Land Bank stable despite 13% profit slump

Finance Minister Pravin Gordhan praised Land Bank CEO Phakamani Hadebe and chairperson Dr Ben Ngubane for “turning around an important institution and setting it on a new and exciting strategic path”, even though the Land Bank’s operating profit fell 13% to R192 million.

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“We’re all aware of the challenges the Land Bank was beset with when the new CEO took over – parasitic and unethical leadership, a lack of control systems and accountability, and poor business direction,” said Gordhan. “There’s a trend developing in South Africa where individuals want to feed off institutions like the Land Bank. This must be stopped.”
Hadebe said forensic investigations into past Land Bank scandals were making good progress.

“Arrests will soon be made in regard to the Agri BEE investigation,” he said, referring to the instance where R100 million of Land Bank money lodged in an AgriBEE fund was used to purchase luxury homes and vehicles.

Five arrests have been made in the Mafisa case (an empowerment scheme that offered low-interest loans to black workers) and investigation into the abuse of land for development finance unit loans “was at an advanced stage with 210 bank accounts subpoenaed”. Investigation into a controversial IT contract was ongoing.

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Legal costs associated with the investigations, which had risen to R45 million, were a further burden on the institution’s finances. And unfavourable market conditions prevented the bank from disposing of the R500 million cost of discontinued operations. The bank also continued to carry R1,8 billion in non-performance loans.

Gordhan said a R1 billion cash injection from government had strengthened the bank’s balance sheet and will ensure that it lives up to its mandate to promote economic development in rural areas.The R1 billion was a cash injection into the balance sheet, and had nothing to do with profit, said a Land Bank spokesperson.

Hadebe said recent doubts about the sustainability of the global economic revival would impact agricultural commodity prices, and that income trends for field crops, horticulture and animal products weren’t promising.

On the plus side, Gordhan said it was exciting that world leaders “are talking about it being necessary to re-balance the global economy, and to change the patterns of demand and growth”. The Land Bank can help here, through driving growth in South Africa and the rest of the continent.

“Africa has the potential to be one of the pillars of the green revolution, and the Land Bank can contribute towards this,” he said.

Hadebe said much of what the bank had achieved, such as its second unqualified audit in two years, was merely what was accepted as the normal responsibility of a development finance institution. He said in 2011 the bank’s leadership would be able to report progress on to reaching government’s objectives of “increasing access to land, providing support for emerging farmers and accelerating rural development.”