Former Ingonyama Trust Board Chairman, Jerome Ngwenya.
The Ingonyama Trust Board (ITB) is unable to recover more than R40 million lost in a dubious investment through its investment wing, Ingonyama Holdings, which has been “hijacked” by former board chairperson Jerome Ngwenya.
The board told parliament last week that it had been unable to exercise control over Ingonyama Holdings, set up by Ngwenya and former ITB chief executive officer Lucas Mkhwanazi in 2019 to audit its books — or to recover the money.
The Mail & Guardian exposed the payments to the company and to lawyers acting on its behalf — which were meant to see the Ingonyama Trust receive R2 billion in investment from a company called AIN Consortium run by Johannesburg businessman Leandro Samuels — at the time, but Ngwenya denied any untoward activity.
King MisuZulu ka Zwelithini, the trustee and current chairperson of the ITB, ordered Ngwenya to publicly account for the payments, which he said were a facilitation fee for AIN to deliver investment from an unnamed international funder and that a dispute had arisen over non-delivery.
The king then fired him.
In its annual report tabled in parliament last Wednesday, the ITB said that the financial statements of Ingonyama Holdings “were not obtained to consolidate” its books and that it had not been able to recover the money.
The board said it had made changes in directorship in order to “aid recovery of the loan of R40.76 million” but Ngwenya had gone to court to prevent it from accessing the entity’s books.
It said Ingonyama Holdings “does not have sufficient cash resources to settle the debt” while AIN Consortium had not met its obligations to deliver investments in terms of a timeline in the shareholder agreement.
“This time is believed to have passed resulting in breach,” the ITB said in its report.
“Governance challenges indicating control difficulties which presents recoverability challenges as the board seemingly can no longer affect the nature or amount of benefits through exercise of power over Ingonyama Holdings including the ability to determine how much must be repaid by the Ingonyama Holdings.”
The fiasco is among the issues over which MPs raised concerns during discussions on the tabling of the annual report, which was delayed twice during October and was finally tabled by the ITB’s deputy chairperson, Linda Zama, last week.
Parliament’s land reform portfolio committee, which exercises oversight on the ITB and the Ingonyama Trust, expressed concern over the alleged hijacking of Ingonyama Holdings and the refusal to submit its financial statements to the ITB.
“The directors have changed the address of the business, and have also been transacting using the company, but refuse to account to the ITB.
“This admission prompted the committee to seek clarity as to how reliable the report that was presented before it was, if its investment company, which is supposed to hand over financial records for auditing purposes, is not cooperating or reporting to it,” the committee said in a statement after last week’s meeting.
Committee chairperson Albert Mncwango said it supported the ITB and wanted to ensure that it played the role it was meant to.
“The ITB must work. We must conduct oversight which seeks to ensure that the ITB works as envisaged in the legislation. At this stage, it is work in progress towards realisation of the intended objective for the trust,” he said.
The committee also wants a written breakdown of all benefits paid to communities by the ITB — part of the revenue it raises is meant to be channelled into the traditional authorities — as “the committee would like to see who gets to benefit from the ITB”.
Mncwango expressed concern about the breakdown in relations between the board, appointed by former land reform minister Thoko Didiza, and the Zulu king, who has refused to work with its members.
The current land reform minister, Mzwanele Nyhontso, told the committee the king had informed him that he intended to resign as chairperson but that he insisted that the board also stand down as he was no longer willing to work with them.
MisuZulu has repeatedly called for the dissolution of the current board, with which he has clashed over a number of issues including investments and a proposed audit of all ITB land by the legal firm which is representing him in his battle for the throne.
The parliamentary committee will conduct an oversight visit at the ITB’s Pietermartizburg offices early in the next parliamentary session and believes what it heard last week makes this all the more urgent.
It said the ITB’s late submission of reports had become an annual norm, because it and the Ingonyama Trust, which again received a qualified audit opinion, reported separately and outside the parameters of the Public Finance Management Act.
The ITB reported that it had set aside R4 million to reimburse residents on land under its control who had made payments on unlawful residential leases which were introduced under Ngwenya’s tenure.
The Rural Women’s Movement, the Council for the Advancement of the South African Constitution and residents of ITB land successfully challenged the lease programme in the Pietermartizburg high court.
The ITB was ordered to refund residents and reinstate permission to occupy certificates, while the minister was ordered to report to the court every three months on progress in implementing the court order.
Didiza complied, setting aside R38 million a year to employ staff to audit the leases — issued since 2008 — and convert them to permission to occupy certificates, and to regularise the issuing process going forward.
But Ngwenya appealed and the process was delayed until November last year, when the current board withdrew the court action, opening the way for the court order to be implemented.
The committee welcomed the withdrawal of the appeal and the commitment by the ITB to obeying the court order by setting aside R4 million for payment to residents during the current financial year.
Council for the Advancement of the South African Constitution director Lawson Naidoo told the Mail & Guardian that the council had met the ITB earlier this year and had been told that it accepted the court ruling and wanted to discuss implementation plans.
One of the difficulties identified was that the money had already been paid to traditional councils and that, as a result, “it is not going to be an easy road”.
The Legal Resources Centre, which represented the applicants, said it had met the ITB In February to discuss its plans to execute its obligations under the court order and had received a summary of its implementation plan.
Lawyer Kieran Rutsch said the centre had not had any communication from the ITB since, while the land reform department had last filed a quarterly compliance report in March.
“In light of the apparent lack of implementation of the court order in the time since the appeal was withdrawn, particularly with regard to the residential leases, the Legal Resources Centre has assembled a stakeholder task team to raise funding for, and coordinate, an action plan to ensure compliance with the obligations of the order,” Rutsch said.