Efforts to clean up the Land Bank suffered a setback with the axing of its chief financial officer and the resignation of the board’s risk and audit committee chairs, after serious irregularities emerged in payments the bank made on behalf of the agriculture department’s R100 million AgriBEE fund.
The Bank chief financial officer Xolile Ncame was fired on 20 June for supplying the bank’s external auditors, Ernst & Young, with a dossier outlining apparent interference in credit decisions by land and agriculture minister Lulama Xingwana, questionable payments to consultants of over R10 million and suspicious transfers from the fund of over R80 million. Xingwana strongly denied any interference.
“It’s misleading and even mischievous to suggest that the ministry or the minister may have played any role in any credit matters,” her spokesperson Godfrey Mdhluli said. he bank argues Ncame brought the parastatal’s name into disrepute by failing to exhaust internal processes before taking the irregularities to an external party; failing to refer them to executive management sooner; failing to prevent them or take corrective steps and failing to ensure proper controls were in place.
Ncame confirmed he was fired while on sick leave and would take the matter to the Commission for Conciliation, Mediation and Arbitration (CCMA), but declined to comment further. His sacking follows the resignation of the board’s audit committee head Joe Mthimunye and head of risk Modise Motloba.
Both confirmed they had tendered their resignations, but would not be drawn on reasons. Mdhluli disputed this, saying Xingwana had not received a resignation letter from Motloba, “whose contribution to the board the minister values”. Xingwana accepted Mthimunye’s resignation, however, “because she had intended to ask him to resign because of his poor attendance of board meetings”.
Land Bank chairperson Themba Langa denied reports he was also poised to resign, but admitted he was “very unhappy” about several incidents, including losing his risk and audit committee chairs and that the board had been unaware of the existence of the AgriBEE fund until alerted by Ncame. Ncame’s dossier contained prima facie evidence of fraud and PricewaterhouseCoopers had been appointed to investigate its allegations and “other whistleblower’s reports”.
Langa stressed Xingwana had been supportive of the investigation and never pressurised the board not to pursue it. But sources close to the bank say all three departures are directly linked to Ncame’s revelations about the AgriBEE fund, which could prove embarrassing for Xingwana’s department. The fund is administered by the office of agriculture department deputy director-general Phil Mohlahlane, who heads its black farmer support section. Funds flowed from the department to a special account at the bank, which disbursed them for specific projects.
Mohlahlane was seconded to the Land Bank as acting CEO in mid 2007 after his predecessor Alan Mukoki left under a cloud, following a forensic investigation Xingwana instituted into financial management at the bank, the results of which remain inconclusive. The forensic report, handed to Xingwana in September 2007, apparently found Mukoki may have deviated from the bank’s legislated mandate of supporting agricultural development by advancing large loans to property developers, although there’s evidence to suggest the decision had the backing of the board and ministry. But the 2007 forensic financial review, seen by Farmer’s Weekly, concludes there were no “fraudulent or illegal transactions and/or activities conducted by the Bank, its management and staff”.
Meanwhile, Ncame’s dossier and supporting documents in Farmer’s Weekly’s possession show the fund held R29 million at the beginning of 2007 and received another R63 million by the end of the year. By the end of January 2008, the bank had disbursed over million to several projects, including a biofuel pilot in Mpumalanga, a feedlot and dairies. Disbursements totalling R17,5 million also took place on 23 December 2007 and 31 January 2008 – unusual dates for company transfers. Ernst & Young is understood to have urged the department to conduct a field audit of the projects. Some of the entities listed in the documents appear not to exist, because the companies the funds were disbursed to are not registered at Cipro.
None of the entities were ever publicised by the department and Xingwana made no mention of them during the launch of the AgriBEE charter in April 2008 or her budget vote speech a month later. hey include an entity called Growing New Farmers Project. According to its loan application, seen by the Farmer’s Weekly, the project is a national initiative founded in early 2007 “by a group of women” to help new farmers buy land, access markets and receive technical and financial management support. It received R10 million in October 2007.
The agriculture ministry has stressed the investigation into the transactions had Xingwana’s full support. “The ministry would like to reiterate that it’s fully engaged in the drive to ensure the Land Bank plays its role as a development finance institution and delivers on its mandate and promotes the role of the historically disadvantaged in the agricultural sector and for AgriBEE to remain sustainable,” it said. – Stephan Hofstätter
