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Article IX: Conclusion: What’s at Stake with Social Ventures in Africa? The Lives of 400 Million People Living on Less than $1.25 per Day by Brian Ray Dinning, JD, LLM and social venture lawyer

Article IX:  Conclusion:  What’s at Stake with Social Ventures in Africa:

The Lives of 400 Million People Living on Less than $1.25 per Day

 

By:  Brian Ray Dinning, JD, LLM and Social Venture Lawyer

July 27, 2012

 How many people in this world live on less than $2.50 per day?  A staggering 3,000,000,000 (3 billion people) or roughly half of the world’s population lives in desperate poverty according to the World Bank.[1]  In Africa alone, there are 400 million people living on less than $1.25 per day according to the United Nations.  And, even more shocking, over 21,000 children under the age of five die everyday from malnutrition and starvation according to UNICEF.[2]  In a given year, that’s 7.6 million children dying from preventable things such as lack of food, water or basic medicine.  Finally, the BBC reports that 200,000 children are sold into slavery and the sex trade each year in Africa.[3]

Many people ask me “why do you still work on social ventures after all that has happened?”  At the same time, I continue to ask myself and others “why aren’t more people working on social ventures to help the poor?”  The world’s population cannot sit by and let the preventable deaths of 7.6 million children occur each and every year without doing more.  I, for one, know that I cannot sit by without doing everything I can to help the poor and dying children of Africa.

Life is too short.  Material possessions and the comforts of life are fleeting.  The years of hard work at a job to simply receive a paycheck does not ultimately provide satisfaction for me and many other people – especially when our recent economic downturn shows us that it can all be taken away in a flash.  My family and my children give me a great sense of happiness and satisfaction in life as does my relationship with God.  It is because of my family and my belief in God that I am committed to helping others in need.  The Bible (along with most religions) teaches us that:

“Pure and genuine religion in the sight of God the Father means caring for orphans and widows in their distress and refusing to let the world corrupt you.”[4]

 What does it take to care for and help children and the poor?  One of two things:  your time or your money.  There are many people who have dedicated their lives to serving in charities, churches, missions organizations and even doctors without borders who give of their time to help those in need.  Yes, most of these people are paid – but they still give of their time and of themselves to help others.  Most of the world can help by giving money to help those in need.  Now, how much money is needed to help those children dying of starvation and the other three billion people living around the world in poverty.  A LOT!  But, each of us can help by donating to UNICEF, World Vision and organizations that feed and help needy children around the world.  Companies, individuals and organizations can also become financial partners by investing into social venture projects – which seek to help the poor and do even more – provide for jobs and a future for these children while also hopefully providing a financial return to the partners.

It is not an easy task!  In trying to help children and those in need in Africa, there are and will be many ups and downs:  children will still die, businesses and social venture projects will fail, people will do crazy things and pirates, dictators and rebel armies will still terrorize Africa and the rest of the world.  However, the real success is this:  some children will live by being helped by me or the many others who are working in Africa and around the world; some social venture projects will succeed; and more and more people will be given jobs and hope for a better future for themselves and their children.  In fact, if I can only help one child from starving then I believe that all my work in this life has been a success.[5]

I am truly proud to say that our social venture projects employed up to 60 full-time workers – which, in turn, fed 60 families or typically 300 people![6]  Now, how many more people could we help and jobs could we create when the social venture projects succeed?  A LOT!  Liz Hamburg in an article for The Huffington Post reported a 30:1 ratio for job creation from micro enterprise and social venture job creation at Women’s Initiative for Self Employment in San Francisco.  Meaning, for each of 30 jobs created, those employed women paid taxes and helped others with employment or other assistance thereby helping up to 900 total people.[7]  Ms. Hamburg reported,

“There’s a 30:1 return on investment as women create businesses, pay taxes, employ others and come off of public assistance. That means for every one invested in the program, 30 go back into the community through clients paying taxes, hiring others and leaving the welfare system.[8]

Thus, one successful social venture project in a rural community in Africa will change that community forever – and the lives of hundreds of people.  It was estimated by the Development Bank of South Africa that the Hole in the Wall project would have employed 23 people. If the project succeeds, it will create up to 57 full-time jobs in the local community feeding up to 285 people.  If you use the Women’s Initiative job multiplier as reported by The Huffington Post, then you could ultimately create up to 1500 jobs through a successful social venture project in one community in Africa.

You may be asking – what are these social venture projects?  What is it like at a community project in Africa?  What is the value of this property to the local community?  How about $98,818,000 of the most sought-after beautiful, untouched oceanfront land on the Indian Ocean in South Africa?  This is the value of the raw, undeveloped land held by the social venture between the community and Pure Africa as determined by a South African property expert and a real estate developer.[9]  For these rural communities in Africa, this land is their future and a means to lift their entire communities out of poverty. The local impoverished community should and must benefit substantially from the sustainable development of their land – it is their right and heritage.  Even if our social venture partners and I cannot finish the task, someone must help these communities benefit from the heritage, culture and land that they have had for generations.  It is a moral imperative and a social responsibility!

In order for you to fully understand the above statements, I will share a bit of our project vision for the local people in Africa with you and why the community land is so special. The local Xhosa people are very poor – most live on less than $1.00 per day, on average.  They are impoverished in a worldly sense but they are blessed with tremendous natural resources – their oceanfront land.  The average tribal leader has less than a sixth grade education, so while they have amazing land – they do not have the tools, skills or education to know how to maximize the value of the land.  This is where our social venture partners bring in the education, know-how, a professional team of lawyers and real estate companies and the finances to help the local community sustainably develop a real estate project to create jobs, job skills training and hopefully profits.  Don’t get me wrong – social venture projects are for-profit – so our goal was to maximize the value of the community land so that the community, our social venture partners and financial partners can all benefit.

Hole in the Wall is a cultural[10] and National icon in South Africa.  It is a large rock mountain in the Indian Ocean that boasts beautiful scenery and ocean views.  In 2004, the Development Bank of South Africa “DBSA” and the South African Government funded a study on creating a tourism project at Hole in the Wall.  In 2004, DBSA, the government and Incopho created a project summary for several projects including Hole in the Wall.[11]  In 2005, our social venture partners received a Lease from the South African National Government to develop the community project at Hole in the Wall[12] and a Record of Decision (building permit and authorization) was issued in late 2005.[13]

Now, it is well-known that nothing happens in Africa without a meeting:  we literally had hundreds of hours of meetings with the local chiefs, the tribal counsel, the community trust and the local people to show them the business plan and the proposed benefits to the local community.  In Africa, everyone has a right to speak so the meetings were attended by hundreds of people – both young and old.  Once everyone had a chance to voice their opinions and concerns, then we would finalize our social venture project plan.  Finally, after our projects were approved by the local community, we then sought approvals from the National, Provincial and local government.  Once everyone was happy with and had approved the business plan at a social venture like Hole in the Wall, then we would begin.  This initial process takes from 18 months to several years for each project!

At Hole in the Wall, after three years of meetings, the approved plan was to build a tourism site with 50 oceanfront rental homes and a boutique hotel[14] which would create a minimum of 57 jobs for the local community and the potential for hundreds of micro business jobs such as beadwork, tours, sea shell jewelry and other tourism souvenirs and hopefully profits from the development (the community owned 45% of the Hole in the Wall development as our partner).

Our professional team provided great endorsements of the projects.  We agreed to approach Sotheby’s International Realty to market the Hole in the Wall project.[15]  On May 6, 2008, Lofty Nel, a Principal with the firm of Sotheby’s International Realty provided a letter to the project, which reads:

“Lew Geffen Sotheby’s International Realty are extremely proud and honoured to be granted the exclusive mandate to market Pure Africa Development LLC Hole in the Wall project on the Wild Coast in South Africa.  Marketing of the project has commenced by word of mouth with the official launch of the project scheduled for the end of May, 2008.

