Ingonyama Trust Board 2019/2020 Annual Report; with Deputy Minister

Agriculture, Land Reform and Rural Development

09 February 2021
Chairperson: Mr Z Mandela (ANC)
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Meeting Summary

Video: Portfolio Committee on Agriculture, Land Reform and Rural Development, 09 Feb 2021

Annual Reports 2019/20

The Portfolio Committee on Agriculture, Land Reform and Rural Development received a briefing in a virtual meeting on the 2019/20 annual report of the Ingonyama Trust Board (ITB).

The ITB Chairperson told the Committee that the ITB was the accounting authority for the Ingonyama Trust and that Treasury regulations, including Regulation 14, applied only to the Trust. For the 2019/20 year, the ITB had achieved four of its seven targets under the administration programme. Two out of five policies were approved, and the other three had been finalised by March 2020. The communication strategy had not been approved by the Board, as the internal process was not finalised. Members asked how the non-achievement of those policies had impacted on the ITB’s operations and performance.

The ITB reported that it had achieved four of its ten training programmes, with the non-achievement being due to capacity constraints. There had been no training for traditional councils and no educational grants, as these were unfunded expenses. The ITB received grant funding from the Department, while the Trust derived its budget from revenue collected from its trading and investments activities. The income from trading activities was mainly from leases, contractual royalties and compensation from servitudes.

The transfer payment from the Department was used mainly to cover the operating costs of the ITB. It received R21.4 million from the government, which was insufficient to cover its operating costs. The balance of its budget came from the Trust.

The ITB had obtained a qualified audit opinion based on the non-disclosure of the full extent of its irregular expenditure. It had disclosed an amount of R943 824, based on its interpretation of irregular expenditure, which had been submitted to the AGSA for audit purposes. The Board argued that it was not a specific requirement of section 55 (2)(b)(i) of the Public Finance Management Act (PFMA) to disclose the full extent of irregular expenditure. This led to extensive discussion by the Committee on the laws which did apply to the Trust.

Members also asked the ITB to provide an updated organogram, an explanation on the short-term contracts of nine employees whose contracts had ended in October 2020, and for details on all the Ingonyama Trust leases. Due to time constraints, the ITB would provide written answers to the Committee by 19 February 2021.

Meeting report

Chairperson’s opening remarks

The Chairperson said there were two important reports before the Portfolio Committee (PC) today-- the annual report of the Ingonyama Trust Board, and the briefing by the Minister of the Department of Land Reform and Rural Development (DALRRD), Ms Thoko Didiza, registering the progress on the release of state land for agricultural purposes. Both these items were a demonstration of the PC’s accountability to the people. He wanted to make some general remarks, and then set the stage for the Committee to deal with the first item, the Ingonyama Trust.

In two days’ time, South Africa would be commemorating 31 years of President Nelson Mandela being released from incarceration on 11 February 1990. He wanted to reflect briefly on the words President Mandela had uttered a few days after his release at a rally in Bloemfontein: “The collapse of good conscience and the absence of accountability and public scrutiny have led to crimes against humanity and violations of international law”. The Chairperson said that he was being selective, and wanted to focus solely on the collapse of good conscience and the absence of accountability, as it was a critical issue in the general state of the nation, as well as a critical ingredient in serving the people, regardless of what that capacity was.

Good conscience dictated that each public representative, as well as each public servant, realised that they were entrusted to fulfil their respective duties, and to carry out the mandates entrusted to them. Good conscience also required public servants to benchmark their performance against the expectations of the people, as well as the standards set by those who had preceded them. Public servants were duty bound to always strive to do better than their predecessors. This led him to ask the question whether there had been a collapse of good conscience on the part of the nation, or whether the nation was merely failing itself in respect of the ambitious exercise of nation building that it undertook in 1994.

He returned to what President Mandela had termed “the absence of accountability” in 1990. He raised this, not only in terms of the annual report before the PC, but as a general consideration for each person to reflect on. It was also instructive to note that with the issue of the Ingonyama Trust -- and subsequently the Ingonyama Trust Board -- there had been interventions in the early stages of the formation of South Africa’s nascent democracy aimed at advancing its stated goals of nation building, national reconciliation, and advancing social cohesion.

He returned to the issue of accountability. The very submission of an annual report was an act of accountability and an acknowledgement that no corporate entity, public or private, was a law unto itself, but had a duty to plan, implement and review; extract learning and lessons, and ultimately to report, as the most fundamental part of accountability. In respect of a public entity, accountability had to cover both developmental indicators of the delivery on the mandate, as well as the best application of available resources.

