By Paddy Harper
The Ingonyama Trust Board is unable to account for R71 million “loaned” to its investment wing, Ingonyama Holdings, three years ago, because its former chairperson, Jerome Ngwenya, has refused to hand over financial records for auditing purposes.
The board is now preparing to go to court to force Ngwenya — who is contesting its attempts to remove him as a director of Ingonyama Holdings — to provide it with the investment company’s bank statements.
The ITB administers nearly three million hectares of traditionally controlled land in KwaZulu-Natal on behalf of the Ingonyama Trust, whose sole trustee is the Zulu king, and raises revenue through commercial leases, mining and other rights.
Ngwenya, who served as board chairperson for more than a decade, oversaw the creation of Ingonyama Holdings in 2019 and was one of its two directors, along with former ITB chief executive Lucas Mkhwanazi.
Ngwenya was removed by the board’s sole trustee, King MisuZulu ka Zwelithini, last year after a dubious R41m million investment by Ingonyama Holdings was exposed by the Mail & Guardian.
Ngwenya has contested his removal from office and has since then refused to step down as a director of Ingonyama Holdings or provide the board with any of its financial records.
This was revealed by the ITB’s chief executive, Vela Mngwengwe, this week at the release of a report by the Land and Accountability Research Centre into the failure of the entity to abide by the Public Finance Management Act (PFMA) and its implications for people living on the land it controls.
Mngwengwe was brought in by Agriculture, Land Reform and Rural Development Minister Thoko Didiza in 2021 to try to regularise the board’s administrative and financial controls, which had seen it receive adverse findings from the Auditor General of South Africa every year since 2011-12.
Mngwengwe said during the auditing process in 2021 “we started noting that there was movement of money from Ingonyama Trust to Ingonyama Holdings” and “started asking questions”.
Although there had been “some kind of cooperation” from Ngwenya, who was both board chairperson and director of the investment company, in the beginning, this changed.
“We started realising that there was resistance by the directors, specifically by the former chairperson of the board,” Mngwengwe added.
This “went further” when Ngwenya refused to account to the board and had told them that it and Ingonyama Holdings were “equivalent” entities and that “we all report to the trustee and therefore have no obligation to report to you as a board, only to the trustee”.
Mngwengwe said: “The bottom line is that we can only access information about Ingonyama Holdings from the directors of the company. We can’t go to the bank saying give us the financial statements.
“We attempted to do so and we faced a problem in obtaining information because that information could only be given to the directors and the directors of the company did not cooperate.”
The board had decided to remove Ngwenya and Mkhwanazi and had appointed new directors.
Ngwenya was contesting his removal and “has threatened the bank that he will sue if they give the new directors access to the bank statements”.
While the ITB had wanted to avoid going to court to force Ngwenya to cooperate, “we have got to the point where we are about to get to that”.
ITB chief financial officer Siyadumisa Vilakazi said there was “no real need” for Ingonyama Holdings to have been created in the first place.
“However, it was done” and was one of the contributing factors to “bringing us to where we are now”.
The lack of transparency on the part of the ITB during Ngwenya’s tenure was central to the Land and Accountability Research Centre report, compiled by researcher and lawyer Janet Bellamy.
The report said the former chairperson had pushed a narrative that the board and the trust were separate entities, and that the trust was not subject to the PFMA because it did not receive direct funding from the government.
Ngwenya had succeeded in convincing the auditor general that the board should be subject to the PFMA because it received annual funding from the agriculture ministry for operations, but that it did not apply to the trust or the revenue it raised.
This meant that there was no accounting for how the trust took in and spent the money it collected or how much of this actually reached people living on trust land, who were meant to benefit from its existence.
The report recommended that the auditor general be called to account for the decision to accept this argument and the decision to exempt the trust from the PFMA since the 2016-17 financial year.
Vilakazi said this narrative of two entities was wrong and that the auditor general had “exacerbated” the confusion and the loss of accountability that came with this.
Vilakazi said the board and the trust were “one entity” and that there “should not be different levels of accountability”.
The Land and Accountability Research Centre report also calls for the implementation of a forensic audit into the trust’s finances, something which parliament’s agriculture portfolio committee has also requested.
The report further calls for the request made to the ITB leadership five years ago by the portfolio committee for a breakdown of all payments made to residents on trust land or to traditional authorities.
According to the report, R6.2 million was disbursed to residents during the 2018-19 financial year and R3 million in 2019-20.
In 2020-21, the board failed to present its statements to parliament, while in 2021-22 payments of R8.7 million and R4.7 million were recorded.
During 2021-22 the trust raised R63 million in revenue from leases alone.
Ngwenya did not respond to calls from the M&G.
This article first appeared in Mail & Guardian on 11 April 2024.