 The development comprises 51 Ocean front homes in a gated estate at the Hole in the Wall, a national landmark in South Africa.  Earth Conservancy have also been appointed to manage approximately 5000 acres of pristine land adjacent to the project as part of a conservancy.  This will ensure that the amazing views and natural beauty of Hole in the Wall will remain intact for guests and owners at the Hole in the Wall development.”[16]

The 50 lots plus a hotel site were priced for long term lease at an average price of $120,000 per lot for total projected revenue to the social venture project of $6 million.[17]   The engineering firm prepared a lot layout for the Hole in the Wall and architects, engineers, and home builders were appointed to get the project ready to market.[18]

In addition to community and government approval, we also sought the approval of specialized real estate legal counsel.  On September 1, 2008, the law firm of Smith Tabata provided Pure Africa with a legal opinion letter:

“We act on behalf of the aforesaid Pure Africa, LLC as majority shareholder of Incopho Wild Coast Development Projects (Pty) Ltd.  Incopho, in turn, is the majority shareholder of the project company, The Reserve at Hole in the Wall (Pty) Ltd.  Our firm has represented The Reserve at Hole in the Wall project on behalf of Pure Africa since 2007 as legal counsel.  We also assisted in the referral of the project auditor, Charteris &  Barnes, auditors.

Based upon a review of the documentation, The Reserve at Hole in the Wall is an oceanfront and oceanview real estate development consisting of 50 stands and a small hotel.  The Reserve at Hole in the Wall is being marketed by Lofty Nel of Sotheby’s International Realty in East London, South Africa.

The original documentation for this project dates back to September, 2004.  For this letter, I have reviewed the following:

The Final Scoping Report dated September, 2004;

The Review of Documents relating to proposed Coffee Bay and Hole in the Wall developments by East Cape Development Corporation and the Development Bank of South  Africa;

The Ground Lease by and between the Kwa Tshezi Community and Earth Conservancy dated February 6, 2006;

The Lease Agreement between The Government of the Republic of South Africa through the Department of Land Affairs, the Kwa Tshezi Community and Incopho dated February 2, 2006;

The Record of Decision from the Department of Affairs, Environment and Tourism dated August 10, 2005 authorizing Incopho “to construct 50 single storey chalets, a central restaurant, a curio shop and amenities and association infrastructure at Hole in the Wall, KSD Municipal Area.

The Lease Agreement between The Government of the Republic of South Africa through the Department of Land Affairs, the Kwa Tshezi Community and Incopho dated June 21, 2008 which is a 30 year renewable lease at the option of Incopho for up to 90 years and continuing thereafter.

It is also my understanding that Title Deed to the land comprising the Hole in the Wall development is forthcoming to the Community in the next 6 months or longer from the Government of South Africa and the Department of Land Affairs.

Based upon a review of this documentation, Incopho has a valid lease with the Government of South Africa and the Kwa Tshezi Community for up to 90 years or more.  Under South African law, Incopho through The Reserve at Hole in the Wall (Pty) Ltd. can sublease the 50 stands to interested sublessees for rental payments over the term of the lease or the rent and lease may be prepaid.  It is my understanding that sublessees can “purchase” or sublease one or more of the 50 stands for an up-front payment of rent or with 10% downpayment of rent and the balance of the rent payments over 10 years at 12% interest.

It is my understanding that Sotheby’s International Realty will be acting as estate agent in the “sale” of the 50 subleased stands to the general public.  A separate company,  Villager Homes, will be constructing homes on the 50 subleased stands under separate written agreement between Villager Homes and the stand “purchasers” or sublessees. 

Finally, when Title Deed is ultimately vested with the Kwa Tshezi Community, it is planned that the 50 stand sublessees may have the opportunity to convert their lease to Title Deed ownership of their stand.”[19]

By May, 2008, all architectural designs, engineering, lot layout, utilities and infrastructure plans were completed and a contract to install all utilities, roads and services to The Reserve at Hole in the Wall were completed.  These crucial steps made it possible for marketing of long term leases for the 50 lots by Sotheby’s International Realty.

In May, 2008, Sotheby’s began to issue marketing materials for Hole in the Wall[20] and in September, 2008, Hole in the Wall was listed as a “hot property” in Conde Nast Home in South Africa and Media Press Releases were issued.[21]  Sotheby’s also went to great expense to create glossy brochures to begin marketing and they also launched a marketing website for the Hole in the Wall project.[22]  Pure Africa and the social venture partners put up a marketing Sign Board at the Hole in the Wall project.[23]  Everyone was excited because Sotheby’s and their marketing experts were certain that the property would lease quickly and that meant up to $6 million of projected revenue for the social venture project and the local community.

However, just as the marketing campaign was beginning, the aggressive bad press campaign team of Batte, Stiner and others jumped in to actively interfere with and destroy the marketing efforts at the Hole in the Wall project.  This was the most damaging tortious interference that resulted from the aggressive bad press campaign – anonymous phone calls from this coordinated group to our real estate professional team and social venture partners.[24] At the launch of the Hole in the Wall project and at other projects, Sotheby’s International Realty, government officials and others received several anonymous phone calls from Virginia and from South Africa stating that the projects were false, that we were trying to sell (versus lease) community land and that I was not someone to be trusted.  The callers also threatened to and did take the matter to the newspapers to discredit Sotheby’s and the social venture projects.  In discussions with Sotheby’s and other real estate firms, we were told that a new development, especially a social venture development, is a delicate matter and you only want positive information for the general public to view when seeking to spend money on a new oceanfront resort.  The decision was made to halt the marketing campaign at Hole in the Wall and try to regroup later.  This was devastating to us because it meant that years of time, effort, money and relationships were wasted.

Each time a project was halted by the malicious and negative actions of Batte and his coordinated bad press campaign, we had to stop everything and try to work on a new project that hadn’t yet been attacked by this group.  However, each time the task grew harder and everyone on the social venture team was tired of the negative attacks and the disappointment and damage that resulted from the negative attacks.

As I have said before, I am still working on social ventures in Africa and will continue to do so.  Each day that I work in trying to help create jobs for the needy in Africa will hopefully help save one or more of those 21,000 children dying everyday.  Does it take money to help save the needy in Africa and elsewhere?  Yes, a lot of money.  Does it take time and hard work?  Yes, a lot of time, effort and thankless hours.  Will this work get done by itself?  No – people have to get involved and do it.

Can you be paid to do this work?  Yes, you can be paid – just like I was paid and millions of others in the public and nonprofit sectors are paid.  And, that pay comes from donations, taxes and investment dollars – just like my consulting compensation.[25]  How does President Obama get paid?  He gets paid from our voluntarily contributed tax dollars.  The fact is public service and charity work is paid for by people contributing money to get a job or a project or a public service done.  If getting paid for social venture work or public service was wrong, then millions of people are guilty of the same thing on a daily basis in the United States.  Did you know that your tax dollars went to pay an abortion doctor to perform abortions or for a soldier to fight in Afghanistan or for a social worker to help inner city children learn to read – probably not but perhaps indirectly you were aware of it.

In our social venture projects, donors and financial partners were given hundreds of pages of legal documents, business plans and other project-related information to review, study and provide to their lawyers and accountants.  Each of these financial partners or donors then chose to donate or invest pursuant to those legal documents and business plans.  In donating funds, there is no return other than the charitable donation deduction you receive for donating.  In becoming a financial partner, it was abundantly disclosed that like most businesses in the world, the social venture projects can fail.  The financial partners were informed that they could lose all of their investment and they were advised of the risks.[26]  While I hope that the social venture projects can be completed, even despite all of the obstacles and interference and crazy actions of others, it will still take a lot of time, money and hard work to get it done.  However, the rewards of completing the social venture projects and helping to create jobs, feed families and save as many lives as possible in Africa make it all worthwhile.

God Bless you all.