He made the following observation: He took the opportunity at looking at where the 10% versus the 90% allocation of income for Ingonyama Trust came from in terms of the Trust’s financial Regulation 10, subsection 2. This was what the regulation said on shortfall in income: Where estimated income was unlikely to be realised, the officials shall forthwith report the matter to the accounting authority, indicating how the shortfall would be met. An amount not exceeding 10% of the Trust’s income may be used for the operational costs of the accounting authority. The costs reasonably incurred by the accounting authority, including ordinary administrative costs, may be used to achieve the objectives of the Act. He did not know if the regulations had been amended to deviate from these provisions.

There were residential and commercial leases that were undertaken by the Trust. There was a court matter on the residential leases. Perhaps the ITB could use the opportunity today to update the Committee on the progress with regard to the court case, and the financial impact on the resources of the Ingonyama Trust. They should provide a breakdown of the income from leases according to traditional authorities and traditional communities, and whether they were residential or commercial leases, and further show how the funds had been distributed back to the deserving communities.

If the Trust existed for the benefit of the deserving communities, a question arose in relation to the role that the Trust had played to support communities living on Ingonyama Trust land during the COVID-19 pandemic. The key question was that the PC should consider dealing with the question of the accountability of the Trust. As the Auditor-General (AG) had correctly stated, the Trust was a public entity and must account as required in terms of the law. On what basis did the Board argue that it should not be accountable in the manner Parliament wanted? This was a long-standing matter which ought to be resolved. The ITB and the Trust were inextricably linked. The Board could not exist on its own, because it was an accounting authority for the Trust. The previous legal advice to the former Minister of Land Reform and Rural Development on this matter had been very clear. He would therefore argue that the Treasury regulations, including Regulation 14, applied to the Trust.

Let the PC deliberate on these issues, and others that may arise in the course of the presentation of the ITB’s annual report, being mindful of President Mandela's words on 14 February 1994, shortly before the dawn of democracy. And let it be mindful that such characterisation should never be applicable to anyone: “There was an absence of democratic accountability and control in every sphere of government and the state. To address this debilitating legacy requires determined action, and a deep commitment to transforming our society from a crisis-ridden present into something all South Africans could be truly proud of,” (to quote President Nelson Mandela).

Ingonyama Trust Board Annual Report 2019/20

Board Chairperson’s introductory remarks

Judge Jerome Ngwenya, Board Chairperson, Ingonyama Trust Board (ITB) said that when the ITB had prepared the annual report, it had not factored in some of the matters that the Chairperson of the PC expected the ITB to deal with. The fact that it might not have responded fully to the Chairperson’s expectation on those matters was not deliberate,  but was simply because the ITB became aware of that need only as the Chairperson was opening the meeting.

Referring to how the Chairperson had emphasised the issue of accountability in his opening remarks, he agreed that in South Africa, for institutions of whatever nature, as well as human beings, the ultimate authority was the government of the country. He had not understood the position of the Ingonyama Trust to be otherwise. His understanding as far as the matter was concerned, was that the separation of the Board and the Trust was with regard to the applicable legislation. The AG had confirmed that the ITB was a listed public entity, schedule 3A, while the Ingonyama Trust was not listed. The Trust had been listed, but it had been delisted. Compliance with the Public Finance Management Act (PFMA) was purely optional for a public entity, but that did not mean that because it was not applicable to the Ingonyama Trust, the laws of the country did not apply to the Ingonyama Trust. There were many pieces of legislation that governed the Trust, including the regulations which stated that it would be audited by the AG.

The Chairperson had made reference to administrative Regulation 10 -- the 10% versus other things. He was trying to clarify that aspect to say that as the entity’s delegation appeared before the PC, representing both the ITB and the Trust, there was no doubt that the entities had to account to all the institutions of the country on what it did, and had to be consistent as far as the value of transparency was concerned. He had raised that issue towards the end of the presentation, but it was crucial to refer to it where necessary as far as the update on the court case was concerned. As far as the ITB was aware, the challenge involved those who had taken the Trust to court. The case was challenging the right of the Trust to enter into leases with individuals on Trust land. That case had been debated before three judges in December 2020, and the judgment remained reserved to date.

