might take a long time, and there is no guarantee that TNPA will do the right thing next time around.

TPNA responded to questions with a terse email, saying that legal processes are under way to deal with the situation: “… as matters related to the contract are both confidential and sub judice, we will not be commenting publicly and request that the media allow the legal process currently under way to take its course.”

It will take decades to undo the damage, with members pointing out that the situation is not unique to Mossel Bay. Several yacht clubs have failed in recent years, or have been changed to drinking and dancing venues.

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COMMENTS   31

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One cannot help but wonder if palms were greased in awarding the contract to Mosselbay Waterfront? It is after all the South African way of doing business.

I have sailed at MBYC in 1979.. a beautiful location. The club offered a great training programme for youngsters. It seems without a a question of doubt that the “tender ” was rigged. Many jobs were lost in the process. A similar scenario is playing off in Mandella Bay and Richards Bay killing the yachting industry and causing job losses.

Yip -the local Municipality did the same with all the long established boat and sport clubs in the RB area. in 2017/18 they zoned the clubs as business enterprises and not social clubs refused to renew the 40 year leases of the 2 ski boat clubs and RBYC and in creased the rent from a nominal R180 pm to R85 00pm for the yc and R58 000 for boat clubs. They gave the soccerclub a R2million bonus..

Ah..who remember the slogan in 1992 vote “Yes” for “our Sports”!

Funny

As long as it’s black owned that’s the only thing that matters to our ruling elite ……Success of the enterprise is irrelevant! Creating quality companies or organisations is not important to them . Bizarre but the African way eg Mugabes farm grabs

Transformation = anc = corruption = Everything they touch stops functioning.

Yes, yachting is a pale male sport so has to be stopped…
Another success story by our new friends…

Yes, of course (no pun intended), just like golf which is perceived by the proletariat as another elitist white sport. Now, egged on by the EFF rabble, King David in Mowbray is earmarked for “affordable” housing. However, little does the hoi polloi realise that it is their masters i.e MP’s, nouveau riche business leaders, etc, who form the majority membership at just about every top golf club in the country.

Fascinating that a random bid from someone unfamiliar with the inner workings of the process came in at 0.0017% higher than the responsible incumbent who has plowed in millions over decades.

And while we are at it, let’s waive the 3 year financial statements requirement as it will get in the way of greased palms.

Hopefully the buildings have not been ransacked. In Johannesburg this would be the case.

What about keeping a public good as a truly public good and not selfishly a private good.

Usually you can’t put a price on what is public good, but then the state has to invest in make public good attractive to ALL the public, and not just fishermen and boat owners.

Time to make this a true public good and a public asset that everyone can use.

And the worst thing is that our courts were complicit in this disaster. Instead of making a legally sound decision, they decided to play politics. The ANC has much blame to carry for a dysfunctional SA, but so do our courts. We have a constitution, consisting of many pages, covering many issues, but our courts seem to have gotten stuck on the BEE page. That seems to be to only important issue, that overrules any other issue, when they have to make a decision. It sounds much like the apartheid years. Clearly we have learned nothing.

Clearly, a behind-the -scenes plan was orchestrated to takeover the yacht club premises thinking the existing members were easy cash cows ready for the milking. (Note the intention to increase membership fees and berth rentals)

The cat is out the bag. It’s not gonna happen now… Waterfront is just a bunch of crooks.

A few blogs about the BBBEE and tenders etc.. Not disagreeing but I fully agree with you about the behind the scenes plan. As quoted above “Waterfront belongs to Verna Durand, the wife of a former member of the yacht club.”. In these clubs, body corporates, churches you only need one such person (and there always seems to be one or more) that do such things for self gain only unlike the other 99% of members who are all walking in the same direction. If this type of toxic behavior is not quickly called out and dealt with the institution becomes toxic and self entitled. When confronted these types always come up with the “we put in all our time and resources with no remuneration”.

As an example I had a colleague at work who along with others were threatened at church (of all the different types of associations) with a firearm when the committee were considering rotating the banking payment duties.

Going by past dealings of state owned entities I am sure there is a lot more to this awarding of the tender than is in the public space at this stage. TNPA killed off a landmark institution and BEE is just the smoke screen. If logic & sanity prevailed TNPA could have taken the better route and built in transformation as part of the lease of the yacht club.

What is it with this lack of ETHICS

What a joke, anybody in their right mind taking an offer of R200-00 per month more on a large amount like this must be ANC and must be crooked!

Another SA FAIL, between Moneyweb’s and Carte Blanche’s reporting, the prognosis is looking worse and worse, to the point where even the Makwera’s might see fit to go back home soon!

Its just black on white racism.

Looks like old fashion tender fraud to me!

I think they should turn it into a transformed swimming club, everyone gets to do a compulsory 1km out to sea when they join .. free t-shirt upon return

No need to keep stock of t shirts — BBE comrats cannot swim !!

Another day, another sacrifice at the alter of afronationalist interests and corruption

No !!! The ANC and Cadres did !!!

Er, not to state the obvious..Verna Durand, the owner of Waterfront is a white Afrikaner. So lets dispense with the comments about ANC corruption and BEE patronage.

Who awarded her the tender? Who was responsible for choosing her and why? She lied about having BEE partners. Her company did not comply with the tender conditions but they still got awarded the contract? Who did she bribe at the TNPA?

Oh ok, so it is not fine for a black person to be given a bribe but it is fine for a white person to give a bribe. Judging by the comments, it clearly is the case here.

It’ OK to be a bit slow Billy, I am too. But then, I try to hide it. You should too.

IMHO when stealing or crime is taking place there seems to be some form of brotherhood and unlike other endeavours it seems to naturally cross racial lines and party lines very easily whilst all is going well. There are a lot of examples of this at the Zondo Commission and they even go further to publicly stick up for each other like brothers.

The debate is then who is guiltier (because they are both guilty), either the one who pays or receives the bribe. I would say the one who initiates the corruption and in this case we have NO details of this. However I can agree that it seems ANC party members seem to be the common denominator a lot of the time which can lead you to believe that they are the initiators. However in this case the ex member had inside details of the goings on at the club and the possibility of “milking the members” and this would make me speculate that this is where the scheme started.

No yacht club it’s just a pub now so yes it did

Algoa Bay Yacht Club in PE went the same way in 2017. Members built the club from the ground up using their own money. Portnet then re-valued the now impressive building, quadrupled their rent, club became unviable. The pale, male and ageing committee fell out with the harbourmaster and ABYC got evicted due to non payment of rent. Tender awarded to a function venue operator. ABYC now just a PO box.

Fortunately the marina is a separate NPO and has escaped this drama to some extent.

Plenty space to rent in the harbour grounds but impractical transformation requirements and the case of ABYC creates too much uncertainty I guess.

End of comments.

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