 [3] BBC 5 October, 2001 & Anti-Slavery Society.  See http://www.oprah.com/oprahshow/Sold-into-Slavery/

 [4] James 1:27 New Living Translation (2007).

 [5] Like many other people, I sponsor a little girl in Zambia through World Vision by providing enough money – roughly $1 per day – so that she has food, clothing and school supplies.  While this is clearly not enough – it is something invaluable to her and frankly, it means the world to me.  To help a child in need, see www.worldvision.org.

 [6] http://www.huffingtonpost.com/liz-hamburg/microenterprise-an-exciti_b_813738.html.  Liz Hamburg reports that each job created fed a family of five from the income from that job.

 [7] For a report on the multiplication effect from job creation in social ventures, see http://www.fieldus.org/Microtest/SROI.pdf

 [9] See Wild Coast Property Valuation.  This valuation was prepared by real estate expert Alan Bell and real estate developer David Stefano based upon comparable property values on existing real estate for sale on the Wild Coast of South Africa.

[10] Known in Xhosa tradition as the place of The Great Cattle Killing, Hole in the Wall is steeped in cultural fokelore and significance for the Xhosa people.  For a short version of the legend, see http://www.southafrica-travel.net/eastcape/wildcoast.htm

[11] See DBSA – Incopho Project Overview as Article 6 FN 4.

[12] See National Government Lease to Incopho.  There are dozens of leases between the local community partners and the social venture partners, which document the projects and the hopeful social benefit to the local community partners.  For years, the social venture projects paid lease payments to the various communities, paid local workers and paid development costs.

[13] See Record of Decision to Incopho.

[14] See Site Plan at Article 6 FN 7.

[15] See Pure Africa letter to Sotheby’s at Article 6 FN 10.

[16] See Letter from Lofty Nel of Sotheby’s International Realty at Article 6 FN 11.

[17] See Plot and Plan Pricing at Article 6 FN 12.

[18] See Model Home specifications by Villager Homes at Article 6 FN 13.

[19] See Opinion Letter of Smith Tabata Law Firm at Article 6 FN 14.

[20] Sotheby’s Booklet showing Hole in the Wall Development at Article 6 FN 15.

[21] See Conde Nast Home article naming Hole in the Wall a “Hot Property” at Article 6 FN 16.

[22] See Sotheby’s website layout at Article 6 FN 17.

[23] See Pure Africa Hole in the Wall signboard at Article 6 FN 18.

[24] See Pam Golding Properties Letter.

[25] My consulting compensation was paid pursuant to signed agreements on an hourly rate basis and payment of costs and expenses and it was acknowledged by the managers and boards of the various companies that agreed to hire me as a consultant.  See William Brown Letter.

[26] See Private Placement Memorandum of the Fund and the signed Subscription Agreement of Dr. Allan Stiner.

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Article VII: On the Ground in Africa: Not Much Better by Brian Ray Dinning, JD, LLM and social venture lawyer

Article VII:  On the Ground in Africa:  Not Much Better.

By:  Brian Ray Dinning, JD, LLM and Social Venture Lawyer

July 17, 2012

 

With social venture projects in Africa, there is generally a team of social venture partners on the ground who are responsible for managing the project and the day-to-day operations.  For example, I’m currently working with an organic farmer in community farming projects in Africa, where there is a local non-profit organization with six full-time workers (providing free seeds and education to the local community), a for-profit farm manager (providing oversight and management to the community farmers) and the local community providing land and workers.  These are the project managers and workers who run the project on the ground.  Every organization, including the United Nations, USAID and the World Bank work with local partners on projects in Africa.[1]

 

With the initial farming social venture, the mining project and the tourism project, our local project manager was Michael van der Merwe and his brother, Pieter van der Merwe.  Whenever funding is needed on the ground in Africa for the social venture projects, there is a team of people who become financial partners and others who generally work on the projects.  In our projects, the funding partners were part of limited liability companies in the United States or a United States non-profit corporation.  The funding project company was managed by Pure Africa and funds were loaned to the social venture project in South Africa.  Those loan funds were then managed by the social venture project manager and invested into the project or used to pay project fees and expenses.  Finally, the financial partners would receive loan documentation and social venture project ownership for their loan to the social venture project or, in the case of funding provided by a US non-profit corporation, like Earth Conservancy, the funding was sent in the form of a grant.

 

The loan funds would then be under the control of the local social venture project manager, who had the responsibility of managing those funds to complete the projects and then repay the loan.  At Hole in the Wall and on the Wild Coast of South Africa, our local partner was Bossie Bosman, who was one of the founders of the social venture work at Hole in the Wall and other projects.  Like with Michael van der Merwe, funding for the Hole in the Wall project was generally wired from the United States to Bossie Bosman, who had responsibility of managing those funds, completing the project and repaying the loan.

 

Although we had sent considerable funding to Michael van der Merwe to secure rights to the three projects and to conduct due diligence, purchase reclamation bonding for the mining project and scoping and other costs, the Pure Africa Sustainable Development Fund and Pure Africa along with our nonprofit social venture partner, Earth Conservancy, did not want to do any projects with Michael van der Merwe.  There was a lack of business reporting, a lack of accounting and most of all, Michael van der Merwe maintained close ties with Wextrust Capital.  As stated before, a private investigation report was later ordered for Michael van der Merwe, which confirmed that he was not a man to trust[2] as he owned seven or more luxury homes in Pretoria, Waterkloof, Waterkloof Ridge, Midrand and East London, an office building in Midrand, a dozen or more luxury automobiles, motorcycles and other toys and his brother, Pieter, built a 20,000 square foot mansion.  This list doesn’t include the assets, which were given to the girlfriends of van der Merwe and Shereshevsky.  The Fund and Pure Africa did not want to risk any further involvement with Michael van der Merwe.  Despite his claims of profitability and viability of these projects, the decision was made to drop them and it cost hundreds of thousands of dollars in loan capital sent to him that will likely never be recovered.

 

In 2009, after a lengthy private investigation to locate loan funds sent to Michael van der Merwe on behalf of our financial partners, my brother and I confronted Michael van der Merwe at his luxury oceanfront home in East London, South Africa.  I asked Michael van der Merwe,
“what did you do with our financial partner’s loan capital and my money?”  A nervous van der Merwe said, “I am in the process of selling the tourism project and I will repay all of your loan money to you and your financial partners.”  In blaming Wextrust Capital, he said, “Joe [Shereshevsky] was a thief and we all lost money.”  When asked directly about his luxury cars, luxury homes and his brother’s mansion that were all paid for with cash, he said that he “bought them with money given to him by Joe Shereshevsky and Wextrust Capital.”  With promises of repayment from van der Merwe, we left after an hour-long meeting.  Of course, we all waited for years for a promised repayment from Michael van der Merwe that never came.  Naturally, when I was asked by our financial partners about the repayment of our loans, I could only pass along what van der Merwe told us many times:  that the projects were being sold and that he would repay all of loan money to us.  This – we found out – was one of many lies told to us by Michael van der Merwe and his brother – Pieter.  The fact is – they stole the loan money of our financial partners (and of Wextrust Capital’s investors) and used it to buy an estimated ten million dollars of luxury homes, cars and other items for cash.[3]

 

Again, this was another significant negative action that made us change our entire business strategy and move on to other projects.  Thus, Hole in the Wall and the Wild Coast projects became our principle focus.[4]

 

The Fund managers, Rick, Lou and John, along with Pure Africa, wanted to have someone “on the ground” in Africa and since my brother, Steve, has a passion for missions work, I suggested that he go to Africa to watch over the developments.   Steve traveled to Africa in the summer of 2006 with promises of an annual salary plus living expenses.  With all of the interruptions, bizarre and criminal conduct and the aggressive bad press campaign, it was very difficult to locate funding partners.  Everyone was turned off by the negative press campaign.