Ms M Tlhape (ANC) asked if the ITB had already started the presentation. If not, could the PC not allow the presenters to present, so that Mr Ngwenya could respond to issues at the end? Some of the issues might arise as Members interacted with the presentation.

The Chairperson replied that the PC usually afforded the chairperson of the Board the opportunity for opening remarks, after which the chairperson would hand over to the presenters.

Judge Ngwenya said that he would allow Mr Sandile Gabela, Acting Chief Executive Officer (CEO), to present on the performance of the organisation, and Mr Amin Mia, Chief Financial Officer (CFO), to present on the finances. He would present the audit findings.

ITB Annual Report

Mr Gabela provided the main highlights from the annual report.

Programme 1: Administration

The performance indicators not achieved were the following:

Ÿ The number of policies approved by the Board, where it had been planned that five policies would be developed. There were three draft policies which were undergoing an internal consultation process. This had been completed, and they awaited approval before the end of the second quarter of 2020/21.

Ÿ The number of  training programmes identified had taken longer to implement because of capacity constraints.

Ÿ The communication strategy was being processed internally for approval by the Board during the third quarter of the financial year.

Programme 2: Land and Tenure Management

The performance indicator where there was a positive deviation was in the number of land tenure rights approved by the Board. The target was 1 000, while the actual achievement was 1 409.

Programme 3: Traditional Council Support

The performance indicators not achieved were the following:

Ÿ The number of traditional councils trained. This was an unfunded expense, but the Trust had made money available from its limited resources to appoint a training coordinator.

Ÿ The number of educational awards granted. This was also an unfunded expense, and a reconciliation of beneficiaries was being prepared. The other issue was that the Board was busy consolidating all the requests that it received so that it could be in a better position to know what kind of assistance was going to be provided.

The performance audit report was audited by the Auditor General of South Africa (AGSA). AGSA had indicated that it had no negative findings in its reports.

Financial Performance

Mr Mia presented on the financial statements of the ITB and Ingonyama Trust, which had both been audited by the Auditor General, and were disclosed in the annual report.

Ingonyama Trust Board:

Total assets amounted to R2 709 117, and total liabilities were R3 158 800, reflecting a negative value of R449 683. Net assets decreased by 636% due to an increase in payables from exchange transactions and an increase in the bank overdraft.

The net cash flow from operating activities had been a negative R632 309. The decrease in cash and cash equivalents. Cash and cash equivalents at the beginning of the year had been R603 242, resulting in a negative cash and cash equivalents position at year end of -R29 067. The decrease in cash flow from operating activities since 2018/2019 was due to an increase in expenditure.

Compensation of employees (CoE) had amounted to R31 883 503, while goods and services had accounted for R14 741 403.

Mr Mia commented that under the administration programme, the Board had spent 100% of the transfer payment received from the Department for the year under review, and 71% of the annual budget had been spent during the year. The 2019/2020 budget had made a provision for CoE which catered for the employment of additional staff in terms of the proposed organogram, but due to the limited transfer payment allocation to the Board, the budget had remained unspent.

Referring to operating expenditure trends, he said total expenditure had increased by 13.62% from 2018/2019 mainly due to an increase in audit fees and CoE, which had increased by 20.14% due to the annual increment and appointment of new staff. The transfer payment received during the year amounting to R21.48 million, was fully utilised. The Committee should note that capital expenditure had been paid for by the Ingonyama Trust.

Employee costs would decrease in future years due to the current retrenchment process.

Ingonyama Trust

Mr Mia said the Ingonyama Trust had total assets of R25.290 billion, and total liabilities of R22 159 338. Total net assets were R25 268. Net assets had increased by 0.41% due to an increase in receivables.

Rental income, comprising including actual amounts Invoiced and recoverable of R70.04 million,

and straight-lining lease income of R102.09 million, had been R172 124 445. The straight- lining lease income was a non-cash entry recorded in the financial statements to comply with generally recognized accounting practice (GRAP) standards. The entity’s total revenue had been R189 786 547.

No capital expenditure was paid for by the Ingonyama Trust Board -- all of the capital expenses, amounting to R3 268 417, had been paid for by the Ingonyama Trust. The capital expenditure was incurred for the administrative purposes of the Trust, i.e., the day to day operations. There were no significant capital projects planned over the short to medium term for administrative purposes of the Board.

Auditor-General’s Report

Judge Ngwenya presented the audit findings, and reported that the Ingonyama Trust Board obtained a qualified audit opinion based on the non-disclosure of the full extent of the irregular expenditure.

