Parliament questions Ingonyama Trust audit finding

09 October 2019 - 20:56 By Andisiwe Makinana
King Goodwill Zwelithini is the sole trustee of the Ingonyama Trust, which administers 2.8-million hectares of tribal land on his behalf.
King Goodwill Zwelithini is the sole trustee of the Ingonyama Trust, which administers 2.8-million hectares of tribal land on his behalf.

Questions remain over the future of the embattled Ingonyama Trust as MPs took it to task over its financial management and the role it plays in uplifting communities living on the land it holds.

In a heated meeting in parliament, MPs asked difficult questions of the trust, which received an adverse audit opinion from the auditor-general for the second consecutive year. An adverse opinion is the professional opinion made by the auditor-general to indicate that an entity's financial statements are misrepresented, misstated and do not accurately reflect its financial performance and health.

The trust received R21.4m from the state for the year under review. In its presentation, it revealed that it was getting R114m in rental revenue, but with only R38.8m of that being actual amounts invoiced and recoverable.

The Ingonyama Trust Board's Amin Mia decried the transfer payment from the state as not adequate to cater for their needs, saying their total budget requirement was R65.6m, and therefore they had an estimated shortfall of R44.1m. He requested the department of land reform to consider increasing their allocation, saying it was not realistic for the board to administer 2.8-million hectares of land with the funding they currently receive.

The AG's adverse opinion of the trust was based in the main on it not properly accounting for property, plant and equipment - and that the board does recognise trust land as investment property. There was also an issue with the recognition of municipal rates as a contingent liability instead of expenditure in the annual financial statement.

The trust rejected the AG's opinion and questioned the auditing standards used.

It argued that save for the Treasury Regulation 14, the provisions of the Public Finance Management Act (PFMA) do not apply to them because the Ingonyama Trust is not a listed public entity in terms of the act.

It also claimed that they do not receive any funding from the state and that the trust is neither a constitutional institute nor a government department, and is only associated with the state by virtue of being created by statute - “nothing more nothing less,” reads a presentation submitted to parliament.

The finding pertaining to rates expenditure and payables is erroneous. The finding further fails to appreciate that save the offices where the trust operates, the rest of the trust-owned land 'vests in and is held in trust by the Ingonyama [Zulu King] as trustee of the Ingonyama Trust',” said Mia.

He explained that the beneficiaries of the land were the people occupying it, including a number of government institutions and departments and commercial enterprises. He said the trust had no material source of income other than that received by beneficiaries who agree to take leases and in turn pay rental.

Questions have been asked over the Ingonyama Trust's finances.
Questions have been asked over the Ingonyama Trust's finances.
Image: Ingonyama Trust

Ingonyama Trust Board chairperson judge Jerome Ngwenya said they were not being arrogant and accused the AG of conflating two institutions – the Ingonyama Trust and the Ingonyama Trust Board. The latter is a listed entity, while the Ingonyama Trust is not listed.

As a result of the conflation, the entities were not being audited according to the laws that established them, he contended, trying to convince MPs who appeared to be washing their hands of the trust.

The angry MPs, led by the ANC, had lashed out at the trust, implying that the board was arrogant and defiant, instead of complying with the law.

If you are an institution of government and funded by government, you don't pick and choose on what you can be audited on. There is only one accounting standard that is going to audit us - it's the AG,” said ANC MP Kathleen Mahlatsi.

The trust is requesting an adjustment on their budget, saying they are unable to function with the R21m given to them. As a member of this portfolio committee, I am questioning myself on how do we begin to give you any adjustment when you refuse to be audited?”

This was the general feeling from MPs across the party spectrum.

It was the DA's Thandeka Mbabama, generally considered a hard hitter, who proposed a sit-down to discuss a way forward for the trust.

From where they are sitting, they've got a different view about themselves than what we have,” she said.

Mbabama said she was torn on what should be done, because on the one hand, the R21m the trust was getting from the state was relatively little, but on the other, questions had to be asked about the role and impact of the trust on the ground.

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