 

One of the first issues Steve encountered was with our local social venture project manager, Bossie Bosman.  Shortly after arriving in South Africa, Steve soon discovered that Bossie Bosman has misappropriated funds designated for the Hole in the Wall project to buy a new Landrover LR3 for cash in his personal name at a cost of $100,000 – a devastating blow – as the funds that he misappropriated were supposed to be used to pay the contractual wages for the local community workers, for my brother and the project managers.[5]  It was six months worth of budgeted expenses stolen by Bosman to purchase a Landrover for himself.  Ultimately, Bossie Bosman was reported to the police in South Africa and he was voted off the Board of Directors of the social venture project.[6]  Angry, Bossie Bosman then became the ally of Dr. Batte and Dr. Stiner and they corresponding regularly in their bad press campaign and coup attempt, which commenced in April, 2007.

 

 

The beautiful oceanfront and riverfront project at Mdumbi Bay

 

As our projects on the Wild Coast were moving closer to launching, they had great potential and we received many assurances that the Hole in the Wall and Mdumbi Bay projects would lease out in quickly.  This meant millions of potential dollars of revenue for the social venture projects and for the local community.  With these funds, all investors could be repaid and the local community would receive a large windfall of profits that they could use to build schools, medical clinics and other needed facilities.

 

However, despite great potential projects, the intentional damage and interference by Batte, Stiner, Bosman and others killed the project at Mdumbi Bay (see photo above).  In June, 2007, the project at Mdumbi Bay was ready to commence marketing by Fresh Properties in East London, South Africa.[7]  There were multiple meetings and conference calls between the marketing company, the financial partners and Pure Africa.  The project would entail the long-term lease of 46 home sites and a small tourism lodge.  On or about June 14, 2007, Fresh Properties set a meeting to discuss the current status of the Mdumbi Bay Marketing Plan.  In this correspondence, Mark Trow of Fresh Properties lists “definite potential cash buyers” for 39 of the 46 lots, with names of the buyers listed next to the lot they had chosen, which represented over $6 million in social venture project revenue.[8]  However, several anonymous phone calls were made to the South African government claiming that we were trying to “sell” the land instead of “lease” the land to potential buyers.  This immediately stopped the marketing effort and in November, 2007, we switched real estate sale companies to Sotheby’s International Realty.  Once again, we were so close to a social venture project success before the proverbial rug was pulled out from under us by Bossie Bosman, Batte and others.[9]

 

Bosman, Batte, Stiner and others then began to utilize the blog of Jeff Brown, a hotel owner and opponent of any development (other than his) at Hole in the Wall.  Jeff Brown told my brother that he will do anything he can to stop the development at Hole in the Wall and he became the bulletin board for all of the aggressive bad press, libel, slander and false information against the social venture projects and me.  They coordinated with Jeff Brown because he could post all of their information anonymously and he has sent it by automatically generated email to our investors, donors and the general public to discredit the social venture projects and me.  They have even utilized the blog to post supposed messages from my children and others – of course – all anonymously.  The unfortunate consequence of the Internet is that it is practically impossible to stop someone overseas from posting false and defamatory articles about you.

 

Hole in the Wall was another social venture project with great potential.  Our professional team provided great endorsements of the project.  On May 6, 2008, Lofty Nel, a Principal with the firm of Sotheby’s International Realty provided a letter to the project, which reads:

“Lew Geffen Sotheby’s International Realty are extremely proud and honoured to be granted the exclusive mandate to market Pure Africa Development LLC Hole in the Wall project on the Wild Coast in South Africa.  Marketing of the project has commenced by word of mouth with the official launch of the project scheduled for the end of May, 2008.

 

The development comprises 51 Ocean front homes in a gated estate at the Hole in the Wall, a national landmark in South Africa.  Earth Conservancy have also been appointed to manage approximately 5000 acres of pristine land adjacent to the project as part of a conservancy.  This will ensure that the amazing views and natural beauty of Hole in the Wall will remain intact for guests and owners at the Hole in the Wall development.”[10]

 

The 51 lots were priced for long term lease at an average price of $120,000 for a total projected revenue to the social venture project of $6 million.  The project was on the verge of success.

 

 

On September 1, 2008, Russell Linde, South African real estate attorney of the law firm of Smith Tabata provided Dinning and Pure Africa, LLC with a legal opinion letter which states:

“We act on behalf of the aforesaid Pure Africa, LLC as majority shareholder of Incopho Wild Coast Development Projects (Pty) Ltd.  Incopho, in turn, is the majority shareholder of the project company, The Reserve at Hole in the Wall (Pty) Ltd.  Our firm has represented The Reserve at Hole in the Wall project on behalf of Pure Africa since 2007 as legal counsel.  We also assisted in the referral of the project auditor, Charteris &  Barnes, auditors.

Based upon a review of the documentation, The Reserve at Hole in the Wall is an oceanfront and oceanview real estate development consisting of 50 stands and a small hotel.  The Reserve at Hole in the Wall is being marketed by Lofty Nel of Sotheby’s International Realty in East London, South Africa.

The original documentation for this project dates back to September, 2004.  For this letter, I have reviewed the following:

The Final Scoping Report dated September, 2004;

The Review of Documents relating to proposed Coffee Bay and Hole in the Wall developments by East Cape Development Corporation and the Development Bank of South  Africa;

The Ground Lease by and between the Kwa Tshezi Community and Earth Conservancy dated February 6, 2006;

The Lease Agreement between The Government of the Republic of South Africa through the Department of Land Affairs, the Kwa Tshezi Community and Incopho dated February 2, 2006;

The Record of Decision from the Department of Affairs, Environment and Tourism dated August 10, 2005 authorizing Incopho “to construct 50 single storey chalets, a central restaurant, a curio shop and amenities and association infrastructure at Hole in the Wall, KSD Municipal Area.

The Lease Agreement between The Government of the Republic of South Africa through the Department of Land Affairs, the Kwa Tshezi Community and Incopho dated June 21, 2008 which is a 30 year renewable lease at the option of Incopho for up to 90 years and continuing thereafter.

It is also my understanding that Title Deed to the land comprising the Hole in the Wall development is forthcoming to the Community in the next 6 months or longer from the Government of South Africa and the Department of Land Affairs.

Based upon a review of this documentation, Incopho has a valid lease with the Government of South Africa and the Kwa Tshezi Community for up to 90 years or more.  Under South African law, Incopho through The Reserve at Hole in the Wall (Pty) Ltd. can sublease the 50 stands to interested sublessees for rental payments over the term of the lease or the rent and lease may be prepaid.  It is my understanding that sublessees can “purchase” or sublease one or more of the 50 stands for an up-front payment of rent or with 10% downpayment of rent and the balance of the rent payments over 10 years at 12% interest.

It is my understanding that Sotheby’s International Realty will be acting as estate agent in the “sale” of the 50 subleased stands to the general public.  A separate company,  Villager Homes, will be constructing homes on the 50 subleased stands under separate written agreement between Villager Homes and the stand “purchasers” or sublessees.

Finally, when Title Deed is ultimately vested with the Kwa Tshezi Community, it is planned that the 50 stand sublessees may have the opportunity to convert their lease to Title Deed ownership of their stand.”[11]

 

By June 2008, all architectural designs, engineering, lot layout, utilities and infrastructure plans were completed and a contract to install all utilities, roads and services to The Reserve at Hole in the Wall were completed.  These steps made it possible for marketing of long term leases for the 51 lots by Sotheby’s International Realty.

 

In May, 2008, Sotheby’s began to issue marketing materials for Hole in the Wall and in September, 2008, Hole in the Wall was listed as a “hot property” in Conde Nast Home in South Africa and Media Press Releases were issued.  Sotheby’s also went to great expense to create glossy brochures to begin marketing and they also launched a marketing website for the Hole in the Wall project.

