Sirama’s land issue: billions lost while the State is unmoved

Sirama’s land issue: billions lost while the State is unmoved

By Hilda Hasinjo

Nosy-be, the island-town in the north of Madagascar, is known as the town of sugar and rum. But that was over a decade ago. Now, things have changed and Dzamandzar's sugar industry is struggling to resume. Land issues are looming large.


A satellite view of the city of Nosy-Be

It is half past noon in the village of Ampasindava, a small neighbourhood set back from the road to Dzamandzar, Nosy Be. Everything stops at this time of day. "It's inhuman to make people work at temperatures reaching 34 degrees", says Rudi, our local guide. Seeing vahiny passing by arouses curiosity among the women and children watching passers-by, but not to the point of leaving the shade.

The housing estate was built by the Siramamy Malagasy sugar company (Sirama) for temporary workers when the company was still in business. Now, the houses are occupied by those same people who pay an annual occupancy fee of 2,000 ariary per year. On the receipt sent by the Nosy-Be municipality, it is written that this fee is equivalent to a building and land tax. These occupiers are not the owners. At least, not officially. The land belongs to Sirama.

The sides of the road to Dzamandzar are good for growing sugar cane. But, they are much sought-after by land buyers.

Clément Rabe is one of the occupiers of these 4-by-4 square meters houses. Originally from the Bealanana district in the SOFIA region, about 300 km from Nosy-Be, he has been living here with his wife and four children since 1995. He is currently the neighbourhood’s head. Due to his status, he knows almost everything about land transactions in the neighbourhood. This is in fact one of the problematic plots for Sirama. A large part is occupied illegally by the inhabitants. They are growing in number by the day. "But we can’t stop them. It is the Sirama land office that deals with it. Anyway, we [Editor’s note: the fokontany] have no say in real estate transactions. We are not even consulted", explains Clément Rabe.


Regularization, squatters, town expansion ... tending towards the expropriation of SIRAMA

Since 12 September 2012, when the Council of Ministers authorized the sale of part of the Sirama lands, the leaders of the state-owned company began regularizing the status of illegal occupiers. "But since then, illicit occupations have no end in sight. Just last week [Editor’s note : end of November 2018], we were informed that the number of squatters is getting out of hand", said Mamy Rasoamahenina, the company’s acting general manager.

Sirama’s acting general manager is a former board member. He has been monitoring the case since 2009.

This Council of Ministers decision enabled 694 hectares of land to be decommissioned. But from then on, things begin to get shady. Nobody knows exactly what this downgraded land will be used for. Versions differ from one source to another. In 2012, the company's managing director, Moana Essa, told the press that this plot of land was already illegally occupied by its residents. For this reason, squatters had to pay 15,000 - 50,000 ariary per square metre occupied, depending on the land’s status. When we called him for an interview, Moana Essa refused to answer our questions, citing the fact that he is no longer the company head, and, therefore, not involved in this case.

Later in our investigation, we heard that these 694 hectares were to be downgraded to expand the town of Nosy-Be. Some say that only part of this land is intended for town expansion. Other sources will say that 27 hectares of this area are intended for workers laid off from the sugar factory. They will each be provided with 400 m² of land. Jean Omer Beriziky, the then prime minister, remembers that there was no question of selling land except to workers who were looking for a place to stay after the plant closed in 2005 and whose position vis-à-vis Sirama had never been regularized.

Nosy Be is an island with great economic potential. Tourism has greatly developed. And that's one of the reasons why the sale of Sirama’s land in the Ylang-Ylang town took off. "In 1999, under Didier Ratsiraka, the leaders began thinking of making Nosy-Be a tourist city. That is when these various manoeuvres began", says Serge Zafimahova, founder of the Development and Ethics Club (Club Développement et Éthique - CDE), who served on the committee for privatization of state-owned companies.

Serge Zafimahova denounces a privatization law fostering manipulation.


Converted to tourism: SIRAMA land sold off cheap

Nosy-Be then attracted not only local investors, but also investors from overseas. Large luxury hotels started to spring up. The island’s fate was sealed: sugar cane would no longer be its sole economic lever. Nobody suspected that six years later, under President Ravalomanana, the sugar factory would go out of business in favour of tourism.

Informed sources indicate that 212 ha of land, apart from the 694 ha mentioned in the September 2012 Council of Ministrers’ decision, have been taken over by large luxury hotels. Most of this major infrastructure is in fact built on Sirama land.

