Milking the Land Bank - Opinion, News
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Milking the Land Bank

13 Jul 2009
I reckon that if I wanted to get a new job, there would only be three organisations on my shortlist (in order of priority): The Land Bank, the Land Bank and the Land Bank. I'm sure that if I joined, I too would be assured of amassing considerable personal wealth in a very short space of time.

Without raising a gun, holding up a teller or hijacking some gold.

Why choose the Land Bank?

Well, if we look at its recent history, we can see that anyone who has worked there has managed to amass a jolly lot of money for doing a job (lending money to their mates) and then been forced to leave, getting a handsome settlement package as a reward.

Back in July 1999, Dr Helena Dolny, then the managing director of the Land Bank, was under investigation amid allegations of corruption, racism and nepotism. Moreover, the then 45-year-old widow of Joe Slovo insisted the Bank's board increase her salary from R630k to R1,4m a year.

At the time it was more than double what the then president, Thabo Mbeki, was earning - but who cares, she was running the Land Bank.

She was also accused, by Bonile Jack (then chairman of the Land Bank board) of providing just R56m in loans to black farmers out of the total of R11bn lent by the bank to farmers up until then.

Among others, she was accused of making a loan of R300k to an institution run by her first husband.

By 2003 the Land Bank had notched up R1,8bn in bad debt provisions, pushing it into making a loss of R1,5bn for the 15-month period that was reviewed. At that time the bank's chief executive, Monwadisi Fandeso, claimed the bank would recover as much as 80% of that amount over the next 18 to 30 months.

Of course, it didn't.

By now, Jethro Mbau was chairman of the bank and he asserted that the executive team, who had been with the bank for 18 months, would focus on using debt collectors to collect the outstanding money.

He also claimed that the previous executive team (under Dolny) had been focused more on their three-to five-year tenure at the bank "with an eye fixed on performance bonuses" to make adequate provisions for arrears.

At this point, the bank was approving loans worth R8,7bn (despite the booming financial conditions), down from R11bn under Dolny's tenure. At the end of 2003, the bank produced an operating profit of R574m (it was making money, not losing it).

By 2005, the Democratic Alliance announced that it would ask the Public Protector to investigate the R800m loan that was granted to a company, which was allegedly linked to the African National Congress's senior executives. The Sunday Times claimed the Land Bank had used the money to fund a buyout of a food company in which the then ANC Secretary General Kgalema Motlanthe and then Mbeki's counsellor, Manne Dipico, held stakes.

Want some money? Ask the Land Bank. As it says: it will stand by you.

As it turned out, Motlanthe was a shareholder in (the now troubled) Pamodzi Investment Holdings and in 2006 the auditors revealed that a total of about R2bn in loans by the Land Bank had gone sour. Of this, an R800m 10-year loan had been made to Pamodzi. It was equivalent to about a third of the loans made that year and was also a non-agricultural investment.

Since then, the Land Bank chairman has again been fired.

In April 2007, the new Land Affairs Minister, Lulama Xingwana, turned to former ABSA chief executive, Nallie Bosman, to come out of retirement so that he could sort out the mess that was called the Land Bank.

By November 2007, things had got really bad as Mbeki's Cabinet called for criminal charges to be laid against people who had allegedly taken money from the Land Bank in illegal loans after a forensic audit by Deloitte. Among the allegations were:

- Former Land Bank chief executive officer (another one) Alan Mukoki and his executives had deviated from the Land Bank's mandate without board approval from form Land Affairs Minister, Thoko Didiza (another one who was replaced by Xingwana) and funded companies that had nothing to do with agriculture. (It's a Land Bank to help farmers, for goodness sake);

- Three legal firms had told the Land Bank not to lend money for non-agricultural purposes such as the development of golfing estates;

- More than R300m was given to Amber Mountain Investments for an equestrian estate in KwaZulu-Natal. A second golfing estate was developed in Midrand;

- Mukoki's executive assistant and acting head of internal audit, Daryl Rose, allegedly had a financial interest in Northern Jungle Trading, granted a R247m by the bank to develop a golf estate in the Vaal River area;

- Sam Mkhabela, a Land Bank board member, is believed to have also benefited from the Northern Jungle Trading loan;

- A Land Bank loan to sugar tycoon, Patrick Sokhela, was apparently used to buy Professional Soccer League status for his football team, Amazula.

At that stage the audit recommended that Mukoki, his executives and a board member should face criminal charges.

By July 2008 the mess had not abated and the then newly axed Land Bank chairman, Themba Langa, addressed an open and frank letter to the Minister of Agriculture and Land Affairs, Lulu Xingwana, revealing details of a bitter feud, sparked, apparently anyway, by Langa's efforts to recover billions of misspent government money.

Remember the R1,8bn of which 80% was supposed to be recovered? It's still not happened – and probably never will.

As the facts show, Langa was taking a tough line. He wanted to liquidate the milling business bought by Patrick Sokhela who borrowed R640m and who, by July last year anyway, had not made a single repayment on the loan.

Xingwana allegedly prevented Langa from doing so.

Langa also wanted to recover money lent to developers to build a golf estate in KwaZulu-Natal and another in Midrand. Xingwana is accused of stopping this process by saying that Langa was acting "unilaterally".

From a profit, some years back, to an enormous R2bn loss in a few short years. And all the bank has to show for its efforts are some enormously wealthy individuals – whether they are former employees or just those fortunate few who secured a single loan that could pay for 640 new Mercedes Benz's.

But that's not the end of the story. Last week, there were reports that senior former Land Bank executives and a former Gauteng politician are likely to be arrested sometime later this month on charges of corruption.

Land Bank's most current chief executive, Phakamani Hadebe, told Parliament that all the information about the alleged irregularities has been handed to the police. No names have yet been revealed but they will come out in due course. Moreover, neither the police nor the Hawks are prepared to comment on the investigation.

That's still not all. Yet another fund, the Mafisa fund, set up to help established farmers mentor emerging black farmers shows that there was collusion, in Limpopo but elsewhere in the country too, between farmers and workers.

In simple terms, farmers would get workers to unknowingly or unwittingly sign documents stating they own a farm. Then, the farmers would get loans made against the "new" farms. Three of the known cases include amounts totaling R4m and two more involve R9m transferred to supposed black economic empowerment companies in 2007.

Worst of all, perhaps, is the fact that Finance Minister, Pravin Gordhan (whose ministry currently runs the Land Bank), has agreed to underwrite R3,5bn in loans to keep the Land Bank running.

So it can continue making illegal loans to a few rich, influential and greedy people?

This guarantee means that you (and I, and millions like us) are going to keep a deeply corrupt organisation running – not for the betterment of all, but for the enrichment of a few. A very few.

And that stinks.

*Hartdegen writes a regular column for Property24.com. The content of his columns constitutes his personal opinion and doesn't pretend to be facts or advice. Contact him at paddy@neomail.co.za.

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