It had disclosed an amount of R 943 824 as irregular expenditure in the annual financial statements, based on its interpretation of irregular expenditure which had been submitted to the AGSA for audit purposes. AGSA had noted that the Board had not disclosed the full extent of the irregular expenditure. It was not a specific requirement of section 55 (2)(b)(i) of the PFMA to disclose the full extent of irregular expenditure.

Mr Ngwenya added that the ITB was saying that the third finding was “wrong.” In the previous year, the AG had found that the ITB had not disclosed irregular expenditure of R1.9 million. In those financials, the report had stated that during the course of the audit, the auditors had identified irregular expenditure of R1.9 million [which was not disclosed in terms of section 55 (2)(b)(i) of the PFMA. That had been the finding of the previous year, and the AGSA had put this in brackets in this annual report on page 59. The ITB was arguing that that was incorrect, because the AGSA had said the total amount not disclosed was R2.84 million. The ITB had stated that it had disclosed R943 824 which the AG did not talk about. The AG had added this amount, which the ITB did disclose, to the previous year’s findings. One would see that the R1.9 million which was admitted last year, was a non-disclosure. If one added R943 824, one would get a total of R2.84 million, which was what the AGSA said the ITB had not disclosed.

The ITB had launched a dispute with the AG on the matter, because what it was reporting to Parliament was a cumulative figure of non-disclosure, plus what the ITB had disclosed, but the AG had said that the ITB had not disclosed. The ITB had then said it would dispute this, and get an independent arbiter, but the AGSA did not have a dispute resolution procedure. Instead, it had a complaints procedure. Anybody could add the ITB’s financials, and see that it had disclosed exactly the amount of R943 824, and that in the previous year there had been an opening balance of R1.9 million, which had been the AGSA’s finding the previous year.

Both legally and factually, the AGSA was incorrect, because if one looked at the PFMA, the section that the AGSA was relying on specifically stated exactly what the ITB needed to do, and the ITB’s view was that it had complied with that. That section stated that the annual report and the financial statement referred to in sub-section 1(d) must include particulars of any material losses through criminal conduct, and any irregular expenditure, as well as fruitless and wasteful expenditure that occurred during the financial year. In the ITB’s own findings, it was saying this was what had been irregular expenditure, and it was disclosing it. The ITB was waiting for a dispute resolution process.


Ms Tlhape welcomed the Chairperson’s reflections in his opening remarks. She thought that by and large, the remarks represented what she needed to say on the Ingonyama Trust. She started with point number two of the ITB’s mission: “To develop progressive business models for the social and economic upliftment and the empowerment of the members of traditional communities on land administered by the Trust, and administered by the Ingonyama Trust Board.” Could the Board tell the PC if it was living up to this mission, and give at least five achievements related to this point? 

The AG had indicated that the annual financial statements (AFS) had been submitted late, despite the two-month extension granted. What were the reasons for submitting late, and what would the Board do so that it did not find itself in the same situation in future? The AG had said that as long as legislation stood as it was, the Ingonyama Trust had to account – did it believe that some pieces of legislation were not applicable to the Trust? Three of the policies had not been achieved -- how had this impacted on the ITB’s operations and performance? With the combined budget for the land tenure management programme and the traditional council support programme, only 48% had been spent. What was the ITB’s comment? These were its core activities -- this was why it existed.

Mr S Matiase (EFF) acknowledged the Chairperson’s opening remarks, which had quoted the founding father of this democratic country. The quotation had been instructive in light of the testimony and evidence given by former and current Members of Parliament before the Zondo Commission. The quotation was instructive in that it referred to the ability of Parliament and the various Portfolio Committees to exercise oversight and hold the Executive to account. He hoped that the Ingonyama trust took that quotation to its heart, mind and conscience.

Judge Ngwenya had said that the Trust was disputing the findings of the AGSA. He wanted to remind the Trust that the findings on the qualified audit opinion had been made public without reserve, or without doubt. If he wanted to take the matter up, he thought that it should be left to an internal discussion between the Trust and the AG. The Office of the AGSA was the supreme audit institution in terms of Chapter 9 of the Constitution, and its opinion reigned supreme. Even if the PC was to consider and patiently sympathise with the disclaimer made by Judge Ngwenya, with the kind of intransigence of the Trust, there was a long history where it had been disputing that it was bound by the provisions of the PFMA. The Act “did not apply to the Trust”, and there was a history of intransigence on its part to fully disclose its finances and to account fully before Parliament in respect of this Act. “Who would really be sympathetic to disclaimer he had just made?” The PC called on the Trust to respect the rule of law, and to subject itself to the provisions of the Act and the different regulations of the National Treasury. Going forward, tThe PC would not be taking lightly the failure of the Trust to fully report before the PC as it was required by law.

