WOSA in grip of funding turmoil as trust fails to honour cash pledge

19 October, 2007

Wines of South Africa

faces a financial crisis after discovering

money it had expected from a wine trust will not be paid.

The South African Wine Industry Trust, which had pledged 9 million rand (£650,000) to WOSA over the next three years, is

in financial difficulties. It has already failed to honour a payment to WOSA of 4 million rand (£290,000) for this year.

WOSA has been forced to hold emergency

talks with South Africa's five largest wine export producers in

a bid to secure

funds to cover the shortfall. The

producers - Distell, Constellation, The Company of Wine People, DGB and KWV - have pledged support, WOSA said.

Jo Mason, UK market manager for WOSA, said: "These funds form a small part of our total budget

- the UK budget has not been reduced.

"All of South Africa's major exporters are working hard to drive sales in the UK . The bridging

funds have been agreed upon in goodwill, in order to sustain the generic effort, and do

not affect WOSA's good relationship with its members."

Michael Fridjhon in Johannesburg writes: The funding crisis affecting

WOSA appears to be coming to a head with the news that the parliamentary committee on public accounts is investigating the affairs of the South African Wine Industry Trust. In the past, a significant portion of WOSA's income has come from SAWIT.

The trust was established in 1998 following intervention by the then minister of agriculture in the KWV's plans to convert from a co-op with statutory authority into a trading company.

KWV agreed to a settlement of

369 million rand (£26 million) that would

fund export promotion, technology transfer and empowerment.

A second generation of trustees granted a sum - estimated at

half of the original fund - to a syndicate to enable them to buy a 25 per cent stake in KWV.

Most of this money appears to have been

lost. WOSA has been aware of the problems but believed payments would resume.

The

hearing continues.




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