Fidelis Zvomuya, AfricaNews reporter in Pretoria, South Africa, photo: Eric Nathan
Agriculture and land affairs minister has been ordered to appoint a chief executive officer with appropriate banking skills and experience as well as the appointment of senior managers for the troubled government controlled Land Bank.
Auditing company Ernst & Young threatened to withdrew its service for the bank if Lulu Xingwana does not appoint the said officers soon.
Ernst & Young in a letter to Xingwana and auditor general Terence Nombembe, said that it has been involved in "close monitoring" of the state-owned bank, which is designated as a high audit risk.
In her response to the letter the minister said selections for a new chief executive and the new board to replace the board that resigned last year would be put to the cabinet next week adding that she believes these candidates have the appropriate skills.
Ernst & Young said its policy was that unless the Land Bank produced a highly convincing plan to address its risks, it would in all likelihood discontinue its audit services.
The auditing firm said it understood the strategy of the bank was to change its role to that of a development finance institution, but the bank still had a R16 billion loan book and external funding to manage including retail and commercial books. it said banking skills should be high on the required skills set in the appointment of a permanent chief executive.
The bank which had six chief executives in less than a year five of them in an acting capacity since last May.
Allan Mukoki who was initially suspended for three months last year resigned in July and then Nopasika Lila was appointed acting, then Lungile Mazwai and Nallie Bosman all acted during the time.
From July to the present day Philemon Mohlahlane has served as acting chief executive, but he is now on stress leave. His place has been filled by Saki Zamxaka.
Ernst & Young said its most serious concern from an auditing perspective was the "excessive" risk of material misstatement of the 2008 financial statements as a result of fraud and error.
It noted that the bank had forged a turnaround strategy and a study of this document indicated that it appropriately reflected the challenges facing the Land Bank. While the plan dealt with the "strategic initiatives", the auditing firm doubted that with the current staff component these plans could be executed.
A spokesperson for Ernst & Young declined to comment.
Keywords: south_africa agriculture banking business