Mr N Capa (ANC) commented on the qualified audit findings. His concern was that it seemed that the Trust did not understand the role of the AG. The AG was not on a witch-hunt. What the AG wanted everyone to do, was to do the correct thing in accounting. Therefore, he would not find any reason why the AG would commit an error of making that finding if it was not true. From the Trust’s side, he would have expected two things. Firstly, was it able to satisfactorily explain to the AG its management response to this finding? Secondly, was it able to indicate that it intended to correct what had been found by the AG? He was concerned that if the Trust was not convinced that there was something to be corrected, then it would remain like this forever.

Ms N Mahlo (ANC) asked about the future of the Trust, and its substantive accountability post-COVID-19. Questions needed to be asked about what was going to happen in future. What were the Trust’s legal and financial obligations to the beneficiaries? Where did the ITB fit in? She wanted to understand the impact that the Trust’s operations and administration had on land rights and the livelihoods of the beneficiaries. With the land administered by the Trust for the material welfare of these beneficiaries, how had the Board attempted to solve these issues? What was the accountability for compliance with its constitutional and legislative obligations? What was the expense of the people living on land administrated by the Trust, where the ITB had an attempted to accumulate income, generating contracts without the consent of the rights holders? What would happen with regard to those questions post-COVID-19? It seemed like things were “going up and down and they were trying to dispute sections of the PFMA,” which was one of the laws that had to be administered in the interests of the people of South Africa. She did not think that the ITB was taking the right route. The Trust must remember that the PC was not here to witch-hunt the ITB, but to help one another in making sure that the administrative processes in government were smooth.

Ms T Mbabama (DA) said that on 9 October 2019, the Chairperson of the PC had asked the ITB for clarity regarding the 10% fee that went to the Board, and the 90% that went back to the community. The Chairperson had asked that the Trust submit a five-year report that detailed what had been given back to communities and traditional councils. This had again been raised by Members of the PC on 4 June 2020. She wanted to know what was stopping the ITB from providing this information. As far as she knew, it had not been provided to date.

South Africa was in the middle of a pandemic. What had the Trust done to support its people in the time of COVID-19? What had it done to assist the people on the ground? With the training programme, only four out of ten targets had been met because of capacity constraints. What did the Trust mean by capacity constraints? What percentage was the annual increment that employees got for this financial year, and how did the Trust justify it? On the motor vehicles acquired for R2.9 million in this financial year, what were they and what were they for?

Ms T Breedt (FF+) said that the Chairperson had summed up the issue of accountability very well, and she still feared that the PC was not seeing the necessary accountability from the Trust. The dispute with the AGSA was worrying. She had said many times that she came from the Free State, so she had had a history of departments and entities disputing findings by the AGSA. That was worrying to her, because it showed that things were not going forwards, but instead were going backwards. Ms Tlhape had mentioned that the Trust had to plan and implement five policies, and only two had been done. Could the PC get a list of the policies that were not completed and planned? Could it get an update as to where these policies were? Had the policies been completed yet or not? Policies regulated and assisted in management, and without that, chaos ensued.

The ITB had not been able to complete the communication strategy. What did this strategy entail, how far along was it, when was the ITB looking at completing it if it was not completed, and when would it be implemented? Ms Mbabama had covered the question on training in terms of what the internal constraints of this were. Leading on from that question, she asked about the organogram that the ITB had spoken about. She noted that the secretariat had 62 staff members, which meant that it had increased from the previous financial year. The PC had been informed that there were no vacancies. Could the ITB speak to that? According to the annual report, nine employees were on short-term contracts – what did that entail. When did these contracts expire? Would these employees be reinstated? She asked for more details on that matter.

She said the leases had increased and been exceeded by 409 land tenure rights that had been, and asked for the details on that. When were the contracts signed, what were the terms of these contracts, the names of the lessees, what were the hectares, and what was the use of land? Was the land rental-free, and what were the terms? The 2019/20 annual performance plan stated that there were forestry leases on Trust land where benefits did not reach the intended recipients, who were the community members concerned. The APP also stated that there would be a consolidation of all existing forestry leases, and that there was a strategy to ensure that these beneficiaries would receive rewards from that consolidation. What was the progress on the consolidation of the forestry leases and the details on that?

