A director of the Land Bank, tasked with providing financial services to the commercial farming sector, has caused a standoff between his employers and the treasury after he was awarded a multimillion-rand contract to supply animal feed.
In August last year, Adam Rakgalakane was appointed the managing director of Land Bank Insurance. This was two months before his family company, Rakgalakane Investments, of which he is a director, was awarded a contract to supply animal feed through a treasury transversal contract.
The contract is worth between R36-million and R200-million over three years. The company is one of several contractors appointed to supply animal feed to government departments through a treasury transversal contract awarded last year.
Approached for comment, the treasury said action would be taken against the company should the matter not be resolved in a month.
But the Land Bank said that no action would be taken against Rakgalakane.
As of last year government employees were prohibited from doing business with the state, according to the Public Service Act and the Public Service Regulations of 2016. In 2014, President Jacob Zuma signed the Public Administration Management Act, which also compelled state employees to disclose their financial interests.
The treasury said the contract was awarded on November 17 last year. The department said it was aware of the Rakgalakane Investments directorship when the contract was awarded.
The contract has no fixed value because it was on an “if and when required” basis. But the treasury did confirm that R4.4-million had been paid to Rakgalakane Investments between November and March.
“The second quarter reports are currently being collected and figures will be released later this month,” the department said.
The treasury said due diligence had been done on the company before it was appointed.
Explaining why the conflict had not been identified, the department said Rakgalakane had been hired by the Land Bank after bids for the contract had already been submitted. The closing date for the bids was May 27 2016. Rakgalakane was appointed on August 10.
Due diligence took place in October 19, when it was declared by Rakgalakane Investments that Rakgalakane worked for the Land Bank, and would deregister from Rakgalakane Investments if it was awarded the tender, the department said.
“The letter of award went out on the November 17 2016. Follow-ups were made with the company and Rakgalakane Investments were busy with their attorneys to resolve the member’s withdrawal and deregistration through a trust to protect his previous income and assets generated by the company.
“Unfortunately the process that was followed has taken longer than anticipated,” treasury added.
This had not happened at the time of publication, according to company registration records seen by the Mail & Guardian.
The bank’s spokesperson, Tabby Tsengiwe, said the Land Bank was aware of Rakgalakane’s business interests because he had declared these upon his appointment.
“[The] Land Bank is aware of Mr Rakgalakane’s outside business interests in various companies, some of which have been doing business with the state since 2012,” Tsengiwe said. “He declared his business interests to Land Bank in line with the bank’s ethics and compliance policies prior to his appointment in the bank.”
She said there was no conflict of interest despite his role at the Land Bank Insurance Company. The Land Bank is an agency of the treasury.
“The said supplier of animal feed that you have cited is an agricultural commodity trading company, which does not do business with Land Bank,” she said.
“Land Bank has a statutory obligation to comply with the PFMA [Public Finance Management Act] and Land Bank Act.”
She added that Rakgalakane’s “outside business interests do not in any way cause the bank to fall foul of its statutory obligations”.
“Therefore, no action had been taken against any of our employees for doing business with the state.”
Tsengiwe said the bank’s policy did not prohibit staff from having external business interests. But this was on condition that employees declared such interests “for the bank’s consideration of potential existence of a conflict of interest”.
“Land Bank employees and their close relatives are expressly prohibited from engaging in business with the bank,” she said. “From a Land Bank point of view, this particular matter was handled strictly in compliance with the bank’s policies and governance prescripts,” she added.
The specialist agricultural bank’s mandate is to provide financial services to the commercial farming sector and to agribusiness. According to its website, the Land Bank also offers “new, appropriately designed financial products that would facilitate access to finance by new entrants to agriculture from historically disadvantaged [backgrounds]”.