Forensic investigation into Ncera Farms (Pty) Ltd: Meeting with stakeholders & Department of Agriculture, Forestry and Fisheries

Agriculture, Land Reform and Rural Development

16 May 2013
Chairperson: Mr M Johnson (ANC)
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Meeting Summary

The Committee met with the representatives of farmers and of the communities surrounding Ncera Farms.  The Acting Director-General and other senior officials of the Department of Agriculture, Forestry and Fisheries and the Chief Executive Officer of Ncera Farms (Pty) Ltd attended the meeting.

The Committee had reached the conclusion that Ncera Farms was a failed enterprise that should be shut down.  The Department of Agriculture, Forestry and Fisheries allocated funding to Ncera Farms.  Ncera Farms had not submitted an annual performance plan to the Committee.  The decision of the Committee to close down Ncera Farms (Pty) Ltd meant that the Department’s budget would have to be amended.  The Legal Adviser from the Parliamentary Legal Services unit explained the relevant processes and legal requirements that needed to be met when the budget of a State entity was not approved or amended.

The Department of Agriculture, Forestry and Fisheries presented the same briefing on the 2010 report by KPMG on the forensic investigation into Ncera Farms that was given to the Committee on 10 May 2013.  The Department of Agriculture, Forestry and Fisheries did not have the opportunity to provide further input during the proceedings.

The representatives of the Ncera Progressive Farmers’ Cooperative and the Chieftess of the Amagqunukhwebe aseLwandle tribe provided input to the proceedings.  The Amagqunukhwebe aseLwandle tribe claimed ancestral ownership of the land that was allocated to the farmers by the Department.  One of the farmers also claimed ancestral ownership of his farm.  A group of farmers had responded to an advertisement placed by the Department inviting applications from prospective farmers to lease eleven of the Ncera farms.  The Permission to Occupy contracts given to the successful applicants had expired in 2009 but lease agreements with the farmers were never signed.  These farmers did not originate from the area and disputes had arisen between the local communities and the incoming farmers.  The Buffalo City Metro Municipality did not recognise these farmers either but had given recognition to another group of farmers represented by a certain Mr Smiley (who did not attend the proceedings).  The Municipality also intended to develop 540 plots for housing on the land in question.  The farmers complained of stock losses and a total lack of support from the Department.  The farmers only wished to establish farming enterprises and were willing to settle on land located elsewhere.

Members of the Committee were extremely critical of the manner in which the Department had managed Ncera Farms and for its failure to deliver on the promises that were made.  Members insisted that the Department took disciplinary action against the officials who were implicated in wrongdoing and dereliction of duty in the report on the forensic investigation.  The Committee suggested that the Department reconsidered the model being used to manage State-owned farms.  The Committee concluded that the Department had no alternative but to negotiate with the farmers to vacate the land.  The plight of the farmers had to be addressed as well.  The Committee requested that the Department met with all the stakeholders, established the rights to occupy the land of all the current occupants and found solutions to resolve the matter.  The Committee requested the Department to present a briefing on the corrective action that would be taken by the Department on 18 June 2013.  The Committee would also require regular progress reports to be submitted by the Department.

Meeting report

The Chairperson noted the apologies of the Minister of Agriculture, Forestry and Fisheries, Ms A Steyn (DA) and Ms N Phaliso) ANC).  He observed that the Deputy Minister rarely attended meetings of the Committee.

Mr R Cebekhulu (IFP) suggested that the Committee sent a letter of condolence to the Minister on the bereavement suffered by her family.

The Ncera Farms (Ltd) matter
The Chairperson explained the Committee’s involvement in the matter concerning Ncera Farms.  The Committee was briefed by the Department of Agriculture, Forestry and Fisheries (DAFF) on 10 May 2013 on the report on the forensic investigation conducted by KPMG into Ncera Farms (Pty) Ltd in 2010.  The budget of the entity for the 2013/14 financial year was presented to the Committee on 14 May 2013.  An annual performance plan for the entity was not submitted.  The Committee needed to decide on the way forward for Ncera Farms and what financial provision needed to be made for the entity.

