South Africa - KwaZulu-Natal: Forensic audit call for the Ingonyama Trust Board | Land Portal
Paddy Harper
Language of the news reported: 

embers of parliament have called for a full forensic audit of the Ingonyama Trust Board (ITB) and for the entity to be placed under administration by the land reform ministry over its history of “delinquency” in failing to meet public finance management standards.

This despite the entity, which administers nearly three-million hectares of land falling under traditional authorities on behalf of the Zulu monarch, being granted an unqualified audit finding by the auditor general for the first time.

The call for a forensic probe of the ITB and the Ingonyama Trust was made by members of parliament’s land reform portfolio committee on Tuesday 16 November during the presentation of the ITB’s annual report for 2020-21 by its leadership and staff from the auditor general’s office.

Members of the committee questioned whether or not the ITB had a mandate to operate due to the succession battle in the Zulu royal house, which had prevented the installation of the new king. MPs  also questioned the entity’s high salary bill — and expenditure on executives — and its continued failure to meet financial reporting deadlines.

While the board is appointed by the land reform minister, in conjunction with the KwaZulu-Natal premier and the provincial house of traditional leaders, its chairperson is nominated by the monarch.

The entity receives R22-million a year in funding from land reform, but spends in excess of R40-million annually on salaries, board fees and operating expenses.

While the ITB is legally entitled to make use of 10% of the revenue it collects on behalf of the Trust, this year it spent R44.736-million, nearly R22.5-million of which came from its earnings of R49.401-million.

The creation of the Ingonyama Trust and the Board during the transition to democracy assisted in securing the participation of the then-monarch, Goodwill Zwelithini kaBhekuzulu and Inkatha — now the Inkatha Freedom Party (IPF) — in the landmark 1994 elections.

The ITB has since administered land falling under traditional authorities on the monarch’s behalf, but has come under fire in parliament over poor financial management and a failure to disburse funds to communities living on the land it controls. 

Residents cannot receive title deeds for the land on which they live because of the tenure system, and have historically been issued with permission-to-occupy certificates, which the ITB has since started to replace with residential leases, and which effectively turned them into tenants paying annual rental for their own land.

The residential lease programme has been successfully challenged in court by residents and NGOs, who won an order setting it aside and compelling the ITB to refund them. 

The order also compelled Land Reform Minister Thoko Didiza to provide the court with a programme for ensuring compliance on the part of her department, which it found had failed in its duty to protect the rights of those who were prejudiced by the leases.

According to the auditor general’s report, the ITB had failed to submit its financial statements on time, but had secured the unqualified audit after financial misstatements were corrected.

The entity’s management had failed to take appropriate steps to prevent irregular expenditure amounting to R7.02-million and wasteful expenditure of R29 000 from being incurred.

The bulk of the irregular expenditure related to salary costs that had not been budgeted for, while R2.9-million was the result of supply chain management regulations and procedures being contravened in the appointment of service providers.

According to the auditor general’s report, ITB’s salary bill stood at R30.1-million, of which R6.37-million went to top management. 

The amount included payments for two chief executives at just over R1.1-million a year each, due to former chief executive Lucas Mkhwanazi being placed on special leave by board chair Jerome Ngwenya last year.

During the same period the ITB spent R5.173-million on board fees, with Ngwenya earning R1.768-million a year. Board members also claimed a total of R1.05-million in expenses.

The auditor general said investigations into allegations of misappropriation of funds and supply chain management violations between 2017 and 2020 were still in progress.

The ITB’s new chief executive, Vela Mngwengwe, appointed earlier this year as part of a turnaround strategy implemented by Didiza, said that while the ITB’s viability was under threat because of underfunding and a lack of capacity, “all is not lost”.

“We believe that part of the problem of the ITB is the perception that the entity is not transparent, and does not want to account. We have taken a very conscious decision that we want to open up this organisation,” Mngwengwe said.

Mngwengwe said that the late submission of documentation and “delinquency” by the ITB leadership “is definitely not going to continue”.

In response to questions from MPs, Ngwenya said that the ITB would appeal the lease  judgment, which he said had “created more confusion”, and that it would not implement the judgment and repay the leaseholders.

“The implementation of the judgment is currently suspended. There are over 20 grounds of appeal — among others this came before three judges, two of whom reside on ITB land and therefore should not have even sat in judgment,” Ngwenya said.

“We are not processing residential leases until the judgment of another court is pronounced. At the same time we have asked the staff to identify the residential leases and put them aside and also to quantify what has been paid, as per the judgment of the court,’’ Ngwenya said.

Ngwenya said that while the absence of a trustee — Misuzulu kaZwelithini’s accession to the throne is being challenged in court by his family members and he is yet to be installed as monarch — was a “challenge”, the ITB still had the legal authority to act.

Ngwenya is the nominee who was appointed by the late monarch.

“The absence of a trustee is a challenge, but not to the extent of invalidating any action taken by the board,” Ngwenya said. “As long as the person who sits as chairperson is the one appointed by the Ingonyama [the king] , all the decisions executed by the board are valid.”

Ngwenya said the ITB had accounted for the funding it received from the government — which fell far short of what it required to operate — “cent by cent”. 

He said the ITB had set up Ingonyama Holdings to act as the “commercial arm” of the trust as the board was “not a business entity” and could not legally do so.

Ingonyama Holdings could, he said, assist  in “optimising and extracting value from” land under the ITB’s control.

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