"Most of the land was acquired by acquisitive prescription. We suspect widespread corruption was involved to this effect. The Nosy-Be land survey services have cited this argument to us several times when it favours the investors", says Mamy Rasoamahenina. Acquisitive prescription is the legal acquisition of a real right that is exercised without a land title, after a period of limitation has elapsed, during which time any person can object to it or claim it in court.

A source at the local surveying department retorted that it was executives at the firm in Nosy-Be, as well as a few “big fish” at the head office in Antananarivo who were allegedly cheating to sell off these plots of land.


Rigging the law at the root of a whole illegal scheme

Serge Zafimahova, who has been closely monitoring the privatization of state-owned companies, is bringing out legal artillery to strafe the actions of the Sirama leaders. According to him, "This company has no right to sell off the company's assets. Article 10 of Law No. 2003-051 on privatization stipulates that the company's property in any form must be transferred by competitive bidding. And in its current form, selling to individuals – what they like to call downgrading - is a form of privatization. Especially as, in this case, since the new owners no longer grow sugar cane, there is in fact misappropriation of the business. Which is not in the spirit of privatization."

"Sirama is a public limited liability company with its own fixed assets. The latter do not belong to the state. The state does not have any say in the matter. Sirama lands are titled private property", explains Omega Rasetaharimalala, the Director of Public Land at the Land Planning Ministry, to signify that the Sirama selling land is rather normal, just like private owners who sell their assets without the state being able to stop them. Indeed, the legal status certificates indicate that all 6,000 hectares of the property have been registered in Sirama’s name by court order.

Does the fact that Sirama is a public limited liability company and that these lands are privately owned entitle its executives to unscrupulously sell off its assets? To Eric Raparison of United Land Stakeholders (Solidarité des intervenants sur le foncier - SIF), it does not.

"Although it is a public limited liability company, Sirama remains state-owned since the state owns 100% of the shares. Why would the Finance Ministry approve the make-up of the Board of Directors if the state had nothing to do with it? And otherwise, why would it be the Council of Ministers who decides whether to sell the land?" says Eric Raparison. In this context, he points to applicable law being rigged.

And if Sirama’s land no longer belongs to the state, how come the Industry Ministry orders Sirama to hand over part of it to a businessman? In fact, during our investigation, we were able to get hold of a letter dated 2018 and signed by the current Secretary General of the Industry Ministry, that, without further explanation, orders Sirama to hand over a plot on its title 550-BO to the Leong company. Sirama’s general management explains that this land is provided in an exchange for renovation work being done on Nosy-Be roads by this company. When contacted for further details, neither the ministry nor Palm Beach Leong’s owner, replied to our requests. However, it appeared in our research that the said Leong, owner of the company of the same name, is a close relative of former president Hery Rajaonarimampianina.

"I was a senior executive at the Nosy Be facility. I remember a minister approaching me and asking me to help him sell land to foreigners because it would bring in a lot of money. But I stood my ground because I wanted to comply with the law. And the law says it is forbidden to sell land owned by state-owned companies. Some time later, I was fired. First relocated and demoted, then fired", recalls a former Sirama manager who prefers to remain anonymous.


Suspicious talks with a firm of surveyors

For the "regularization" process, Sirama hired Zaratany, a firm of sworn surveyors based in Antananarivo. As we were unable to trace a tender notice referring to this, we tried to confirm the firm's identity in the trade register. To no avail. Sirama’s general management explains that only the Board of Directors contracted with the firm. Contacted by telephone, the Chairman of Sirama’s Board declined to receive us.

Zaratany deals with the regularization of the status of the occupiers of Sirama’s land, from processing administrative documents to boundary-marking. It is paid for the work after submitting an invoice in due form. Other services such as demarcation, picketing and boundary-marking are paid for.

In Nosy Be, this firm is singled out as the source of corruption in the sale of Sirama land. "I was charged 1,600,000 Ariary to mark the boundaries on my land. But nothing has been done", complained one woman in her sixties who lodged a complaint against the firm for extortion. She won her case.

Other sources claim that Zaratany fiddles the papers. "The fact is that there are two regularization procedures. The first involves laid-off Sirama workers, and the second one, individuals who have taken possession of land and must regularize their possession. In the proceedings, the laid-off workers buy the land at 5,000 ariary per square metre and the others at 15,000 - 50,000 Ariary, depending on their geographical location. The firm then offers buyers a price in these ranges and promises to find a nominee among the laid-off employees to bring the price down. It then splits the difference with the buyer who manages to buy a plot cheaper" says Anne-Marie, a forty-year-old whose name has been changed for safety reasons. Being married to an Italian, Anne-Marie wanted to buy land but the sharp practices were such that she decided to invest her money elsewhere.