Mr Sipho Ntombela, Acting Director-General, DAFF said that the Department was aware that an annual performance plan had not been submitted for Ncera Farms.  The Chief Financial Officer was requested to contact the National Treasury to establish what the financial implications were.  The allocation for Ncera Farms was an insignificant item in the DAFF budget but the allocation had to be justified.

Mr Jacob Hlatshwayo, Chief Financial Officer, DAFF advised that the national Treasury had suggested that DAFF requested the Chief Executive Officer of Ncera Farms in writing to submit an annual performance plan.  The 2013/14 allocation for Ncera was R3.9 million, mostly for salaries.  The total DAFF budget was R6 billion.  He suggested that the Committee approved the DAFF budget, including the Ncera allocation.

The Chairperson pointed out that DAFF and Ncera was funded from public funds and no amount whatsoever was “insignificant”.  Entities were legally obliged to submit strategic plans and budgets, regardless of the amount involved.  Entities had to account to Parliament how public funds were spent and had to meet the legislative requirements.  He asked for the legal obligations of Parliament in dealing with the budgets of entities to be explained.

Adv Gary Rhoda, Legal Adviser, Parliamentary Legal Services explained that the Money Bills Procedure and Related Matters Act (the “Money Bills Act”) required Parliament to consider the Division of Revenue Bill and the budgets of Government Departments, including the allocations to subordinate entities.  With regard to DAFF and its subordinate entities, the Committee would consider the annual performance plan and budget of the relevant entity and make recommendations.  The Committee decided to what extent the plans and budgets would be analysed.  The Committee issued a Budgetary Review and Recommendations Report (BRRR).  If the Committee was of the opinion that there had been wrongdoing or something was amiss, the recommendation to the National Assembly could be that the budget was amended or was not approved.  The Finance and Appropriations Committees of Parliament made recommendations and reported to the National Assembly as well.

The Chairperson said that DAFF had requested the Committee approved its budget.  The Committee’s report on the matter would be considered by the Finance and Appropriations Committees.  The matter concerning Ncera Farms should be referred to the Select Committee on Public Accounts (SCOPA), which dealt with issues of governance in State entities.

Ms Kanthi Nagiah, Head: Legal Services, DAFF said that it was understood that the appropriate procedures had to be followed.  The Committee would need to justify a recommendation that the DAFF budget was amended.

Mr Rhoda explained that the Committee could issue additional BRRR’s if necessary.  The BRRR could include a statement that no annual performance plan was submitted by the entity concerned and that the budget was a matter of concern.  The BRRR would be forwarded to the National Treasury and to the Minister.  The Committee could undertake to liaise with SCOPA and with other Parliamentary Committees.

Mr B Bhanga (COPE) remarked that if the Committee recommended that the DAFF budget was amended in respect of the funding provided to Ncera Farms, the recommendation would have to be clearly motivated.

The Chairperson said that the budget needed to be informed by the annual performance plan.  The problem was that no annual performance plan was submitted for Ncera Farms.

Adv Rhoda advised that the BRRR was part of the budgetary process and included the Committee’s recommendations.  The National Assembly decided whether or not the budget was approved, not approved or had to be amended.  Amendments to budgets needed to be approved by the Finance and Appropriations Committees.  He cautioned that the disapproval or amendment of the budget of an entity could result in a major political fall-out.  He suggested that the Committee’s concerns were clearly set out in the BRRR and specified what action needed to be taken and that ongoing reports were submitted.  He urged the Committee to proceed with due caution.

Mr Cebekhulu said that the Committee was of the opinion that the employees of Ncera Farms had to be paid until such time as the entity was closed down.  It was pointless to request Ncera Farms to submit an annual performance plan as the entity had already failed to do so.

Mr Bhanga said that the Committee’s position on Ncera Farms needed to be made clear to all concerned.  There were major problems with the entity and the Committee was of the opinion that it should be closed down.  The entity provided no value for the money invested in it and DAFF had not developed any plans to turn it around.  The State could not continue to fund an entity that was not financially viable.  The process required by the applicable legislation needed to be followed in implementing the Committee’s decision.  Funding provision needed to be made to pay staff and cover operational costs during the closing-down process.  The Committee needed to pass a formal resolution that Ncera Farms would be closed down

Ms M Pilusa-Mosoane (ANC) observed that Ncera Farms had been problematic for a number of years.  DAFF had never met the necessary requirements for the Ncera budget.  The recommendations of SCOPA and the other Parliamentary Committees were not known.  The major concern was what would happen to the people occupying the farms.  The Committee did not wish to see the current occupants losing their income.  Ncera Farms had been problematic since day one and the Members would like to hear from DAFF what the plans for the entity were.