Inkosi R Cebekhulu (IFP) commented that the content of the Chairperson’s opening remarks was something that he was hoping to hear regarding the assistance, or the development, that the ITB was taking to the communities. He had raised the question of assistance by the ITB on agricultural projects in the rural communities, as well as the issue of assistance with mechanisation several times. This assistance regarding land use or cultivation was decreasing. His angle on the report was what the Chairperson had mentioned in his opening remarks regarding assistance to the communities with socio-economic development in the areas, with a focus on agriculture.

Ms B Tshwete (ANC) appreciated the turnabout by Judge Ngwenya on the issue of the AG and accountability. She was happy to hear from him that the ITB acknowledged the fact that it had to fully account to the AG. She was pleased with this, because it was the same issue that the PC had raised at the meeting on 8 October 2019. She mentioned that meeting, because she believed that there were issues that were still outstanding. The AG raised the issue of the inconsistency on assets since 2018 involving the same issues The Board chairperson was disputing the amounts being carried over to this year from R2.1 billion to R1.1 million that was not disclosed to the AG.  

She asked for a list of those community members who had been given a lease agreement on the communal land. The PC had requested this, and it had not been submitted to the Committee. She asked why the list of beneficiaries that had been mentioned today was not put forward to the Committee.

On the AG’s report that had been issued in the previous year, she noted that the accounting officer of the ITB had been given 20 days to act on the recommendations of the report. Could the ITB share how far it was with these issues raised by the AG being implemented? Could it share what the communication policy was about, and what it entailed? Regarding the two policies that had been completed, and those that were outstanding, what policies was it referring to?

Mr N Masipa (DA) said that if the ITB was correct that the PFMA did not apply to the Trust, it meant that Treasury Regulation 14 did not apply to the Trust. The only reason for the PFMA not applying to the Trust would be that schedule 3A of the PFMA referred to the ITB and not to the Ingonyama Trust. The ITB and the Trust were inextricably linked, and the sole function of the ITB was in relation to the Trust and the Trust land. Section 47 of the PFMA provided that the accounting authority for a public entity that was not listed in either schedule 2 or 3 must notify the National Treasury in writing that the public entity not listed. The Minister of Finance was obliged by notice in the Gazette to amend schedule 3 to include in it all public entities that were not listed. The Minister of the DALRRD also had the discretionary power to make technical changes to the list, and to amend schedule 3A to explicitly include the Trust. Did the ITB really understand this, and if it did, what would it do about it? Perhaps the PC should consider asking the Minister to make the necessary changes, or write to the Minister of Finance to incorporate the necessary changes so that the PC did not have this problem again. He thought that this problem had been around for far too long. It needed to come to an end, so that the ITB accounted properly to Parliament and worked with the AG.

Mr M Montwedi (EFF) said that the Minister had to provide leadership with regard to the ITB. When he first joined Parliament, four or five months later, the Minister had said that an inter-ministerial committee had been established to look into the issues of the ITB. As it stood, he had not received any report from the inter-ministerial committee to say how the ITB issues had been resolved. At times, it was very frustrating that the ITB came to Parliament and said things that were continually the same, and yet there was no change. He wanted to appeal to the Minister to please look into the issue of the ITB and provide political guidance, because they could not live with an entity that wanted to behave like a department, but wanted the Department to be accountable to it.

What were the Trust’s legal and financial obligations to its beneficiaries? Where did the ITB fit into the picture? What impact had the operations and/or administration of the Trust had on the land rights and livelihoods of its beneficiaries? Had the Board succeeded or failed to ensure that land vested in the Trust was administered for the material welfare of its beneficiaries? How had the Board attempted to circumvent accountability for compliance with the constitutional and legislative obligations? What was the experience of the people living on land administered by the Trust? Had the ITB attempted to include income-generating contracts without the consent of the rights of land holders in those particular areas?

Ms K Mahlatsi (ANC) thanked the Committee and members of society for the messages of condolence on the passing of her father.

