Top Land Bank officials siphoned off more than R2-billion meant for farmers to fund their close friends and business associates’ luxury golf estates, a sugar mill, equestrian estates and residential developments.
This massive fraud was revealed in a damning forensic audit by Deloitte that was handed to the Cabinet this week by the Minister of Agriculture and Land Affairs, Lulu Xingwana.
The extent of the fraud has forced Cabinet to call for the Land Bank board to be fired and for criminal charges to be brought against virtually the entire top executive who were implicated in the forensic probe. Xingwana is set to announce a new board this week.
The Sunday Times understands that it has also strained relations between Xingwana and her predecessor Thoko Didiza, with the latter believing that the current minister is conducting a witchunt against her former employees and showing up her failures.
The audit revealed that:
# Former Land Bank CEO Alan Mukoki and his executives had deviated from the Land Bank’s mandate without board the approval of Didiza and funded companies that had nothing to do with agriculture;
# Three different law firms had advised the Land Bank against using tax payers’ money to fund golf estates.
# More than R300-million was given to a company called Amber Mountain Investments to develop an upmarket equestrian estate in the KwaZulu-Natal north coast. Another multimillion-rand golf estate was developed in Midrand using money from the Land Bank.
Amber Mountain features prominent businessman Abe Maduna and Paul Baloyi, the CEO of the Development Bank of South Africa (DBSA), as directors .
# Mukoki’s Executive Assistant and then Acting Head of Internal Audit Daryl Rose also had financial interest in the companies that benefited from the loans. This includes a company called Northern Jungle Trading, which was granted a R247-million loan by the Land Bank to develop a golf estate in the Vaal area.
# Sam Mkhabela, a Land Bank board member who has since resigned, also benefited from the Northern Jungle loan.
# A Land Bank loan was also used to help KwaZulu Natal sugar tycoon Patrick Sokhela to buy PSL status for his team, Amazulu, after he had failed to raise the money on the open market. Sokhela als received a R700-million loan to buy a sugar mill, a loan whose size over-exposed the bank.
The audit recommended that Mukoki, his executives and one member of the board should face criminal charges.
Mukoki resigned in July, a month before the auditors submitted their final report.
Mukoki yesterday denied any wrongdoing.
He claimed that Deloitte had not signed the report submitted to the board. He admitted that he had deviated from the Land Bank’s mandate without the minister’s approval.
"We made a submission to the minister and Treasury about our turnaround strategy, which included funding land development projects. They did not respond for 30 days."
He said that a clause in the Public Finance Management Act allowed him to proceed after this period.
"It was a strategy and a tactic to enable the bank to generate sufficient resources so that it can deliver of its development mandate. The Bank was poor and making losses. We wanted to make it profitable."
Mukoki admitted that the beneficiaries of the Land Bank loans were his business associates. He said: "Any person who I have worked with in the past can apply for loans. There is nothing in the Land Bank Act that says I cannot do that."
He also said that there was nothing wrong for his executives to benefit from Land Bank loans as long as they had declared their interest.
Four Land Bank executives were suspended on Wednesday and Thursday following the Cabinet meeting. This includes Nicky Maredi, head of IT, Kumenderi Pillay, senior manager finance and head of treasury Makgale Gwangwa.
Several bank executives, who served under Mukoki, have since left the bank, while others, including Gerhard Hechter, chief risk officer, are currently facing disciplinary inquiry.
Acting chief executive Philemon Mahlahlane served the officials with suspension letters this week. Following this, the officials, who were on duty at the time, were immediately marched out of the Land Bank’s Tshwane head quarters by security guards.
A Land Bank official said: "The mood in the office is very tense and the morale at an all time low. When we see security guards going up the lifts we know that another official has been suspended."
Members of Parliament sitting on the portfolio committee on agriculture this week demanded from Land Bank officials the names of the beneficiaries of loans.
The Land Bank board chairman Lungile Mazwai, who appeared before the portfolio committee this week, told MPs that the loans were granted by the bank’s management without the board’s knowledge.
He could not answer whether former Agriculture and Land Affairs Minister Thoko Didiza, who is now with Public Works, had approved of such a scheme. “That would be determined by the forensic investigation,” he later told the Sunday Times.
The scheme started operating in April last year – a month before Didiza was redeployed to the Public Works Portfolio, which was vacated by the late Stella Sigcau.
The bank’s chief financial officer Xolile Ncame, who was once suspended during the investigation and later reinstated by Xingwana, confirmed that there were people within the bank who had applied for loans as the bank’s policy did not preclude the practice.
These, he said, were declared to the bank each time a loan application was being considered. The skeptical MPs demanded to see copies of the declarations, which Ncame and Mazwai have since promised to deliver to Parliament.
Ncame told MPs that the Land Bank would sell the entire loan book of the illegal scheme.