The Chairperson pointed out that the Committee’s involvement was limited to meeting its legal obligations regarding the annual performance plan and budget.  The BRRR would include the Committee’s recommendation that the DAFF budget was amended with regard to the allocation made to Ncera Farms.  The Committee’s report on the matter needed to be formally approved.  Copies of the report would be made available to DAFF and all other parties involved in the process.

Input by the stakeholders in Ncera Farms
The meeting was attended by representatives of the farmers and the surrounding communities.  The delegates introduced themselves to the Committee.  A Xhosa translator was provided by Parliament.

The Chairperson understood that not all the farmers were represented at the proceedings.

Mr LV Ntikinka, Farmer and Chairperson of the Ncera Progressive Farmers (NPF) Cooperative explained that the farmers were divided into two groups.  One group was led by Mr T. Albert.  The other group was led by a certain Mr Smiley (who was not present).  The Buffalo City Municipality only recognised the group led by Mr Smiley.  He represented the ten Ncera farmers who were members of the NPF Cooperative.

Mr Mzi Titimani, Chief Executive Officer, Ncera Farms (Pty) Ltd understood that all the farm dwellers were represented by the delegates attending the meeting.

Mr Mphathi Qwabe, Farmer and member of the NPF Cooperative stated that he had received no assistance from DAFF during the seven years since his application for a farm was approved.

The Chairperson explained that the Committee did not take sides and would consider all the facts in the matter.  The Committee would follow a fair process.  The purpose of the meeting was to attempt to correct past wrongdoing.

Mr T. Albert spoke in Xhosa.  His remarks were not translated.

Report on the forensic investigation into Ncera farms
Ms Mmapitso Mashele, Director: Employee Relations, DAFF repeated the briefing on the report and recommendations of the forensic investigation into Ncera Farms that was presented to the Committee on 10 May 2013 (see attached document and the PMG report dated 10 May 2013).  The briefing was translated into Xhosa.

The briefing covered the background to the commissioning of KPMG by DAFF to conduct the forensic investigation into Ncera Farms.  The matters to be investigated were listed.  KPMG completed the investigation and issued a report on the matter in 2010.  The findings were summarised.  KPMG had recommended that disciplinary action was taken against the State employees implicated in wrongdoing and who had failed to carry out their duties.

Mr Ntombela confirmed that the Department had instituted disciplinary action against the DAFF officials implicated in the matter.  The disciplinary action was subject to the requirements of the Labour Related Act.

Mr S Abram (ANC) said that it was clear that there had been gross misconduct on the part of officials.  The problem was that much was said about fighting corruption but there were no consequences for the perpetrators.  23,000 complaints were laid at the office of the Public protector during 2012.  The number of complaints was escalating because the State was failing the people.  He wanted to know if the officials implicated in the report on the forensic investigation remained in the employ of the Department, if the officials were suspended and what action had been taken by DAFF.  He noted that Mr Qwabe had been asking for assistance from DAFF for a period of seven years to no avail.  He was aware of another case in Pongola where farmers had been waiting for the last eighteen years.  He criticised DAFF for its lack of commitment to farmers.  The Committee had documentation indicating that the accumulated deficit for the 2004/05 financial year of Ncera Farms was R22 million.  The deficit increased to R23.8 million in 2005/06.  He did not understand how DAFF had failed to notice that the financial viability of Ncera Farms was deteriorating and allowed the situation to continue to deteriorate for a number of years.  There had been a wholesale looting of assets and farming funding at Ncera.  He continued to berate DAFF for its failure to properly manage Ncera Farms (which was a State-owned entity).  He also felt that the Committee could have done more to hold DAFF accountable.  It was necessary to take drastic action to “lance the boil” as well as ensuring that the concerns of the occupants of the farms were addressed.

