/ 25 October 2022

AG, parliament want answers on R31-million Ingonyama Trust Board ‘loans’

It is deeply disturbing that the Ingonyama Trust Act is now being portrayed as some sort of bribe made in secret by the apartheid regime to “pacify” Prince Buthelezi
The trust’s officials couldn’t say how the money was invested because the information was not forthcoming from the ITB’s investment wing. (Delwyn Verasamy/M&G)

The Auditor General of South Africa (AGSA) and parliament’s land reform portfolio committee want answers from the Ingonyama Trust Board (ITB) about “loans” worth R31-million it gave to Ingonyama Holdings (IH) and has failed to account for.

Earlier this month committee members raised questions about the fate of the money — an initial tranche of R10-million and several subsequent transfers totalling R31-million — that the auditor general has queried and red flagged with the ITB, which was in parliament for a hearing on its annual report.

A dispute between the auditor general and the ITB about the payments has delayed the submission of the entity’s financial statements to parliament.

The ITB administers nearly three million hectares of land in KwaZulu-Natal on behalf of the Zulu monarch, the sole trustee of the Ingonyama Trust, but has been at loggerheads with parliament and the auditor general regarding its corporate governance failures.

Ingonyama Holdings was set up as an investment wing in November 2019 by ITB chairperson Jerome Ngwenya, who is also a director of the IH along with former ITB chief executive Lucas Mkhwanazi.

It operates out of the building occupied by the ITB in Trelawney Drive in Pietermaritzburg and has received a total of R41-million from the board in the form of an initial R10-million transfer to its lawyers and subsequent loans of R31-million.

MPs wanted to know from the ITB’s chief executive, Vela Mngwengwe; its chief financial officer; Siyadumisa Vilakazi; and board deputy chairperson Zethu Qunta, why Ingonyama Holdings’ books had not been consolidated with those of the ITB and accounted for.

They also wanted to know what the R31-million had been invested in, but none of the officials were able to answer this, saying they had not been able to get the information from Ingonyama Holdings.

Vilakazi, who was seconded by the land reform department to help deal with the ITB’s corporate governance issues, said it was “very difficult” to answer questions about Ingonyama Holdings because “the board and myself have very material differences with regard to the issue of governance at the entity, specifically to IH”.

Vilakazi said he agreed with the portfolio committee and the auditor general that the ITB had a legal commitment to consolidate and submit Ingonyama Holdings’ financial statements, but that they had been unable to secure the necessary information to do so.

“What happens at Ingonyama Holdings — I am trying not to say something that would be controversial to the board — is that information does not come through,” he said.

“We have told the board and the AGSA has reported on it. We agree with the AGSA that there is a requirement for consolidation, However, they [the IH financials] were simply not available so we couldn’t manufacture it to be able to correctly consolidate the financial statement.”

Vilakazi said the initial payment of R10-million to attorneys was made because Ingonyama Holdings did not have a bank account at that point. The payment was made before he was sent to the ITB by Land Reform Minister Thoko Didiza. 

“Subsequent payments of R31m were dispersed as loans. The AGSA has complained that there are no terms for these loans. This speaks to the issue generally within the entity,” he said.

Vilakazi was unable to say what Ingonyama Holdings did with the money.

He said there were some issues regarding Ingonyama Holdings that he could not respond to, because doing so would “draw a direct line in the sand between myself and the board and I would not want to do that in a public forum”.

Qunta said that although the creation of Ingonyama Holdings predated her appointment, there was “nothing bad” and “no conflict” about the ITB having representation on the IH board as “the shareholder” because “this happens” in government.

“The structure in itself is not a problem. Perhaps what can be looked at is whether it should have been the chair of the board or perhaps any other member,” she said.

MP Sam Matiase said the ITB leadership needed to provide clarity on the disparities in its own financial statements and to account for the loans to Ingonyama Holdings.

‘We implore the board and the ITB personnel — let’s deal with these serious graphic irregularities and breaches which really undermine the spirit and the letter of the precepts and the legislation that govern public institutions,” Matiase said,

“Can we get proper written answers as to what happened here?”

Mngwengwe said the ITB would continue to have capacity problems, and would continue to battle to account for land, property and equipment, until it had restructured itself to be more capable of carrying out its tasks.

Mngwengwe said the ITB’s capacity was “much lower” because the bulk of its staff members were lower level employees without the requisite skills, mainly as a result of the manner in which the entity had “evolved”.

The staff complement of 60 had been cut to 45 as part of a retrenchment process aimed at cutting the staff number to 30. 

“The physical bodies are there, but there isn’t the capacity to do the job needed now,” Mngwengwe said.

Some staff members, including management, had been seconded from the land reform department and more employees had been requested to address the skills deficit, he said.

Manketsi Tlhape, the acting chairperson of the portfolio committee, said they would meet the ITB’s leaders and Didiza on 18 October.

But the meeting has subsequently been postponed to 11 November.

Africa Boso, spokesperson for the auditor general, declined to comment.

“The auditor general will release the general report on the audits of national and provincial departments, as well as state owned entities, on 23 November 2022. All related inquiries will be dealt with then,” Boso said. “In the meantime, the Ingonyama Trust Board will be best suited to deal with your inquiry.”