The Ingonyama Trust Board (ITB), which administers about three million hectares of tribal land on behalf of King Goodwill Zwelithini, has failed to account for land under its control valued at R1.08-billion.
The board’s failure to provide supporting documents to auditor general Kimi Makwetu for the land during his 2017-2018 audit, and a series of other financial management failures, have resulted in the body receiving an adverse audit.
Makwetu also criticised the board, led by chairperson Jerome Ngwenya, for failing to account properly for a total of more than R28-billion in assets — including the land at nearly R2-billion — that fell under ITB control and for continuing to keep revenue from mining leases, which is supposed to be contributed to the National Revenue Fund.
Although Makwetu’s final report on the board will only be tabled in Parliament in November, his initial audit report was included in the ITB’s annual report, which was tabled before Parliament’s land reform and rural development portfolio committee on October 12.
Zwelithini has demanded assurances from President Cyril Ramaphosa that land under ITB control will not be affected by government’s plan to expropriate land without compensation and has threatened to call on his subjects to vote against the ANC should Ramaphosa fail to do so.
The board has come under increasing pressure in the wake of Parliament’s high-level panel, which recommended that residents on Ingonyama Trust land be given security of tenure. It also faces a series of legal challenges to the leases it has been issuing to residents, who have historically received permission-to-occupy certificates.
Meanwhile, a report submitted to Parliament’s land reform portfolio committee earlier this year by ITB staff members raises further questions about the level of control over finances and assets at the board.
According to the report, which the Mail & Guardian has seen, the board agreed to purchase a Lexus SUV, registration ITB 1 ZN,for the monarch, with all running costs carried by the ITB. A second vehicle, a BMW 7 series valued at more than R2-million, was then purchased for the monarch at the request of Ngwenya.
“The board approved the acquisition on condition that His Majesty returns the Lexus SUV so as to reduce costs. The vehicle was not returned and there were no reasons furnished for that. Instead the board was paying for the maintenance of more vehicles, a Lexus and the BMW 7 series,” the report states.
Prince Thulani Zulu, spokesperson for the monarch, appeared surprised by requests for comment from the M&G. “Why are you asking that question? Is there anyone who told you that the car is no longer with the king?’’ he asked.
Zulu then referred queries to Ngwenya. At the time of writing Ngwenya had not responded to calls and email messages from the M&G.
In his preliminary report, Makwetu said ITB management failed to ensure that complete and accurate records of expenditure and other reports were prepared in compliance with government reporting regulations. “The system established by the accounting authority was inadequate to monitor compliance with national treasury’s framework,’’ he said.
Makwetu said the board failed to account properly for property, plant and equipment valued at R28-billion under its control because it did not submit survey diagrams and did not have controls in place to value properties. The trust had continued, incorrectly, to recognise mining royalties as its revenue, instead of submitting them to the National Revenue Fund in terms of the Petroleum Resources Royalty Act.
It had also failed to take “effective and appropriate steps’’ to collect revenue, with more than R72-million from bad debtors.
In her response to the adverse audit, the board’s acting chief executive, Thandeka Ndlovu, said the board had come up with a plan to improve financial management in the coming financial year.
She said the audit opinion had been affected by the short notice the auditor general had given the board in its request for title deeds and survey reports.
The board, she said, had valued the land it controlled for the first time.
“In all fairness more time should have been given,’’ she said. “The ITB would have provided the required information and averted the adverse opinion.’’
Ndlovu said the board wanted “arbitration’’ for the mining revenue issue as it believed such revenue was “contractual’’ and the revenue should go to the ITB for disbursement among the residents hosting the mines and not to the fund.
“Since 2009, there is no traceable record that indicates … any community living on IT [Ingonyama Trust] land having received direct benefits from the royalties paid to the state.’’
Responding to Makwetu’s criticism that the board had not collected royalties from mining companies, she said the ITB had not promoted nonpayment of royalties by mining houses and that it was holding talks with them to increase the rentals to the current market rate.
“Should it be necessary, we request that this matter be referred to a mediator or arbitrator [for] resolution,’’ she said.