Before the Ingonyama Trust responded to the issues that had been raised by Members, maybe the Department, through the Ministry or the deputy ministers, could give an update on what the engagement between the Department and Ingonyama Trust on various issues had been. That might assist this meeting in dealing with what Members had raised. Primarily, the PC believed that there was political leadership in the Department that was in charge, and had been able to discharge its responsibility successfully, primarily on issues related to the mandate of the Department. On the Ingonyama Trust itself -- as Members had indicated -- things were going round in circles. It was raising the same issues that it had been raising with the Ingonyama Trust. She thought that it was time to get an indication from Ingonyama Trust to say what it wants to see happening to it. What was it that the Trust wanted to see, because it was not possible that an institution or an entity could be in dispute with various institutions and the legislations that were governing it? It was not possible for the Ingonyama Trust not to be in coherence with the PC, the AG and other legislation. The PC needed to get an understanding of what it was that the Trust wanted the PC to understand about how it saw this entity operating, both within the timeframes and the legislative frameworks that were governing it.

Could the PC get an indication from the Ingonyama Trust and the AG themselves? The last time, there was an indication that there had been some conversation between these two institutions, and that there had been an element of convergence between the two. What had happened to those conversations? What were the developments thus far? That would assist the PC in getting a way forward, because moving back and forth was not assisting the Committee, the entity or the Department. The PC needed to find a way forward with timeframes, so that in the next meeting where it had a discussion with Ingonyama Trust, it would be able to measure successes or failures of those frameworks or those issues that it would have lined up as a programme moving forward.

The Chairperson requested that the ITB should respond in writing to the questions that had been raised, and submit the responses to the PC secretariat by noon on Friday 19 February. He asked that the PC allow the ITB about 20 minutes to respond to the questions as best as it could, but added that the Committee would await the ITB’s responses in writing, so that Members would have ample time to look into them and see what way forward they could map.

ITB Chairperson’s response

Judge Ngwenya said the ITB appreciated the opportunity to respond in writing by 19 February.

He had picked up the perception from Members of the ITB being defiant and noncompliant. He referred the Chairperson and Members to the annual report, page 108, paragraph 15. The AG had stated that the Trust was not required to prepare a report on its performance against predetermined objectives, because it did not fall within the ambit of the PFMA (Act 1 of 1999). Such reporting was therefore also not required in terms of the entity-specific legislation. It had not been the case that the ITB had been defiant. Mr Masipa had referred the ITB to section 47 of the PFMA. He wanted to reiterate to the Committee that the ITB was listed in Government Notice No. 402 of 16 February (2001) as a public entity. At the same time, the Ingonyama Trust was listed as a public entity. But subsequently, the Ingonyama Trust had been delisted by Government Gazette No. 12 (61) on 17 April 2003. This was what lawmakers had done on their own. The ITB was trying its best to follow the law as it was written.

There had been a question by Ms Tlhape on whether the ITB was following progressive business models, and she had asked for examples. The ITB wanted the Committee to understand how it operated. When this Committee voted for the budget in Parliament, it voted only for the Ingonyama Trust Board -- there was not one cent that came from the government for the Ingonyama Trust. In the year under review, the ITB had been working with R22 million. All of the projects that the Committee was expecting the ITB to implement had to come from the Trust on a self-funding basis. Yet, on the ground, the ITB was confronted by people who said that the ITB was taking away people’s rights. He was not sure whether any Member of the Committee had asked what the source of revenue was that had to be generated by the Ingonyama Trust Board for the Trust. There was no source of income except the leases that the ITB had introduced. The royalties had been taken without consultation to the National Treasury. Members had now told the ITB that it entered into leases without consent. The ITB would never issue any rights unless there was written consent as stipulated by law, in terms of section 2 subsection 5 of the PFMA. Otherwise, on the ground, people had oral rights. However, if any Member of the Committee were to give the ITB an example of one person who said their rights had been taken away through the Ingonyama Trust without their consent, then the ITB would happily deal with that. The Tust had never done that before, and it was not doing that now.

The ITB had been asked for a list of a number of things, and that would be part of its written response. Ms Tlhape had asked for the reason for the late submission of the annual financial report That was not correct. The ITB respected the AG. If one looked at all of its submissions in the past, the ITB had stated that the Constitution of the country was the supreme law, and it knew that the AG was the supreme audit institution in terms of Chapter 9 of the Constitution. The AG was not infallible -- it made mistakes. He could show that the AG’s findings about irregular expenditure in the year 2018/19 had been R480 million. The AG was now talking about irregular expenditure of R109 million. There were many things that the ITB could show.

He wanted to respond to the late filing of the annual financial statement. It had not been late -- what had been late were the annexures and schedule to the annual financial statement. The deadline had been a Friday, and the ITB had submitted those schedules on the next Wednesday. Those were the facts on the ground, and the AG could confirm them.

