Spirited Hanekom breathes down KWV's neck
A legal battle has begun between
the co-operative and the government, writes HEATHER FORMBY
KWV expected its proposal to be ratified on Thursday but was "surprised" to be blocked by Hanekom. KWV managing director Willem Barnard says Hanekom was informed of the plans in July. But the advocate retained by the Land and Agriculture Policy Centre and who advises the minister, Steven Goldblatt, says he became aware of the timeframe only in October.
"Everyone was informed - it was a public debate," says Barnard, who lobbied KWV's 4 751 members and received a positive response from 84% of them. One source, however, believes KWV tried to push the process through before anyone could take note of the implications and that it was "less than candid with the minister".
The battle centres on the assets KWV has acquired in its role as a statutory monopoly. The government and CWSI members are questioning whether all these assets belong to KWV members. KWV has operated under the Wine & Spirits Act and with certain privileges and has been able to control the distilled wine and spirits industry. It has also controlled the wine surplus. Court documents claim that KWV contributed R11,9-million of the surplus contribution to its own reserves in 1995. Goldblatt says it could be argued that funds and assets were built up using statutory levies earned on wine and spirits. "Cellar space, for example, was built at no cost to KWV but from levies raised in its capacity of managing the surplus wine supply," he says.
In terms of the Scheme of Arrangement, KWV will distribute R1,6-billion to its members if it becomes a company. Assets will be allocated to members who have contributed to the wine pool over the last 15 years on a pro-rata basis. Barnard says the state has no claim on these assets "as it made no contribution whatsoever to KWV since its inception".
Barnard says KWV would not mind giving up its surplus control powers if it were restructured though "members might want to continue with the system without statutory requirements". Wine and spirit wholesalers such as Stellenbosch Farmers Winery, Distillers Corporation, Gilbeys, Douglas Green Bellingham and Seagrams have joined Hanekom in his application to delay the restructuring, saying in an affidavit that any change to the structure of KWV would have wide-ranging implications for the industry and shouldn't be done unilaterally. They conclude that if KWV were to become a company and keep its special powers, it would compete unfairly.
Hanekom says he wants to see that a proper regulatory framework is in place.The case was postponed until March 25 when it will be decided whether the minister can intervene in the proceedings.