 

Then, the aggressive bad press campaign team started their bad press campaign in South Africa. This was the most difficult interference that resulted from the aggressive bad press campaign was the anonymous phone calls from this coordinated group to our real estate professional team.  At the launch of the Hole in the Wall project and then at the second marketing launch of the project at Mdumbi Bay, Sotheby’s International Realty received several anonymous phone calls from Virginia in the United States and from one or more individuals in South Africa stating that the projects were false, that they did not exist and that I was not someone to be trusted.  The callers also threatened to take the matter to the newspapers to discredit Sotheby’s and the social venture projects.  In discussions with Sotheby’s, we were told that a new development, especially a social venture development, is a delicate matter and you only want positive information for the general public to view when seeking to spend money on a new oceanfront resort.  The decision was made to halt the marketing campaigns and try to regroup under a new development company.[12]  This interference also cost us R25,000,000 or $4M from The Development Bank of South Africa.[13]

 

When another marketing project called The Wild Coast Explorer Club was preparing to launch in the Fall of 2009, similar anonymous phone calls were made to Pam Golding Properties, the real estate company handling the development and launch of this new project.  The callers again threatened to take the matter to the newspapers and to tarnish the name of Pam Golding Properties if they continued to represent the project.[14]  Sadly, again, this malicious, bad press campaign had succeeded in stopping a very promising project.  The Wild Coast Explorer Club had received endorsements from our law firm, accounting firm, real estate professionals, home builders and many others but marketing a new project cannot stand up to bad press – even if it is false.[15]

 

Each time a project was halted by the malicious and negative actions of Batte and his coordinated bad press campaign, we had to stop everything and try to work on a new project that hadn’t yet been attacked by this group.  However, each time the task grew harder and everyone on the social venture team was tired of the negative attacks and the disappointment and damage that resulted from the negative attacks.  In 2010, my brother had to return home penniless as he too was paid only a small fraction of the salary and living expenses he was promised by the social venture projects.

 

With regard to the negative attacks, there are emails, correspondence and witnesses to corroborate and confirm everything that I have said here today.  Additionally, in February, 2012, I filed a $30 million civil RICO lawsuit against Batte, Stiner and the group responsible for the aggressive bad press campaign in Suffolk Circuit Court in Virginia.  The goal is to recoup the social venture revenue lost to their libel, slander and interference and to complete one or more of the social venture projects, repay the financial partners and provide jobs and profits to the local Xhosa community.  It is no wonder that they have filed false reports and charges against me because they have to try to justify their negative actions and cover up their own wrongs.

 

Finally, many of you may say, the government is accusing you of using funds to buy a luxury home and cars.  In 2006, with my consulting contracts in hand from Pure Africa and Earth Conservancy, I was able to put a down payment on a nice home (along with significant financial help from my family) with a large mortgage.  In 2008, after learning that all of our money was stolen by Michael van der Merwe and Bosman and the interference by Batte and others, Pure Africa and Earth Conservancy were unable to pay me and my home was sold in a short sale per an agreement with the bank so that we could avoid foreclosure.  I sold or had two cars repossessed to pay the car loans.  The real difference between my compensation and van der Merwe’s and Bosman’s theft is that I was paid a fraction of the consulting fees promised to me by written consulting agreements and my home and cars were bought with bank financing like most people – not with stolen cash like the van der Merwes and Bosman.[16]

 

The next and final article in the series is: The Malicious Lawyers:  Lying, False Claims, Threats and Insa


[2] In the Investigation Report of Michael van der Merwe dated April, 2008, it is noted that the Lion’s Walk project was sold but the funds never went into the company nor were taxes paid.  We are still trying to recover our loan funds from Michael van der Merwe.

[3] There are many more sordid and salacious details to the stories about Joe Shereshevsky, Wextrust Capital and Michael van der Merwe and their rampant thievery and fraud but those stories will have to be told in another Article or series of Articles.  The real question is:  where are the Volvo loaders, trucks, excavators and other moveable equipment from all those mining projects?  Each mining project had approximately $5M of equipment and in my last conversation with van der Merwe – he said he and Wextrust Capital had seven mining projects.  That is perhaps $35M of moveable equipment that may be unaccounted for and likely liquidated by the van der Merwes at or about the time of the Wextrust Capital scandal.

[4] See Status Report of Fund dated July 2007 and September 2007.  Article 7 FN 4 Fund Status Report July 2007

 [5] See Minutes voting Bossie off the Board and Bossie Crimes letter.

 [6] We were also told later by local community and governmental leaders that Bosman was a hated man in the local black communities because it was widely known that he was a mean and malicious police officer in the Apartheid era and treated the local people very harshly.  It was also rumored that Bosman was present and participated in the beating death of black student peace advocate Stephen Biko in Port Elizabeth.  See http://en.wikipedia.org/wiki/Steve_Biko

 [7] See Fresh Letter.  Fresh Purchasers are Waiting

 [8] See Fresh 39 Cash Buyers email.  Fresh Cash Buyers for 39 lots

 [9] The $6 million of revenue from the sale of the lease lots at Mdumbi Bay would have paid all project costs, paid back the financial partners of Mdumbi Bay project and generated a significant profit for the local community and our social and financial partners.

[10] See Letter from Lofty Nel of Sotheby’s International Realty.  Article 7 FN 10 Sotheby’s Endorsement Letter copy

[11] See Opinion Letter of Smith Tabata Law Firm.  Article 7 FN 11 Pure Africa (Opinion Letter for Hole in the Wall

[14] PGP Email

[15] Endorsement Letters  White and Case and Grant Thornton Endorsement

[16] The completely false and slanderous news articles written about me state that our financial partners invested or donated $2.9M and I kept $2M.  Actually, most of the financial partners were recruited by Dr. John O’Neil, Rick Lally, Lou Dommer, Granville Batte and Dr. McTavish.  Of the $2.9M, approximately $800,000 was sent to Michael van der Merwe, Bosman and our project managers as loans and was managed and spent by them presumably on project expenses, $900,000 to the law firm trust account of attorney Gerhard Dreyer for his mining projects with Granville Batte, approximately $250,000 was used to repay loans and settle disputes by financial partners and the balance was used to pay company expenses such as rent, consulting fees for me and others, travel, repayment of loans and other business costs and expenses.  From 2005 to 2010, I was paid less than half of the consulting income I was contractually promised by the social venture projects.  In 2011 and 2012, I continue to work with social venture community projects in Africa on a volunteer basis without any compensation.  I live off consulting income from tax consulting with energy companies, teaching them to utilize tax incentives to become more environmentally-friendly and emitting less pollution.

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Article II: Social Ventures in Africa: What Can Go Wrong? By Brian Ray Dinning, JD, LLM

Article 2:  Social Ventures in Africa:  What can go Wrong?

By:  Brian Ray Dinning, JD, LLM and Social Venture Lawyer

June 29, 2012

Sometimes committing your life to a worthy cause like social ventures comes with many challenges and obstacles such as:  differing world views, different goals and objectives (especially from banks and investors who have financial goals rather than the founders and social venture partners who generally have charitable and social goals as well as financial goals), the unpredictable nature of people and a limitless host of other complications and factors.  Business and social ventures are hard work – let alone business and social ventures in Africa, where resources, personnel and supplies can be scarce and corruption, violence and theft are rampant.

 

The US Government published that over 50% of all businesses started in the US fail within the first five years.[1]  New Venture Lab – Equipping Christian Entrepreneurs, quotes interesting statistics from Harvard Business School noting that the failure rate of businesses can be as high as 95% (depending on how you define failure).  Their website, quoting a Harvard Business professor, provides:

 

“Most companies fail. It’s an unsettling fact for bright-eyed entrepreneurs, but old news to start-up veterans. 

 

But here’s the good news: Experienced entrepreneurs know that running a company that eventually fails can actually help a career, but only if the executives are willing to view failure as a potential for improvement.