When the ITB had said that the AG was wrong when it stated it had taken the accumulated findings, and it had said that the ITB did not disclose, the ITB was requesting the Committee to read page 59 of the annual report, and also to look at page 64. On page 64, the ITB had pointed out to the AG that this was its disclosure. Instead, the AG had added its disclosure for the current year to the previous year’s findings, and the ITB was saying they were wrong. The ITB was talking about the past here.

There had been a question on whether the ITB and the AG were beginning to reach each other. The answer was they were -- the ITB was trying to get a comprehensive remedial plan that would deal with these issues. Whenever the ITB came to the Committee, it found itself having to answer on things that the law did not require at the moment. It could have dealt with whatever the PC asked it, but separately, because there was a date on which the PC wanted the ITB to come and present. Today the ITB was presenting the annual financial statements (AFS) for 2019/2020, but what it had been asked to respond to was things that were said in 2018 and 2019, at the time when the law said that this was what the ITB had to present to the PC.

That was the difficulty that had perhaps created the impression that the ITB was belligerent and against everything else. It was not given time to respond openly on issues that were raised. If he looked at the number of questions that the ITB had to respond to today in 30 minutes, it was unrealistic to expect that it could have done so. When the ITB prepared a response, it would do so, but it would have to take resources from elsewhere to put the responses together. It would need to consider whether it couriered these responses or not, because with giving information on all the leases -- which he knew were over 5 000 -- to the Committee, he did not know what information it wanted. He was assuming that because the Committee had made a ruling, it wanted to know who the holder of a lease was, the extent of the land, and how much rental that person paid, and that the Committee wanted to do an analysis on that. The ITB would definitely have to comply with that, but what they had been asked to do was “quite monumental.” For example, the question that was raised by Mr Masipa had said that the Trust was inextricably linked to the Board. That was correct, but there were other institutions that were also intricately linked. If one put it as a public entity, one would have problems.

He said Inkosi Cebekhulu was one of the representatives of the beneficiaries -- his whole land was owned by the Trust. He was among the traditional councils where the ITB had done a trial on a 100-hectare project, where the Trust had spent money to help people develop vegetable gardens. Inkosi Cebekhulu knew that. That was why Judge Ngwenya thought that his question was, “how much assistance could they (the traditional councils) still get?” The ITB could testify that it would not touch the land which was under his administration, although it was owned by the Trust without him and his traditional council giving the ITB an ITB 2. What the ITB had told about its wrongdoing by the Members was not supported by evidence, but if evidence was provided, the ITB would like to know about it and engage on it.

Judge Ngwenya undertook on behalf of the Board to compile a response, as requested by the Chairperson. The annual report had stated some of the things that he was saying, but he had gained the impression from some of the questions that some of the Members had not read the report. Members were therefore saying the ITB was belligerent, and that it thought it was not subject to law. The AG had analysed all the legislation that applied to the ITB. If one looked at the last year, there had been a consolidated report, which was not part of the annual report. This was because the more the AG had begun to understand the ITB, the more it had begun to relent. However, because the AG had the last word, what had happened was what was in the public domain.

Chairperson’s response

The Chairperson said he could assure Judge Ngwenya that the Members had read the annual report, and were continuing to do the work they were mandated to do. If he afforded himself an opportunity to read his opening remarks, and looked into the questions that the Members had posed, they were all informed by the report before the Committee. The Chairperson would not want to cast aspersions on Members by saying that they were not doing their work. The questions themselves testified that the Committee read the reports and engaged with them. Due to time limits, he would allow the CEO and CFO to make closing remarks.

Mr Gabela said that the ITB would rather respond in writing.

The Chairperson thanked Members for their indulgence, as he knew that the Committee had gone over the scheduled time.

He asked them to please log on to the training that was continuing with Parliament. The Committee would resume its meeting at 17:00 with the Minister. He asked for closing remarks from Deputy Minister Sidumo Dlamini, to hear what the Department’s interventions had been, if any.

Deputy Minister Dlamini thanked the Chairperson for facilitating the meeting. The Department had agreed with the ITB on certain areas. It had had a meeting with the ITB last week, and the parties had agreed that they needed to work together so they were able to work on the issues that the Committee was raising. The Committee was raising genuine issues that the Department could not ignore.

The Chairperson thanked the Deputy Minister and the Members.

The meeting was adjourned.



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