Mr Bhanga suggested that the Committee’s recommendations included taking disciplinary action against the implicated officials.  DAFF had to inform the Committee when the disciplinary process would be completed.  He pointed out that the Department of Higher Education had managed to complete disciplinary procedures within 90 days.  The Committee should also submit progress reports to the Committee.  The forensic investigation found that tenders were awarded to companies in the Limpopo Province and that the tender process had been flawed.  It was found that certain companies were paid but the work had not been done.  He presumed that the companies concerned were named in the KPMG report.  He wanted to know what action was being taken against the defaulting companies.  He asked what process was in place to determine which beneficiaries had a legitimate right to occupy the farms and which occupants had no rights to be there.  He wanted to know how DAFF would deal with the issue of illegal occupants.  The report named officials in the Directorate: Land Settlement under DAFF.  He understood that officials from the Eastern Cape provincial authority was involved in wrongdoing as well and wanted to know what disciplinary action was taken against these officials.

The Chairperson advised that the Committee had received a list of the assets on Ncera Farms.  The list was not on a letterhead, which was regarded as unprofessional.

Ms Pilusa-Mosoane spoke in Xhosa.  Her remarks were not translated into English.

Ms Mashele said that there was a regrettable tendency in the Public Service for officials accused of wrongdoing to transfer to another department, thereby getting off scot-free.

Mr Cebekhulu understood that the original occupants of the farms were forcibly removed from the land.  The Eastern Cape Provincial Government had bought the land with the intention of providing restitution to the original occupants.  He wanted to know why the farms were allocated to persons from elsewhere instead.  The Committee was not opposed to the original concept of Ncera Farms.  He asked why the Department of Rural Development and Land Affairs had not been involved in the development of Ncera Farms.  He wanted to know what was being done about addressing the concerns of the adjacent communities.  He understood that youth groups were given herds of Nguni cattle and he asked what had happened to the livestock that was provided to these groups.  He was extremely concerned over the management of Ncera by DAFF.  Government had invested a substantial amount in the entity.  DAFF was responsible for other farms as well and the Committee was concerned that the model being used by the Department was not achieving the objective of empowering farming communities.  DAFF needed to ensure that Government objectives were being met instead of officials enriching themselves and squandering taxpayers’ money.

Ms R Nyalungu (ANC) asked for clarification of the finding that there were discrepancies in the sizes of the farms and the boundaries.  She asked if the official responsible for establishing the boundaries were still employed by DAFF.  The findings included instances of irregularities in supply-chain management.  She asked what action was taken against the officials who had failed to carry out their duties.

The Chairperson invited the farmers and other stakeholders to provide input.

Mr T. Albert was one of the farmers and represented one of the groups of farmers.  He said that his grandfather was buried on the farm.  His right to occupy the land was not valued by DAFF.  The Department had brought in farmers from outside the area without discussing the issue with the existing occupants of the land.  He understood that the officials originally involved in the process were no longer with DAFF.  He accused DAFF officials of being disrespectful to the local Chief.  He regarded himself as an exemplary citizen but now had an undeserved criminal record after being accused of stock theft when he removed his own cattle.  His only interest was to reclaim the land that belonged to his ancestors and to protect the homes and cattle of the farm dwellers.  He said that the previous CEO of Ncera Farms had asked certain elderly farm dwellers to act as caretakers of the houses on the farm.  The caretakers were turned out after the farm was allocated to a new farmer.  The farmer wanted to use the buildings for a bed and breakfast (B&B) enterprise and did not do any farming.  He accused the farmer of killing some of his goats in 2010.  He had also lost some of his cattle and was told that the Committee would decide if he was eligible for compensation.  He accused the Government of failing to protect the people.  He said that the report on the forensic investigation made depressing reading.  The manner in which the matter was being handled had caused division in the community.  There was a pineapple processing factory but this was no longer operational.  The land was being occupied by people, who were demanding that houses were provided for them.  The local Chief was not being kept informed and did not know what was happening.  He was unhappy because he was expected to pay for livestock.