 

The statistics are disheartening no matter how an entrepreneur defines failure. If failure means liquidating all assets, with investors losing most or all the money they put into the company, then the failure rate for start-ups is 30 to 40 percent, according to Shikhar Ghosh, a senior lecturer at Harvard Business School who has held top executive positions at some eight technology-based start-ups. If failure refers to failing to see the projected return on investment, then the failure rate is 70 to 80 percent. And if failure is defined as declaring a projection and then falling short of meeting it, then the failure rate is a whopping 90 to 95 percent.

 

“Very few companies achieve their initial projections,” says Ghosh. “Failure is the norm.”[2]

 

 

While this is the reality for businesses in the United States, a University of South Africa study indicates that the rate of small business failure in South Africa can be as high as 80%.[3]  MIT and other business schools note that the failure rate of social ventures will likely follow that of other for-profit businesses.

 

The challenge is to continue working to improve the lives of the 400 million people living on less than $1.25 per day in Africa regardless of past failures or challenges.  As Nelson Mandela states, “The greatest glory in living lies not in never falling, but in rising every time we fall.”  Quoting Vinod Khosla, billionaire venture capitalist and co-founder of Sun Microsystems: “There needs to be more experiments in building sustainable businesses going after the market for the poor. It has to be done in a sustainable way. There is not enough money to be given away in the world to make the poor well off.”[4] Researchers on social ventures at Duke note that: “We live in an age in which the boundaries between the government, nonprofit, and business sectors are blurring. This blurring results from a search for more innovative, cost-effective, and sustainable ways to address social problems and deliver socially important goods, such as basic education and health care.”[5]

 

Furthermore, Dees and Anderson realize that social venture projects and social entrepreneurs focus on the social impact of social venture projects and business-minded people focus on the financial returns thereby creating complexity.  “It is extremely hard to make strategic decisions about resource allocation or practical cost/quality tradeoffs when the social impact of these decisions is nearly impossible to measure in an efficient, timely, and reliable fashion.  It can become all too easy to focus too heavily on the more familiar, tangible and straightforward economic measures of success.”[6]

 

Businesses including social ventures fail for many reasons.  A New York Times columnist notes the top 10 reasons for small business failure:

 

“1. The math just doesn’t work. There is not enough demand for the product or service at a price that will produce a profit for the company.

 

2. Owners who cannot get out of their own way. They may be stubborn, risk averse, conflict averse — meaning they need to be liked by everyone (even employees and vendors who can’t do their jobs). They may be perfectionist, greedy, self-righteous, paranoid, indignant or insecure. You get the idea. Sometimes, you can even tell these owners the problem, and they will recognize that you are right — but continue to make the same mistakes over and over.

 

3. Out-of-control growth. This one might be the saddest of all reasons for failure — a successful business that is ruined by over-expansion. This would include moving into markets that are not as profitable, experiencing growing pains that damage the business, or borrowing too much money in an attempt to keep growth at a particular rate. Sometimes less is more.

 

4. Poor accounting. You cannot be in control of a business if you don’t know what is going on. With bad numbers, or no numbers, a company is flying blind, and it happens all of the time. Why? For one thing, it is a common — and disastrous — misconception that an outside accounting firm hired primarily to do the taxes will keep watch over the business. In reality, that is the job of the chief financial officer, one of the many hats an entrepreneur has to wear until a real one is hired.

 

5. Lack of a cash cushion. If we have learned anything from this recession (I know it’s “over” but my customers don’t seem to have gotten the memo), it’s that business is cyclical and that bad things can and will happen over time — the loss of an important customer or critical employee, the arrival of a new competitor, the filing of a lawsuit. These things can all stress the finances of a company. If that company is already out of cash (and borrowing potential), it may not be able to recover.

 

6. Operational mediocrity. I have never met a business owner who described his or her operation as mediocre. But we can’t all be above average. Repeat and referral business is critical for most businesses, as is some degree of marketing (depending on the business).

 

7. Operational inefficiencies. Paying too much for rent, labor, and materials. Now more than ever, the lean companies are at an advantage. Not having the tenacity or stomach to negotiate terms that are reflective of today’s economy may leave a company uncompetitive.

 

8. Dysfunctional management. Lack of focus, vision, planning, standards and everything else that goes into good management. Throw fighting partners or unhappy relatives into the mix and you have a disaster.

 

9. The lack of a succession plan. We’re talking nepotism, power struggles, significant players being replaced by people who are in over their heads — all reasons many family businesses do not make it to the next generation.

 

10. A declining market. Book stores, music stores, printing businesses and many others are dealing with changes in technology, consumer demand, and competition from huge companies with more buying power and advertising dollars.

 

In life, you may have forgiving friends and relatives, but entrepreneurship is rarely forgiving. Eventually, everything shows up in the soup. If people don’t like the soup, employees stop working for you, and customers stop doing business with you.  And that is why businesses fail.”[7]

 

 

Aside from the ten reasons noted above, in my experience with social ventures in Africa, the ventures did not work out as planned because of differences in goals and objectives between the partners, tension between the profit-making side and the social aspect of helping people and outlandish, intentional and unprofessional (and sometimes criminal) behavior and actions of others which interfered with, delayed or handicapped the social ventures.

 

Of all the reasons for small business and social venture failure noted above, it would be the outlandish, intentional and unprofessional (and sometimes criminal) behavior and actions of others, which caused our social ventures in Africa to either fail, be delayed or become handicapped.  In order to fully illustrate this point and to tell my side of the story, I will publish this seven part series complete with documents, video, photos, letters and email.

 

In addition to documents, video, photos, letters and email, there are also witnesses to most or all of this outlandish behavior including from the perpetrators themselves.  While some of these people are looking forward to a day in court against me, they will have to take the witness stand (under penalties of perjury) and answer for their outlandish behavior and actions and, hopefully, they will understand how their actions harmed the social venture projects, other investors and donors and the local people of Africa.

 

 

Article 3 is entitled:  Social Ventures in Africa:  Wextrust Capital – The Good, the Bad and the Ugly.

 

 

 

 

 


[1] Small Business Administration

[3] Mabaso, NR, University of South Africa (March 2008).

[4] MIT Entrepreneurship Review: From the Lab to the Land: Social Entrepreneurs Explore Appropriate Technology Dissemination (Nov. 26, 2010).

[5] Dees and Anderson, Duke Social Entrepreneurship: “For Profit Social Ventures,” (2003).

[6] Id.

[7] Goltz, J., “Top 10 Reasons Small Businesses Fail,” New York Times (Jan. 5, 2011).

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Introduction to my Social Venture Work in Africa by Brian Ray Dinning, JD, LLM and Social Venture Lawyer

Article 1: Introduction to my Social Venture Work in Africa

By: Brian Ray Dinning, JD, LLM and Social Venture Lawyer

June 27, 2012

NOTE: As I am writing this series, I have been wrongly accused of wire fraud related to social venture projects in Africa and face a trial in the United States. See Footnote 1.  While I do not believe I have done anything criminal, that decision is likely in the hands of a jury of my peers and I hope and pray that truth and justice will ultimately prevail. The purpose of this series is to tell my side of the story, complete with letters, video, emails, documents and all backed up by witnesses. As a lifelong follower of Christ, I trust in God and his promises like John 8:32 “Then you will know the truth, and the truth will set you free.” (NIV) I also want my wife, children and family to know that I did my very best to help as many of the 400 million poverty-stricken people of Africa as I could and I will work as long and as hard as I can to help them for the rest of my life.