She even went so far as to allege that executives in the Nosy-Be facility were in cahoots with the firm. "Raymond Bavimena, the farming manager, is the most corrupt of the lot. There is also Mosesy, the plant maintenance manager and Pascal Besinoa who are always around him. They are the ones who are in close contact with the sales and regularization files. We see their stamp everywhere. They approached me once."

We approached these people, who all told us they were in no way responsible for the final decision to sell real estate. They say it’s up to the Governing Body to decide whether to give applicants a title. José Claude Razafindrazaka, the manager of Zaratany in Nosy-Be, claims that it is impossible for them to fiddle the files because, before any decision, the Board of Directors looks at the land status on a map.

"If they suspect corruption, let them refer it to the Bianco! We’re not afraid because we’re clean. In any case, it is these laid-off workers themselves who squat on Sirama land and sell it. And we are the ones they incriminate", says Pascal Besinoa rising from his chair, his face flushing, in an interview during this investigation.

There is some truth to his story. We came across a file certifying that a former site manager, a laid-off worker by the name of Toahiry, sold a plot of 16 ares and 10 centiares to a Malagasy woman in 2008. The plot is located on the 548 -BO title that happens to be Sirama’s property. Although, as mentioned above, laid-off workers are entitled to only 400 square metres of land.

How did Toahiry come to own this area? We met him at the very beginning of our investigation. This former site manager then explained that seeing the other directors and executives helping themselves to the best plots, he was also tempted. What he didn’t say is that he grabbed these 16 ares and 10 centiares for himself and sold them in 2008. 


Where does the regularization money go?

Sirama's general manager says that at present Zaratany has regularized the status of 40% of these occupiers since 2009. That means 40% of the 694 hectares that were downgraded. According to the general manager, the price of land is estimated at 15,000 Ariary- 30,000 Ariary, or even 50,000 Ariary per square metre. We were tempted to find out how much the company has pocketed so far from the sale of its land.

As exact figures from Sirama are lacking, we did a simulation starting from the lowest price, i.e. 15,000 ariary per square metre. At this price, the sale of 277.6 hectares would have brought in 41,640,000,000 Ariary to Sirama’s account. This is a manner of speaking, however, because Sirama does not have a bank account. Transactions are done in cash in its offices in Isoraka (Antananarivo). "We make regular payments to the head office in Antananarivo" says the Nosy-Be branch manager. "We personally handed the amount for the partnership agreement to the Chairman of the Board of Directors" says Andry Fiankinana Andrianasolo, a lawyer for Vidzar, the company that reached an agreement with Sirama to revive the latter’s business in 2015.

Mamy Rasoamahenina confides that the income generated by regularization is used to pay Sirama’s staff. This amounts to around 200 million ariary a month and involves the 500 employees at the head office, Brickaville and Nosy-Be. Those 41.5 billion Ariary or more could have paid 208 months (17 years) of wages.

Since 2009, Sirama has had to pay 21.6 billion ariary in wages. If it had paid staff wages since 2004 when it stopped working, which is not the case, it should have paid out 31.2 billion ariary. In this scenario, 10.44 billion ariary are unaccounted for. And again, we are not taking into account transactions under the Vidzar partnership agreement.


The sugar industry in a bad state

What's left of the Dzamandzar plant

In this mad scramble, Sirama’s sugar business has been badly hit. Vidzar, the rum pioneer in Madagascar, was supposed to put the plant back on its feet. But so far nothing has been done. "We could not obtain the land that was to be handed over to us as stipulated in the partnership agreement. Worse still, the land we were given maps of either does not belong to Sirama, or has been handed over to another company" explains Vidzar's lawyer.

In response to this, Sirama’s general manager replies that "This property belongs to Sirama. It does what it sees fit. In any case, we are looking for ways to end the contract with this company because, in three years, it hasn’t done anything tangible either with the farmland or in the plant area." Mamy Rasoamahenina even alleges bitterly that Vidzar is only interested in Sirama’s land assets.

The situation is not improving. Nobody wants to ackowledge that Sirama is facing a land issue. Everything seems fine. But the sugar company will soon have no scrap of land left because sales are going well. A land office has been dedicated specifically to the management of Sirama’s lands, which seems to strengthen this fear. Some think its task will not be finished until the last square metre is sold. And whoever the company’s next partner may be, the sugar cane fields will no longer be of good quality because the soaring number of buildings is hindering their cultivation.

A case to be monitored closely…