The Land Bank whistleblowers hung out to dry

Marko and Debbie Vogler thought they were doing the right thing when they reported Land Bank corruption to the Scorpions. After death threats and an assassination attempt they were put on witness protection, but then dumped by the state with no explanation. Their ordeal provides a disturbing snapshot of shady dealings by corrupt Land Bank officials who have never been brought to book despite overwhelming evidence against them, writes Stephan Hofstätter.
Issue date : 22 May 2009

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Marko and Debbie Vogler thought they were doing the right thing when they reported Land Bank corruption to the Scorpions. After death threats and an assassination attempt they were put on witness protection, but then dumped by the state with no explanation. Their ordeal provides a disturbing snapshot of shady dealings by corrupt Land Bank officials who have never been brought to book despite overwhelming evidence against them, writes Stephan Hofstätter.

The idea of running an environmental education camp for underprivileged children came to Marko Vogler while he was running a scuba-diving club at the KwaZulu-Natal high school where he taught. “Kids who’d never had the chance to swim would come out of the water wide-eyed after being exposed to a whole new world,” he says. “I thought getting children together at a wilderness school to learn about the environment would be the perfect way to break down barriers of race, class and religion.” With this in mind, Marko and his wife Debbie registered a non-profit organisation in 2004 called Aliwal Shoal Environmental Education Foundation. The foundation planned to buy land and build a resort and conference centre, with running costs generated by a fractional-ownership scheme, where investors would own a tradable share with fixed rights and obligations. In the meantime, the Voglers identified two coastal properties totalling 84ha on the KwaZulu-Natal south coast and signed sale agreements for R14,5 million valid for a year.

Shady dealings
Given the social and educational value of their venture, the foundation decided to approach government for start-up funds. This route proved fruitless despite several promises, so the Voglers placed an advert in the press. In 2006 they were introduced to a group of investors who owned a company called Guilder Investments 10.
Guilder’s shady dealings would later be detailed in a report completed in September 2007, outlining the findings of a forensic audit by Deloitte into housing developments financed by the Land Bank. A key finding was that property-development loans fell outside the bank’s legislated mandate of funding agriculture and land reform.

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In the same month Farmer’s Weekly became the first publication to expose the Land Bank for violating its mandate by bankrolling the luxury polo estate Seaton Delaval on the KwaZulu-Natal North Coast. The Deloitte report, obtained by Farmer’s Weekly, but never publicly released, also fingered several executives in irregularities ranging from conflicting interests and abuse of power, to fraud and misappropriation of funds. The investigation coincided with a rash of resignations, suspensions and dismissals of senior officials and board members.

Marianhill development
The report shows that in May 2006 the group of investors who promised to fund the Voglers’ environmental school had been granted a R100 million Land Bank loan via Guilder Investments, to build a residential development near Marianhill worth an estimated R2,7 billion on completion. The report said the loan agreement stipulated a breakdown of R35,6 million for the land and R64,4 million for bulk infrastructure.
The sole signatory approving the loan facility was a senior Land Bank executive named in the report. The forensic audit identified several serious problems with the Guilder loan. First, Land Bank policy states loan disbursals require two signatories. Second, the land had been zoned for industrial development, violating the bank’s legislated mandate to fund agriculture and land reform. Third, the Land Bank approved the R100 million loan based on a valuation that appears to have been fabricated by the applicant, Guilder Investments.

Despite these shortcomings, the Land Bank executive approved the loan facility and R45,6 million was disbursed. Guilder was unable to make interest payments and no further disbursements were made. It’s unclear how much, if any, of the money paid to Guilder has been recovered.

Alarm bells
When the Guilder directors approached the Voglers with the news they had access to over R3 billion in investment funds, they were overjoyed. Alarm bells should have rung when they were instructed to change their foundation into a profit-making company, Aliwal Shoal Property Investments, and told their project would be funded from the proceeds of a housing development on the coastal properties.
The property developments would be owned by a shelf company called Danzig Trading 32 and Vogler was made a silent shareholder of Danzig, with his stake held by one of Guilder’s directors. “We were just happy our dream of creating an environmental-education centre would come true,” says Marko Vogler.