I also want my family, friends and others to know the truth behind the delays, slowdowns, obstacles and impossible situations we faced when doing social ventures in Africa. While it has been disheartening at times and sometimes I just want to give up, I often think of men like Nelson Mandela, who endured years in prison only to be released to become the President of South Africa. As Mr. Mandela states:

“Let there be justice for all. Let there be peace for all. Let there be work, bread, water and salt for all. Let each know that for each the body, the mind and the soul have been freed to fulfill themselves.”        NELSON MANDELA, speech, May 10, 1994

“The greatest glory in living lies not in never falling, but in rising every time we fall.” NELSON MANDELA, Autobiography

My aunt and uncle were Christian missionaries in Africa and my family performed missions work in South Africa for over 35 years. Brought up in a dynamic faith-based household, I was always taught that we must care for orphans, widows and the poor – and that everyone is born with a purpose in life. As unlikely as it might sound, by the age of 10, I knew I wanted to be a lawyer, and I also knew that one of my purposes in life was to help people in Africa. It wasn’t until much later in life that I understood how I might combine those two ambitions.

I’ve been a practicing lawyer for 22 years and, up until recently, I’ve had a spotless record, full of accomplishments and commendations that have brought me and my family a great deal of pride. As a tax and business consultant to energy and mining companies in 2011/2012, I was able to charge an hourly rate for consulting work of $400 and I am blessed to make a good living in the for-profit world. In social ventures, you can also make a salary or work as a consultant but sometimes (most times) the pay is not as good.

I have had the privilege of traveling to Africa over 60 times, and in 1992 through 1994, I helped my professor at Georgetown University write a legal textbook on how nonprofit organizations can do for-profit social ventures, which is the foundation of the modern day social venture or social entrepreneurship project. This work resulted in the legal treatise entitled, “Sanders, Partnerships and Joint Ventures Involving Tax Exempt Organizations” (Wiley & Sons 1994).

I started doing work for clients in Africa in 1994 and have been working on social venture projects in Africa ever since then. These were missions-type projects where we would help build a church or community center, help with clean water, renewable energy, organic food and more. In this work, I realized that the local people of Africa had dreams to become something more, to be connected to the world that existed beyond the boundaries they were confronted by – to also ensure that their children had a future. So, I believe that I was blessed with the talents, ability and vision to look for innovative ways to help the local people in Africa to create jobs, income and a future. This was – plainly stated – to look at their natural resources (land, water, wildlife, mineral rights etc.) and help them locate the tools (people, financial partners and education) to help them maximize those resources – by building a tourism lodge, starting a micro business or starting a minerals project. This way, the local African people could achieve sustainability – meaning they could feed their families, afford to send their children to school and have food and clean water. More importantly, when talking with local community elders, they overwhelmingly said they want to provide a bright future for their children.

Initially, in 1994, I was asked to go to South Africa with some filmmakers to do a reconciliation film entitled “The Final Solution” by filmmaker Christopher Krusen about the life of a dynamic lawyer turned missionary named Gerrit Wolfaardt. This changed my life because Gerrit told me that “you must meet the heartfelt needs of the African people in order to talk to them about God, and missions work and micro enterprise. A starving person needs to be fed first before all else.” On this trip, I met John Coors, the youngest of the Coors brewery brothers. John hired me as a consultant to help with his project “Golden Photon” – which was designed to create solar energy water pumping systems to provide clean water to the rural communities in Africa. They also created a solar energy battery charging system to charge car batteries, which could be used, exchanged and reused by local people to power a light, radio or other electric appliance for their homes. Both were designed as micro businesses and were ingenious social ventures. These men, Gerrit Wolfaardt and John Coors, were pioneers in social ventures and I am thankful for the example they set for me. With my recent research and writing on how non-profits can do for-profit ventures, I was perfectly suited to help them.

These were amazing times because the Apartheid Era had just ended a few months earlier and Nelson Mandela, jailed 27 years by the Apartheid Era as a terrorist, was now the President of South Africa at the age of 76! The entire country was buzzing with life and hope – and expectations: for example, Nelson Mandela promised that he would help provide housing for all people so tens of thousands of people living in the rural countryside moved into the cities expecting to be given a home – not understanding that such a promise would take decades to complete. I met Bishop Frank Retief of the St. Johns Church of England in Cape Town, where eleven people were tragically killed in a church bombing by those loyal to Nelson Mandela in their struggle for freedom. Such stories of loss and tragedy and yet miraculously the Government of South Africa switched control from all White to mostly all Black in a short span of months – and all without any bloodshed. South Africa was a new nation and I was blessed to travel there several times a year from 1994 to the present.

In 1998, I met a man in Stellenbosch, South Africa, the wine country outside of Cape Town, who had heard of our social venture work and asked if I would like to travel to a country in need, Central African Republic, and work at a National Park, Manova Gounda St. Floris National Park – a World Heritage Site in Danger. From 1980 to 1999, the once rich elephant population dropped from 66,000 to 2,000 – all victims of poaching! It is also one of the poorest countries in all of Africa and its population is being ravaged by HIV/AIDS. After researching the country and the issues, I agreed to travel with him to Central African Republic in 1999.

Knowing that we needed a lot of help, I called Ted Turner’s office at CNN in Atlanta. His assistant listened to my story and then told me to send a fax to her office. Three days later, I received a call from Ted Turner’s office asking me to go to his newly formed UN Foundation in Washington, DC to meet with them. In 1999 – 2002, I worked as a consultant for Earth Conservancy where we partnered with UNESCO and the UN Foundation in Central African Republic to manage three large National Parks including Manova Gounda St. Floris National Park. In 2001, Earth Conservancy organized a UNESCO and United Nations sponsored mission trip to assess the current state of the National Parks. Headed by an intelligent and insightful woman named Elizabeth Wangari from UNESCO’s World Heritage Center, the trip and mission in May, 2001 was a great success and we had amazing adventures including several Presidential receptions with President Ange Felix Patasse.

We built two small tourism camps to help create jobs and to teach the local community about conserving wildlife so that tourists would come to the untouched paradise. There were many stories about life and death struggles with poachers, being held at machine gun point by soldiers, the amazing biodiversity and wildlife, walking on foot into a pride of lions, cannibals, naked pygmies and more. As early as 2000, we heard of the terrible persecution of Christians in Southern Sudan. In fact, it was the Sudanese soldiers who were the primary poachers in the National Park. With all this land, millions of acres, I thought the National Parks would be a perfect place to also provide sanctuary for those people being persecuted in Southern Sudan – just across the border from Manova Gounda St. Floris National Park.

Based upon these visits, in 2000 and 2001, prior to September 11, 2001, I wrote several White Papers to the late Congressman Murtha asking the US Government to help in our Central African Republic work as the small country is surrounded by Libya, Sudan, Chad and Congo. In meeting with the Congressman, I suggested that a peacekeeping and conservation mission would allow the US Government to post intelligence personnel so that these dangerous areas filled with terrorist training camps could be watched. The White Papers were bounced around the US Congress and different government agencies and I met with many people but it was decided that since the US Government did not have a formal presence in Central African Republic that our Government could not help. Tragically, we learned that many of Saddam Hussein’s terrorists trained just across the border from Manova Gounda St. Floris National Park. I often wonder if these terrorists could have been detected or stopped earlier had we been able to establish an intelligence gathering post in Central African Republic, while also doing our humanitarian and wildlife conservation work.

But, as life always evolves and circumstances change, one week after our United Nations sponsored trip to Central African Republic, the military of the country staged a coup, President Patasse fled the country taking untold millions of dollars with him and most of the government officials we worked with were killed. With the help of his friend Qaddafi (who I met in 2000 along with President Nicephore Soglo of Benin) and the Libyan and Congolese army, Patasse regained control of the country but a successful coup ousted him from power in 2003. Ten years later, after a failed Presidential bid to become the President of Central African Republic again, former President Patasse died in Cameroon in February, 2011.

The sad story is that the people of Central African Republic, who live in a country filled with the most amazing natural resources, remain the poorest of the poor in Africa. Also, the infamous warlord Joseph Kony and his rebel army are thought to be hiding out in those beautiful National Parks in Central African Republic still abducting children, raping, murdering and promoting terror. Tragically, due to circumstances beyond our control, the work for the local poor in Central African Republic remains unfulfilled. I often dream of that beautiful country and the people there and in Southern Sudan and wish I could have done more to help.