Mr BG Mkobeni was a Traditional Councillor of Imidushane Ncera.  He explained that Ncera Farms (Pty) Ltd was responsible for eleven of the 88 farms originally allocated to Chief Jongilanga.  Government had sent consultants to train the Ncera farmers and members of the surrounding communities in 2005.  The farmers were requested to take care of the farms allocated to them.  The manner in which the farms were allocated had jeopardised the entire scheme from the outset.  The people currently working on the farms would lose their jobs if the entity was closed down.  He asked that the land was handed over to the farmers in terms of a scheme that had been successful elsewhere.

Mr B Mavubengwama, Farmer related how DAFF had awarded a tender to a Limpopo company for fencing.  The farmers were not consulted and no consideration was given to giving the work to a local fencing enterprise.  Agriculturists had visited the farms in 2010 and had informed the farmers of the grand plans for Ncera.  The Premier of the Eastern Cape Province was present on that occasion but had not been seen in the area since then.  He asked the Department and the Committee to approach the farm dwellers and communities directly, rather than via the local politicians.

The Chairperson spoke in Xhosa.  His remarks were not translated into English.

Mr Ntikinka related how conflict had developed in the area as a result of the failure of DAFF to deliver on the promises that were made in 2005.  250 applications were received from prospective farmers in response to the DAFF advertisement.  The successful applicants were interviewed by DAFF officials and were promised leases until the farmers could purchase the farms.  The farmers were aware of the issues that had resulted in the forensic investigation.  The farmers had also provided documentary evidence to the Committee.  The farmers had reached the conclusion that DAFF was unwilling to assist them.  The farmers did not wish to be in conflict with the local communities.  The Buffalo City Metro Municipality had written to all the farm dwellers to inform them that the Municipality only recognised Mr Smiley as the legitimate representative of the farmers.  The Municipality was questioning the legality of the occupancy of the farms by the current farm dwellers.  The Municipality had issued a map of 540 plots being developed for housing.  Mr Smiley was a member of the municipal housing committee as well.  The farmers merely wanted somewhere to settle and where they would be allowed to farm.  He asked the Committee to ensure that a lasting solution was found.

Ms Nongenile Pato was the tribal authority (Chieftess) of the Amagqunukhwebe aseLwandle tribe.  The tribe occupied the land and claimed ownership.  The tribe had farmed the land in the past and had produced food for the local community.  She refrained from commenting on the problems of Ncera Farms and on the incidents of malpractice that had occurred.  The members of the tribe had an ancestral right to the land and should be allowed occupancy.

Mr Qwabe agreed with the findings in the KPMG report on Ncera Farms.  He said that DAFF had failed to support the farmers.  He was aware that contractors were paid in full for work that was not completed.  Ncera Farms (Pty) Ltd was a State-owned entity.  He understood that the company had recently purchased 200 goats and 100 head of cattle.  However, the farmers and beneficiaries had received no assistance from DAFF whatsoever.  He did not know who the accounting officer of the entity was.  He had not had any contact with DAFF for longer than two years.  He had submitted his application for the farm after seeing the advertisement placed by DAFF in the press.  His only interest was to start a farming enterprise and did not mind where the farm was situated.  He asked why the Government did not give farmers like him a chance to get on with the job.

The Chairperson thought that progress was being made.  The two main issues were what needed to be done about the Ncera Farms centre and the ownership of the land.  The land disputes dated from the Ciskei homeland era and were extremely complex.  DAFF had decided to attract new farmers to the area but there were also existing occupants.  In addition, the local tribes claimed ownership of the land.  The major issue that must be resolved was what would happen to the land.

Ms N Twala (ANC) agreed that the input provided by the stakeholders had helped to clarify the issues for the Committee.  The same problems were reported during oversight visits to Ncera since 2010.  She asked for DAFF to explain what was planned for Ncera.

Mr Abram observed that certain expectations were created when the farms were advertised.  However, the Department had let the applicants down.  The Committee needed to take into consideration that the farmers had suffered financial losses in the process.  DAFF had failed to address the continued deficit declared by the company and allowed matters to remain unresolved.  He insisted on hearing what disciplinary action was being taken against the officials involved in Ncera.

Ms Pilusa-Mosoane said that it was painful to hear that the farmers had nowhere to go for help.  She wondered why DAFF had been unable to solve the problems and asked if the Department was unwilling to deal with the matter.  The Committee had also been approached by a group of farmers in Pongola who were facing similar problems.  She appealed to DAFF to provide the necessary assistance to the farmers.

