Investors in Mozambique lose millions in ‘unlawful’ auction

The Cabanas was an ideal family holiday destination. The lodge it used to be affiliated with, was auctioned off illegally. Photo: Nicolene Darwell.

MBOMBELA – Local investors of a lodge in Inhambane, Mozambique, were shocked to discover that their investment had been involved in what seemed to have been an unlawful auction in August.
The investors in Barra Cabanas, who were assured that their investment was protected under Section 39/2007 of international habitation rights of the Mozambican law, have taken legal steps against the new and previous owners. Their aim is to either claim against the Protection Act, or to force their title deeds upon the new owners and claim back their investment.
First National Bank (FNB) in South Africa and Mozambique called for the liquidation and auction of the lodge when it became apparent that it did not have the necessary funds to stay afloat. However, the investors were not even aware of the severity of its financial woes and were not informed of the auction. Local businessman, Mr Hennie Potgieter, bought two weeks’ timeshare in Barra Cabanas in 2011. He was one of about
64 South Africans who bought weekly timeshare in the six cabanas. The investors contacted one another and planned to take the matter to the former Mozambican minister of tourism, Mr Carvalho Muária. One investor, Mr Chris Smit of Johannesburg, set up a provisional appointment with the minister for next week.
He said in an email to the investors, “We have got the commitment from the minister’s office that they will give us their full support on this matter. I believe the outcome of the meeting will determine our actions.”
The lodge’s previous owner, Mr Dave Law of Barra Resorts Limitada, also the owner of Flamingo Bay Water Lodge which burned down earlier this month, could not be reached for comment. “Numerous attempts to contact the new owner of Barra Lodge were in vain,” Smit’s email read. “The property, as far as my knowledge stretches, is barricaded and we as periodic habitation-right holders are not allowed to access our property and exercise our property rights. Talks with FNB have also come to a halt as they refuse to give me more information.” The name of the new owner has not been made public. This issue casts light on the potential dangers of foreign investment in Mozambique. “This will be a watershed moment for the government of Mozambique as it is a very integral part of the law in respect to Section 39/2007 and a few others specifically done to protect periodic habitation-right holders.”
Potgieter gave Smit his full support and said he was more than willing to contribute to the legal costs. “I am saddened that we can’t utilise our holiday home for the period we were promised, but the writing was on the wall when we went there for our last holiday,” Potgieter told Lowvelder. “The annual levies were too low and signs of neglect were starting to show.”
The investors are hopeful that, with the cooperation of the minister, as well as adequate legal help, the matter could be resolved.

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