/ 27 July 2008

Land Bank dossier damns Xingwana

An explosive dossier outlining irregularities at the beleaguered Land Bank implicates Land and Agriculture Minister Lulu Xingwana in allegedly removing files on suspicious Land Bank deals and ordering the bank to pay out a farmers’ union.

The Mail & Guardian is in possession of the dossier compiled by former Land Bank chief financial officer Xolile Ncame, who was suspended by Xingwana two days after presenting the dossier to acting Land Bank chief executive Saki Zamxaka.

Ncame was fired three weeks ago after an internal disciplinary hearing found him guilty of breaching policy by also forwarding the dossier to the bank’s external auditors, Ernst & Young.

After the Land Bank’s board became aware of the allegations, chairperson Themba Langa appointed audit firm PricewaterhouseCoopers to investigate.
Shortly thereafter Xingwana also fired Langa.

Issues raised by Ncame, including millions of rands paid from the Department of Agriculture’s AgriBEE fund via the Land Bank to various companies, are now believed to be the main reason behind the flurry of suspensions and dismissals in the past six months.

Xingwana was removed as political head of the Land Bank last week and authority was given to Finance Minister Trevor Manuel to turn the ailing institution around. The treasury’s head of asset and liability management, Phakamani Hadebe, has since been appointed acting chief executive of the bank.

Ncame’s report outlines several alleged irregularities at the bank and charges of unauthorised meddling by Xingwana in the institution’s affairs.

Xingwana allegedly came to a meeting of the bank in January 2007 and inquired about a staff member suspended for fraud. ‘She then instructed my colleague, who was with me in the meeting, to pay out money to a farmers’ union — money that was not budgeted for this.”

Early in 2007 Xingwana attended a meeting with Ncame and allegedly asked him why the bank gave R500-million to a sugar mill empowerment deal — the Ushukela transaction in KwaZulu-Natal. ‘She then asked that I hand over at that moment all that client’s files. She further asked me to hand over all client files she had identified and wanted them ‘now’. She took all those files and I informed both the chairman of the board and the chief executive.”

This, Ncame writes, ‘is like a shareholder of Standard Bank going to Standard Bank and demand[ing] the files of clients — which violates client/banker confidentiality”.

The M&G has reliably learned that the majority of files taken by Xingwana related to the AgriBEE fund that was administered by deputy director general in the agriculture department, Phil Mohlahlane. Mohlahlane acted as Land Bank chief executive from mid-2007 to early this year, when he was replaced by Zamxaka.

Ncame discovered that payments from the fund were made through the Land Bank and brought the matter to the attention of the board. Langa was previously quoted in Farmer’s Weekly saying the board was unaware of the fund’s existence as it was not reflected in the bank’s books.

The files were returned after Ernst & Young auditors demanded to see them as part of their internal audit and the audit firm was told to contact the minister personally.

Ncame further alleges that Xingwana summoned the bank’s credit committee to a meeting and demanded to know more about the profiles of clients already granted loans.

In 2007 Xingwana allegedly went to a board meeting with a former chief land claims commissioner, Thozi Gwanya, and alleged that the KwaZulu-Natal Ushukela land was the subject of a land claim. Investigations by the finance team later revealed this was not the case.

Subsequently the KwaZulu-Natal land claims commissioner sent the bank a confirmation letter saying the land was indeed under claim and land claims were duly gazetted.

Ncame further alleges irregularities with the appointment of staff at the bank. According to the dossier, the general manager in Mohlahlane’s office was appointed without the job being advertised as required by the Employment Equity Act.

After the dismissal of the bank’s senior manager of finance, Mohlahlane allegedly went to Ncame’s office to ask him to sign off an advertisement for the job. ‘[W]ithin an hour the general manager in the chief executive’s office came with a letter of appointment for me to appoint someone I had not interviewed nor seen to replace my senior manager. I indicated to her that I couldn’t do that and the chief executive can make the appointment. He [the new senior manager] was then employed by the chief executive.”

The dossier highlights the improper appointment of consultants to the bank and that no tenders were sought to appoint them.

One consultant was allegedly paid R1,6-million to test the functionality of financial systems. A second consultant allegedly received more than R3,3-million for ‘communications planning” and a ‘turnaround strategy”.

According to Ncame, Mohlahlane and two senior managers also attended a concert featuring soul singer Gladys Knight at Sun City for which the Land Bank picked up the bill.

Neither Xingwana’s spokesperson — the minister is overseas — nor Mohlahlane responded to questions before going to press.