The Chairperson asked what the legal situation was regarding the farmers who were currently occupying the land.

Mr Sizwe Mkhize, Deputy Director-General: FSAR, DAFF advised that the Permission to Occupy (PTO) contracts had expired in May 2009.  Lease agreements with the farmers were not finalised.

The Chairperson explained that DAFF had no alternative but to negotiate with the farmers to vacate the land.  The Department had to meet with the local communities, tribal authorities and all other occupants of the land.  All the stakeholders needed to be involved in finding solutions for the problems at Ncera.  It was not clear what the model was for Ncera Farms.  He suggested that the Department consider alternative models for State-owned farms, for example the Ingonyama Trust in KwaZulu Natal.  He wondered why it was so difficult for emerging farmers to get ownership of land without it being necessary for the land to be sold to them.  Government had national black land ownership targets.  The farmers had expressed their willingness to settle on another piece of land, which could be a potential solution that should be considered.  The Committee expected to receive regular progress reports from DAFF.

Mr Bhanga supported the proposals put forward by the Chairperson.  Ncera Farms (Pty) Ltd would be closed down but the plight of the farmers was understood and would be taken into consideration.  It would be necessary to resolve the disputes between the farmers and the surrounding communities.  DAFF needed to develop a better model for the management of Ncera Farms.  There were successful enterprises operating in the North West and KwaZulu Natal provinces and there was no reason why all the State-owned farms financed by DAFF could not become productive.  He did not support handing over productive farming land only for the land to lie fallow and no longer used to produce food.  It was also essential that farmers were taught modern farming methods.  The issue regarding lapsed contracts needed to be addressed as well.  The Committee cannot allow DAFF to ignore the fact that contracts with farmers were invalid.  Ncera Farms was as failed concept.  The Committee required DAFF to provide regular progress reports on the matter.  The Committee should also insist that the officials implicated in wrongdoing were dealt with harshly and that money misappropriated or paid to companies that had not delivered the agreed services was recovered.  The Committee needed to hold the Eastern Cape provincial authorities to account as well.  He lauded the leadership shown by the Chairperson of the Committee in dealing with the matter in a decisive way.  He said that it was not desirable to use agricultural land for housing purposes.  The land should be used to produce food for the nation.

Mr Abram agreed with the comments made by the other Members.  He suggested that the Committee set a deadline for the Ncera matter to be finalised by DAFF and proposed a target date of September 2013.  It might be necessary to take steps to ensure that the progress reports required from DAFF were submitted.  The Department of Rural Development and Land Affairs had acquired substantial land holdings.  The current policy was to identify people willing to rent the land.  Government was willing to assist emerging farmers.  He urged DAFF to find solutions to the problems faced at Ncera that would satisfy the interests of all the stakeholders.

The Chairperson said that the Committee had adopted the report on the oversight visits to Ncera.  He suggested that DAFF presented a briefing to the Committee on the corrective action plans for Ncera Farms on 18 June 2013.  The Committee was keen to resolve the issue of land ownership in the longer term.  He asked DAFF to establish what the situation was regarding the existing occupants of the land and on what basis these occupants claimed ownership.  It would be necessary for DAFF to meet with all the stakeholders and to identify what the available options were.

Mr Albert commented that the Committee’s decision on Ncera Farms had exacerbated the problem.  He understood that there was land available at Coega that was free of any pre-existing claims.  He informed the Committee that a meeting had been arranged at the Ncera training centre on 27 May 2013.  The meeting would be attended by an official from the Department of Rural Development and Land Affairs.

The Chairperson advised that the Committee expected a full report from DAFF on 18 June 2013.  His further comment was made in Xhosa but was not translated.

Mr Ntombela said that it would be necessary for DAFF to liaise with the Department of Rural Development and Land Affairs.  The recommendations included in the report on the forensic investigation were that disciplinary action was taken against the implicated officials in accordance with procedure and that criminal charges were laid against the companies found to have defrauded the State.

The Chairperson said that the Committee had to be informed of what action was taken against the officials from other Departments who were involved in the Ncera matter as well.  He thanked the participants for their attendance and for their contributions to the proceedings.

The meeting was adjourned.


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