He was asked to source three more properties and submit purchase offers in Aliwal Shoal’s name. The total value of these, together with the coastal properties he’d originally offered to buy, came to R21 million. When Vogler was instructed Aliwal Shoal must offer to “sell” the properties to Danzig for R34 million, his suspicions were finally aroused. “I asked how I could sell properties I didn’t own and why the price had been inflated, but was assured it was all above board,” he said.

In July 2006, two months after the R100 million Marianhill loan was approved, Danzig used the inflated sale agreement to apply for another Land Bank loan of R154 million. Of this, R34 million would pay for the land and R120 million for bulk services. In August, the same Land Bank executive who approved the Marianhill loan promptly issued a letter of intent to loan Danzig R154 million, the forensic audit shows. His kickback, according to Vogler, would be a silent stake in Danzig and a R7,5 million coastal property.

Vogler believes Danzig expected to be reimbursed a sizable chunk of the R120 million earmarked for infrastructure costs from the municipality, as one of its directors was a senior municipal official. From conversations with his Danzig partners Vogler also became convinced they were involved in several similar scams at the same time. The Deloitte forensic audit found the Danzig loan application contained “a misrepresentation in the form of an inflated purchase price for the property”, and the same bank executive involved in the Marianhill deal had abused his position to have it approved. In the end, no money was disbursed because the official, who the report refers to as the deal’s “main sponsor”, resigned from the Land Bank in August 2006.

Assassination attempt
Early in 2007, after months of being stonewalled by his Danzig partners who couldn’t explain why his environmental project wasn’t up and running yet, Vogler offered to sell his stake and report any irregularities to the authorities. This set in motion a chain of events that would change the Voglers’ lives forever.The Voglers reported their information to a local politician they trusted, who passed it on to the Scorpions. The Voglers then received several threatening phone calls, late at night. Then Vogler’s father, a founding member of the Aliwal Shoal foundation who had moved from Germany to help get the project going, was approached outside their home by a man driving a blue BMW. “You’re dealing with very resourceful people,” the man said. “They’re very well connected. Leave it alone before it is too late.”

Weeks later the same vehicle tried to run over Vogler’s father. The BMW was later seen trailing a bus the Voglers’ children took to school. Vogler’s father reported these incidents to the German embassy, who conducted their own investigation. They deemed the threat to the Voglers’ lives so great they offered to pay to relocate the entire family to Germany. Vogler’s father accepted the offer, but by then Marko and Debbie had been placed in the witness protection programme and were told they couldn’t leave the country. After a short stint in a safe house in KwaZulu-Natal, the Voglers were relocated to a coastal town in the Western Cape. Only their handlers, who drove them to meetings in Hermanus with the Scorpions, and Deloitte investigators, knew where they lived. After several more meetings with a senior prosecutor in Cape Town, they believed they would next hear from the prosecuting authorities when called to testify in court.

In November 2007 the Deloitte report was handed to Cabinet, which immediately, recommended criminal proceedings be launched against executives it implicated. But weeks later, on the eve of the ANC’s Polokwane leadership conference in December, the decision was mysteriously rescinded, sparking widespread speculation of a political cover-up. Days after Cabinet’s about-turn, the Voglers’ handler knocked on their door; they were no longer needed as state witnesses and were ordered to vacate the safe house within a fortnight. They were being cut loose with no explanation. For the next year the Voglers survived on the charity of friends and their church, who fed them and arranged accommodation for weeks or months at a time.

Several attempts at getting full-time jobs fell through when prospective employers learned they’d become embroiled in the Land Bank saga. “Despite being signatories to international treaties on corruption providing for damages for loss of income to whistleblowers, we’re afforded no protection or redress in this country,” says Vogler. “That’s why we decided to devote our lives to improving the lot of whistleblowers and fighting corruption.” To this end they set up a website as a forum to share their experiences and invite other whistleblowers to recount theirs.

They also launched a newsletter of press clippings sent to government agencies outlining the cost of corruption to our economy and society, and developed a business plan for an anti-corruption model. After approaching all major political parties for support, the Christian Democratic Alliance (CDA) eventually provided some financial and logistical backing. Funds are also beginning to trickle in from international donors, and the governance watchdog Transparency International has taken their proposal to the World Bank and United Nations.Contact Marko and Debbie Vogler on [email protected]     |fw