Heads must roll at Land Bank after ‘damning’ audit report, says Agri SA

Agri SA has called for an urgent intervention to hold responsible parties at Land Bank for the loss of R2.8 billion following a damning report by the Auditor-General (AG) Tsakani Maluleke.

“The adverse audit opinion cannot be ignored. Heads must roll at management,” said Agri SA in a statement.

The federation of agricultural organisations said the sanction should also be applied to Treasury, which is responsible for oversight.

“It is unlikely that they were unaware of what was coming because the financial crisis at the Land Bank did not occur overnight,” the statement said.

In her report, Maluleke attributed the problems at the Land Bank to an exodus of competent managers, a lack of oversight by the national Treasury ,the downgrading of the bank’s credit rating by Moody’s and drought conditions which had made it difficult for farmers to repay their loans.

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This, however, was merely the tip of the iceberg, according to Agri SA.

The AG’s report also referred to a lack of internal control measures implemented by management to effectively offset credit losses or a decline in the value of extended loans or the collateral offered when loans were applied for.

Agri SA said that the leadership did not exercise adequate oversight with regard to financial reporting, compliance, and related internal control measures.

It said material misstatements were identified in the financial statements that were submitted.

“Effective control measures were not implemented in relation to monthly processing and reconciliation of transactions of external service providers used to manage the indirect loan book. Management, therefore, did not adequately oversee the development,  implementation, and monitoring of action plans to address shortcomings in terms of internal control relating to the security required for loans, as prescribed by international financial reporting standards.”

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The AG also mentioned that the financial statements submitted for auditing were not presented in accordance with the prescribed financial reporting framework and were not supported by complete and proper records as required by law. According to the AG, there was also a lack of sufficient, appropriate audit evidence to serve as the basis for an audit opinion.

Agri SA lamented that the Land Bank’s cash reserves, or funds held for short-term and emergency financing purposes, had declined by almost 80% to R700 million compared to R3.2 billion in the previous year.

“This level of incompetence cannot be overlooked. Heads must roll. This situation cannot be allowed to continue.”

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