In 2002, my law firm was sponsoring The Shakespeare Theatre season of productions in Washington, DC. I was asked to represent the firm at a gala banquet for the Shakespeare Theatre in Washington, DC. There I dined with Justice Ruth Bader Ginsberg, Justice Rehnquist and the newly-appointed Head of Africa at USAID, Constance Newman, now Assistant Secretary of State for African Affairs. Ms. Newman was fascinated by the social venture model of partnering for-profit and non-profit companies to promote community-based projects in Africa. Ms. Newman asked that I meet with her staff at USAID and provide power point presentations and keep her updated with any progress.

At the same time, in 2003 and 2004, Dr. William Brown, a Fulbright Scholar and Ph.D Professor, and an innovative film crew worked with Earth Conservancy to produce two award winning HIV/AIDS education films work in Kenya and Tanzania with the United States Department of Defense. The films focused on the true life stories of soccer stars and promoting education, testing and awareness of HIV/AIDS. Winning awards at the Houston WorldFest film festival, the films achieved the goal of educating young people about HIV/AIDS and were shown throughout Kenya and Tanzania using a screen projector shown on bedsheets sewn together by a team who traveled from village to village. Earth Conservancy stills works in Tanzania and I am working on the establishment of social ventures with Dr. Steven Kiruswa, Ph.D and Maasai warrior, at his home town near Mount Kilimanjaro.

In 2005, our social venture team was privileged to partner with several local Xhosa Tribal communities in South Africa to help them manage and sustainably develop tens of thousands of acres of beautiful oceanfront property.  See Footnote 2.  Sotheby’s International Realty said it is the most untouched and beautiful coastal property remaining in South Africa.  See Footnote 3.  Because all of the small beach hotels were run by local white South Africans under a for-profit model – meaning they did not share any profits or ownership with the local people – our goal was to help the local community develop their own natural resources where the local people were actually partners in the projects.  See Footnote 4.  This would allow the local communities to not only receive jobs and education but also potentially receive profit, if the projects succeeded. Through Earth Conservancy, we also participated in three missions trips to build a church and a playground for a local orphanage. We also sent hundreds of bicycles, tons of food and clothing, soccer balls, medical supplies, computers and school supplies to the local people from clothing and bicycle drives that my wife and I organized.

As of today, I am still working as hard as I can for social ventures to help the poor in Africa. In 2011 and 2012, I helped to pay the start up costs for several new social venture projects in organic farming, education and a wildlife refuge and I have not received any compensation for my efforts. Furthermore, I started to pay back my past compensation from the social ventures to be discussed in this series. My goal is to help the people in Africa and to do my best – along with other caring people – to create sustainable and successful social ventures in Africa.

Article 2 in the Series is entitled: Social Ventures in Africa: What can go Wrong?

FOOTNOTES 1-4

Article 1 FN 1 Letter from William Brown to Mr. Haynie

Article 1 FN 2 Sotheby’s Endorsement Letter

Article 1 FN 3 Hole in the Wall Listing in Sotheby’s

Article 1 FN 4 Legal Opinion Letter for Hole in the Wall by Smith Tabata Law Firm

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Moringa Production as a sustainable agricultural model by Ray Dinning, social venture lawyer

In March/April, 2012, I had the opportunity to work with and interview the agricultural social entrepreneurs in the sustainable farming model for Moringa Production in Africa.  The social entrepreneurs at IRDI, a Zambian-based NGO which helps local communities reach the proverbial first rung of the economic ladder to sustainability through Moringa (superfood) production.  Hailed as one of  the most nutritious super foods in the world, Moringa production can aid in fighting malnutrition and other ailments in Africa while providing an economic windfall to rural communities.

IRDI spokesperson, Jacqui Wintle, introduced me to local schoolchildren, rural communities and farmers who were creating sustainability in their sphere of influence with Moringa farming.  This is truly one sustainable agricultural model and product that can aid Africa now and in the future.

 

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Social Entrepreneurship in Africa named Top 30 Social Entreprenuership Blogs for 2012

Ray Dinning, social venture lawyer, and his blog “Social Entrepreneurship in Africa” have been named One of the Top Social Blogs to Watch in 2012.  See http://www.socialentrepreneurshipinafrica.com.

To view the article, please click on the link below:

http://www.evancarmichael.com/blog/2012/04/10/the-top-30-social-entrepreneur-blogs-to-watch-in-2012/

 

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“Making Social Ventures Work” – Ray Dinning, tax lawyer

Reprinted from Harvard Business Journal (Sept. 2010) by Thompson and MacMillan:

In recent years, we’ve all experienced considerable volatility—financial breakdowns, natural disasters, wars, and other disruptions. It’s clear we need new approaches to the world’s toughest economic challenges and social problems. Entrepreneurs can play a central role in finding the solutions, driving economic growth (building infrastructure, developing local talent, infusing struggling regions with investment capital) and helping hundreds of millions of people worldwide. If successful, socially minded entrepreneurial efforts create a virtuous cycle: The greater the profits these ventures make, the greater the incentives for them to grow their businesses. And the more societal problems they help alleviate, the more people who can join the mainstream of global consumers.

The failure rates for new companies and markets, however, are high. That is true anywhere in the world, including emerging economies. The management challenges associated with producing and marketing goods and services at the base of the economic pyramid include imperfect markets, uncertain prices and costs, nonexistent or unreliable infrastructure, weak or totally absent formal governance, untested applications of technology, and unpredictable competitive responses. Given this daunting uncertainty, entrepreneurs need a framework for “unfolding” success from a perceived or an emergent opportunity.

Turning Uncertainty into Risk

Entrepreneurs and others who want to launch businesses in, say, Latin America, Asia, or Africa but lack reliable data about those environments need to put together the best models and mechanisms they can, documenting their assumptions as they go. Critically, however, they need to systematically test each of the assumptions underpinning their preliminary models against a series of checkpoints and be prepared to change on the fly, redirecting their efforts through a process known as discovery-driven planning. In this way, they can act on emerging evidence instead of obstinately and blindly pursuing infeasible objectives. (See Rita Gunther McGrath and Ian C. MacMillan’s “Discovery-Driven Planning,” HBR July–August 1995.)

What Is Discovery-Driven Planning?

However, this method of planning is necessary but not sufficient to handle high-uncertainty ventures. In the following pages, we’ll look at how to combine discovery-driven planning with four other guidelines for building successful businesses in uncertain markets that we developed during a sustained field program carried out by the Wharton Societal Wealth Program (WSWP). Specifically, we’ll consider four social enterprise projects we helped launch in Africa and examine how the guidelines informed the work in each.

It’s important to note that the lessons here aren’t just for entrepreneurs. The management teams of established multinationals, foundations, large NGOs, and other nonprofits can apply them in any challenging and highly uncertain business situation. In doing so, they can better control their costs, increase their impact on society, minimize the effects of surprises, and know when to disengage from questionable projects.

Lessons from the Field

As part of our research in the WSWP—a nine-year-old field research program at the University of Pennsylvania’s Wharton School of Business intended to examine the use of business models to develop projects that attack societal problems—we worked with 10 groups of local entrepreneurs trying to launch base-of-the-pyramid ventures in the United States and several African countries. Each project faced some or all of the elements of uncertainty cited earlier. In a few instances, even the initial objectives and desired outcomes were unclear, which made it tougher to make decisions about where and how to allocate resources.

“Resource allocation in Africa and which social venture projects to begin with is always a priority. Jumpstart projects which can help create micro enterprise businesses based on the larger resource project is a good start,” says Ray Dinning, social venture lawyer.

Ian MacMillan and James Thompson co-authored this article in Harvard Business Review.

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