As the Land Bank’s new boss, Phakamani Hadebe, announced the bank’s first profit in five years this week, Finance Minister Pravin Gordhan asked the Financial Intelligence Centre and compliance unit to trace a web of alleged fraud at the institution.
As part of a major clean-up at the bank, the unit is focusing on the multimillion-rand AgriBEE fraud case that the Mail & Guardian exposed last year.
The South African Revenue Service is also helping to trace the multitude of accounts used to strip the fund of money meant for emerging farmers. It is understood that a former top official at the bank and a former Gauteng politician will be arrested soon for looting the fund.
Irregularities in the AgriBEE fund were first exposed by the bank’s former chief financial officer, Xolile Ncame, who showed that it had disbursed more than R80-million in a few months on projects, including a biofuels pilot plant in Mpumalanga, a feedlot and dairies.
Ncame, and the bank’s former board chairperson, Themba Langa, lost their jobs after blowing the whistle.
The alleged AgriBEE fraud was the latest in a string of financial scandals to have plagued the bank in the past six years. In July former president Thabo Mbeki moved oversight of the institution from Lulu Xingwana, then agriculture minister, to Trevor Manuel, then finance minister.
Manuel seconded Hadebe, the head of the treasury’s asset and liability management division, to take over as the bank’s chief executive.
Hadebe said he was shocked by what he found. He promised to investigate not only the AgriBEE fund, but a slew of irregular investments, including golf estates and equestrian estates, fraud in the emerging farmer empowerment scheme, Mafisa, and IT irregularities.
Four forensic audits have been commissioned. “Don’t judge me now, judge me in a year’s time,” he promised a year ago.
This week at Gallagher Estate Hadebe presented the bank’s annual report and financial results to the media and investors.
For the first time in five years the bank showed a profit of R241-million. It also boasted its first unqualified audit.
Treasury has given the bank R3,5-billion in guarantees, but Gordhan said this week that it had to be sustainable and look after itself first, if it was to help farmers.
Repossessions would be used as a measure of last resort, he said. The bank could not afford moratoriums on the repayment of loans, as that would bankrupt it in three years.
Gordhan said the government’s rural-development strategy would entail the close cooperation of the departments of agriculture, forestry and fisheries and rural development and land reform, with the Land Bank taking a leading role in helping developing farmers.
Tina Joemat-Pettersson, the agriculture minister, announced at the same event that her department and the Rural Development Department would bail out 283 farmers threatening to default on Land Bank loans.
She said the departments would take over the farmers’ mortgage bonds, renegotiate and restructure the loans and then lease the farms to them for specific periods. The farmers owe a total R232-million.
In addition her department would take over the production loans of about 30 farmers.
“Should these farmers not display farming and business mettle, even after appropriate support, the farms will be offered to other eager farmers,” she warned.
“The government will not simply throw money at the problem and walk away.”