Shell accused of benefiting from South African apartheid-era land law

Campaigners say oil company is paying just 192 rand (£13.75) annual rent for two filling stations in impoverished KwaZulu-Natal

The Guardian, David Smith in Johannesburg, Thursday 21 March 2013

Shell says it paid a substantial sum upfront when it signed a 50-year
contract for the sites. Photograph: Toby Melville/Reuters

Remote and unspoiled, Umgababa is a small but aspirational South African beach resort washed by the warm Indian ocean. Tourists who veer off the beaten track to get there might feel somewhat isolated, but for the reassuring presence of two Shell service stations along the way.

The oil giant is not so welcome, however, to a community where land ownership remains a highly inflammatory subject. Shell stands accused of paying rent of just 192 rand (£13.75) a year for each of the two stations – barely enough to buy enough petrol for a 100km journey. The company strongly denies the claim.

The dispute comes against the backdrop of widespread poverty in KwaZulu-Natal province and the imminent centenary of the 1913 Natives' Land Act, which resulted in the systematic dispossession of black South Africans. Even under democracy, millions of hectares of state-owned land have still not been transferred to those who live on it.

The Shell anomaly is being investigated by South Africa's parliamentary oversight committee on rural development and land reform. Stone Sizani, its chairman, said: "It's a huge unfairness on the part of Shell to the community there. They're making huge sums of money from those filling stations and what they're paying is the equivalent of an indigent family for a piece of land."

He added: "Nobody can explain how Shell got such a piece of land. Even if it was done during apartheid, Shell should be feeling ashamed."

Shell obtained permission to occupy (PTO) during the apartheid era, when black people were not permitted to obtain title deeds to land. A PTO holder once paid a token rent to the government; now it pays it to the Ingonyama Trust Board, which administers about 2.8m hectares of land in KwaZulu-Natal. The board says the agreement legally cannot be changed, despite the stations' profitability.

Shell denies the 192-rand claim, saying that when it signed a 50-year contract with a body called the Ithala Development Finance Corporation, it was required to pay a significant sum upfront. "Shell paid total costs of approximately 29m rand [£2m] by 2000," spokeswoman Jackie Maitland said on Wednesday.

"Umnini tribal land is now administered by the Ingonyama Trust, who are deemed to be the landlord of these sites. The PTO remains held by Ithala, who Shell signed the lease agreement with in 1988. All rentals have been paid in full for the duration of the 50-year lease."

She added: "We are aware that nominal amounts can be paid on an annual basis by individuals to local chiefs for permission to occupy land. This process does not apply to Shell, as we entered a prepaid rental agreement with Ithala."

Informed of Shell's response, Sizani stuck to his guns, saying he had asked the Ingonyama Trust board to check its records and "the outcome is still the same". His message to Shell was: "Are you aware that, in South Africa, old age pensioners get 1,000-plus rand per month individually? What can 192 rand per year for the whole community do?"

The way the land was assigned also highlights a tension between longstanding traditions in rural areas, where a local chief still wields power, and the letter of the law in a 21st century constitutional democracy.

Athol Trollip, shadow minister of rural development and land reform, who has visited one of the stations, said: "The problem with these Shell filling stations is that this land would have been granted through a traditional leader."

He added: "It is a crazy situation because they have this arbitrariness in the way they allocate land. There's no lease held, there's no formal transfer of ownership."

The South African government recently claimed it has completed an audit of state-owned land, but Trollip and others are sceptical.

Johan Kruger, director of the Centre for Constitutional Rights, said: "One of the biggest concerns is that we just don't know what's out there. We don't know how much the government owns and how much has been redistributed or on a long lease.

"It is a responsibility the government has not fulfilled yet. There is a huge amount of land in government hands that could be transferred to black ownership."

An annual rental fee of 192 rand "can't be right", he added.

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