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Wednesday, 13 August 2008

Theft 'covered up' at Land Bank

Julian Rademeyer, Beeld, South Africa

Johannesburg - Land Bank bosses tried to cover up the theft of promissory notes and bills of exchange worth millions that were stolen from the bank's treasury last year.

They also allegedly failed to report the robbery to police.

A Beeld investigation has discovered that promissory notes and bills with an estimated value of R28m disappeared without trace in October or November last year from the bank's treasury which could not be locked because the security door was malfunctioning.

The bank only discovered the theft of the 25 promissory notes and three bills - printed in denominations of R1m each - when they were contacted by First National Bank on November 20 2007 after one of the bills was tendered for payment at an FNB branch in Standerton.

An FNB spokesperson, Steve Higgins, yesterday confirmed the incident.

"A vigilant supervisor prevented the payment of the bill and alerted our internal fraud unit. They in turn contacted the Land Bank."

Urgent matter

An internal memorandum about the incident was drawn up the same day by the Land Bank's then head of treasury, Makgale Gwangwa, and directed to senior management. "During the month of October 2007, the security door leading to the (treasury) dealing room was malfunctioning," it noted.

"The urgency of the matter was communicated but still it took a couple of weeks for the door to be fixed. During that period anyone had free access to the treasury."

Gwangwa further noted that "during the past couple of weeks several valuable personal items were stolen from locked cupboards in the treasury dealing room".

"The thefts were reported, but to date, no action has been taken to investigate the matter."

According to his memo, FNB faxed the bill of exchange to the Land Bank.

"Upon closer inspection, it was noted that the two authorising signatures had been forged. All blank money market instruments were checked immediately and it was found that three Land Bank bills and 25 Land Bank promissory notes were missing from the locked safe in the treasury."

Gwangwa appealed to senior Land Bank officials, including the then acting CEO, Dr Phil Mohlahlane, the acting head of internal auditing, Betty Dhlamini and chief financial officer Xolile Ncame, to "report this theft to the SAPS without delay and that all security means available be checked to determine who had access to the treasury dealing room, especially after hours".

"Please regard this investigation with the utmost urgency."

Gwangwa did not want to comment yesterday but according to Beeld's sources nothing ever happened and the "case came to a dead end".

Beeld has confirmed that the national treasury - which took over management of the Land Bank from the department of agriculture and land affairs last month - was only informed of the robbery this week.

The Land Bank has been rocked by a steady flow of corruption scandals and allegations of appalling financial mismanagement. In the 2006/2007 financial year, the bank reported a loss of R100m.

Thoraya Pandy, the national treasury's spokesperson, said yesterday that after the theft, the Land Bank "took steps and ... put in place procedures for the issuing of financial instruments which govern the overall process including an effective monitoring system where participants sign off at every stage in issuing of financial instruments. A daily record of log books is also kept."

She said the Scorpions were investigating.

Somebody will suffer losses

But Scorpions spokesperson, Tlali Tlali, said yesterday: "No such case has been reported to the Scorpions."

Later Pandy contacted Beeld to correct her earlier comment. "There will now be an investigation," she said. Beeld understands that following the newspaper's queries yesterday, Land Bank officials contacted the Scorpions to find out how they could formally register a case.

Pandy said she had been advised that "the bank didn't suffer any financial loss and dealt with the matter almost immediately, telling clearing banks not to honour any of the instruments."

But, according to one of Beeld's sources, "that means nothing".

"The public were never notified. These things are legal tender so if someone bought cows from a farmer and gave him one of these promissory notes, the guy would only find out it had been stopped when he went to the bank. By then it is too late. The cows are gone. Somebody will suffer losses."

According to Higgins, anyone who receives a promissory note, bill or cheque for services or goods should wait until the funds are credited to their bank account before handing over the goods.

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