Findings into the Macena Agricultural Primary Cooperative Ltd matter: Committee rejects report of the Department of Rural Development and Land Reform

Meeting report

Briefing by Department of Rural Development and Land Reform (DRDLR)
Dr Moshe Swartz, Acting Director-General, DRDLR, presented the findings of the preliminary review into the Macena Agricultural Primary Cooperative Limited. He gave the background to the project, showing that Macena was situated in the rural area of Giyani. It was created as a closed corporation (cc) on 29 January 2009, and initially consisted of 36 women tomato farmers. After Dr Ralph Manhire, of Ralman Consultancy Group, was introduced to Macena in Muyexe village, Limpopo, he had developed a business plan to assist the cooperative with business and technical skills, and funding.  He had presented this plan to DRDLR and Old Mutual’s Masisizane Fund separately.  Ralman had asked for R2 454 356 from the DRDLR and R1 390 000 from Masisizane.  The Department had rejected this request, but Masisizane had approved the loan and transferred the finance.

Two proposals were submitted by Ralman to the Department.  One was a Memorandum of Agreement (MoA), in terms of which the DRDLR would contribute R32m towards a revolving finance scheme for agricultural projects in Limpopo. This was between the DRDLR and Apol Ltd, Apol Agrifin and Ralman. The other was the business plan in which the DRDLR would contribute R2 454 356 and Masisizane would contribute R1 390 000 towards the Macena project. The then Director General (DG) had not approved the MoA, after feedback that such a project could not be sustained, and had requested that a proper procurement process be followed to appoint service providers.

The DRDLR had advised Dr Manhire that it would not be able to contribute funding towards the business plan in the form of a grant or cash, but would contribute directly to the project where needs were identified.  The following contributions were made to Macena by the DRDLR and other interested parties: fencing, a borehole, protective clothing, a replacement borehole pump, seedlings and a pack house.

The business plan was separately submitted to the DRDLR and Masisizane, and when Dr Manhire presented the plan to Masisizane, he did not include the decision from the DRDLR that there would be no cash contribution to the business plan. Dr Manhire misinformed Macena that the DRDLR would contribute into the business plan and said that the DRDLR’s contribution would be used to pay the Masisizane loan. No signed agreement between the DRDLR and Old Mutual, Masisizane, Ralman, Apol Ltd, Apol Agrifin or Dr Manhire was found, regarding Macena.  The Board of Masisizane had informed the DRDLR that the loan to Macena would be written off and Masisizane would not pursue recovery of the debt against the members or the business.

To conclude, the DRDLR did not sign any agreement with any of the stakeholders as named previously.  Ralman had misrepresented to Macena and Masisizane that the DRDLR was going to contribute an amount to Macena, according to the business plan. The Masisizane loan to Macena would be written off, and Old Mutual would not pursue the recovery of the debt against the members or the business. 

Discussion
Dr Swartz asked to move to the report on oversight visits to Eastern Cape, KwaZulu-Natal, Limpopo and North West, but the Chairperson said that the last presentation had not been completed. He explained that there were other projects within the same areas and indicated that the Committee would like to hear about them.

Dr Swartz explained that the report on oversight visits contained the findings of the Select Committee’s visit to Limpopo, which included the Macena gardens. He offered to start with that part of the next report.

The Chairperson explained that he had read the preliminary report.  He thought it was very good and gave an accurate picture of what was happening, but this presentation had not reflected that report and had included very little of the information.

Ms B Mabe (ANC, Gauteng) said that after looking at the preliminary report and the forensic audit, she was expecting the presentation to reflect the preliminary review report; however the information was incomplete and inadequate. She asked when the completed report would be presented. She expressed the view that ‘blind’ presentations were often given to the Committee and asked why the presentation did not reflect the preliminary report and the forensic audit.

The Chairperson said the report was unsatisfactory.  He asked why it did not reflect the preliminary report and audit, and whether the Department had the information required.  He wanted to know where the information on Dr Manhire had come from, who he was, and why this information was being withheld.

Dr Swartz said the presented report was from the internal audit unit, which had been asked to conduct a forensic audit on what had happened under Dr Manhire.  The second report was not comprehensive and did not cover all the projects that had been visited.  He undertook to create a report which addressed every project visited in order to give the Committee all the information.

The Chairperson said that this was a pattern with all government departments. Committees went on oversight visits and their observations did not match the reports which the departments made later. He said that the Committee rejected the report as presented, and asked the Committee how long the Department should be given to amend it.

Mr D Worth (DA, Free State) noted that the DRDLR was claiming not to have lost any money, but the presentation had stated that the Masisizane loan would be written off and Old Mutual would not pursue the recovery of the debt of R1.3m. He was skeptical that the Department would not pursue this amount of money, and questioned its motives.

Mr O de Beer (COPE, Western Cape) said that the DG had been at the briefing, and the Portfolio Committee had said at the time that they were not satisfied, because what they had been presented with and what they had experienced, were totally different. Today, they had been given even less information and were worse off than at the briefing. The Committee questioned the status of the contract as well as who was receiving the money. This created an issue of who was going to pay the money back, as the DRDLR was refusing all responsibility.  Issues, such as whether the land was used as collateral to borrow money, were in the air. The Committee had raised issues of storage space and markets and other concerns for driving this project as a business, but this had clearly been a handout. The contractors had paid themselves R1m, with the Department not asking for it back. It could not go on like this.

The Chairperson asked for the full attention of the Department and said he was grateful for the report as it showed the full failures of the Department.  He asked for honesty about their failures. He reminded those present that once one addressed land and environmental issues, one also addressed joblessness, lack of skills, inequality and poverty. He reflected on the World Cup and the success of the Department in ensuring all structures were in place by the first match. He said that when the Department came to deliver lies to the Committee, it was at government expense.  The Committee had seen what was happening on the ground, so it would not accept lies any more.  He asked the Department to come back within 14 days with a full report, revealing all failures.  He said the Committee’s integrity was being undermined.  

The Department was dismissed and the meeting was adjourned.