‘We are not involved in aggressive methods of liquidating clients’ – Land Bank

FIFI PETERS: The Land Bank has been accused of using aggressive methods and strong-arm tactics to liquidate farmers who are in financial distress [and] who have defaulted on their loans. But the bank has denied these claims, saying its own investigation done in July into such claims found no evidence to support these allegations, or the allegations that its legal representatives acted unethically or used inappropriate practices to recover debt.

I’m joined by Musawenkosi Kubheka. He’s a forestry farmer in northern KZN. He was financed by the Land Bank in 2017. Musa, thanks so much for your time. How much did the bank give you to start your forestry farm, and what’s happened to your farm now?

MUSAWENKOSI KUBHEKA: Greetings, Fifi, and all the listeners. Our funds [came through] in 2017, November, for R25 million to purchase three forestry farms, altogether saying at 2 100 hectares; approximately 1 200 hectares [was] planted timber.

Currently what’s happening on the farm the bank has allocated the liquidator to be on the farm, and the liquidator has cut each and every stock that I had on hand, every little stem that was standing on my farm is gone, taken away by the liquidator because I can’t defend myself in court any more.

FIFI PETERS: So how did you come to land in financial distress? What happened?

MUSAWENKOSI KUBHEKA: When I entered into farming in 2017, and disclosed to the bank that this was my first time actually buying a farm, so I’m very dependent on them, just making sure that everything is in place, because I’ve never bought a farm before.

The seller was not very clear as to why he was selling the farm. He [told] me because he’s moving out of South Africa, only to find out that he had labour issues on the farm. So when I walked in, I walked into those labour issues with the communities on the farm. It caused me not to actually farm at my optimal at that time in 2017/2018 financial period. So I had to make sure that the communities had calmed down and we were able to farm, because every second day they were [inaudible] the plantation, even when they were threatening my life to install the pre-packing. So I had to make sure those things [were] in place.

We couldn’t function at our optimal play at that time. So on my first year, 2018, the first instalment that I had to pay the Land Bank was R4.2 million out of the R25 million debt. I couldn’t meet the obligation of R4.2 million. And when the bank came to visit me in March in 2018, I did let the bank know guys, what I’m currently doing and what I’m turning over, I don’t think it has been practical to even meet the R4.2 million, let alone it being a very steep instalment for me, given the kind of activity I’m doing.

But the bank’s response to me was ‘we don’t care, all we want is our money at the end of the year’. So that is how I, in my first year, ended in distress. In my second year the timber industry went south, due to Covid-19. I lost almost all my contracts in March, and by the time I had to pay my second instalment in 2019 I couldn’t pay, because I couldn’t sell my timber any more. Then in 2020 the bank started its litigation matters. It took legal action against me during Level 3 lockdown.

FIFI PETERS: When did they place you in provisional liquidation?

MUSAWENKOSI KUBHEKA: I was placed in provisional liquidation in October, 2021, because from 2020 we were arguing the matter on paper with the bank, until my matter was set down on the August 13, 2021. Then in October they let me know that I am provisionally being liquidated.

FIFI PETERS: Do you think there was any way that you could have eventually turned your business around, such that you’d be in a position to pay back what you took, what you [borrowed] from the Land Bank?

MUSAWENKOSI KUBHEKA: Oh yes, Fifi. When I was referred to Mr James Craven in the legal department, I engaged him further saying: “You know what? I do have stock. Unfortunately, my stock takes nine years to mature. So with the current stock I have now for the next 23 years I will not be able to meet my obligations to you guys as the bank, but after that time I’ll be able to start meeting my obligations, and even beyond, because all these three farms at some point will be able to pay off the debt I have.”

And over and above that I went to one of my biggest clients, TWK, to assist me in developing a proper spreadsheet and a proper payment term to the bank, stating that: “Guys, we are able to pay back the money, just not now. It’s just a matter of my stock is not mature for me to harvest and send to the market. But the time will come. We have enough stock that is mature, to send to the market and be able to pay the bank. So if the loan that I was given over 25 years, by year-end 25, all the money that you need should be given to you.

FIFI PETERS: All right. Let’s broaden this conversation right now. We’ve got Sydney Soundy, the executive manager of strategy and communication at the Land Bank, who has been listening in on the conversation with Musawenkosi. Sydney, I think that you heard everything and I think that, more importantly, you heard the tone of a bit of frustration and a bit of disappointment in how he feels he was treated by the Land Bank. But what do you make of Musa’s story?

SYDNEY SOUNDY: Good evening SAfm and Musa. I listened to Musa’s story and over the cliff on the inside it is very concerning. It is also concerning to us, but I’m listening to the detail of the fact as we speak. So it’s important that even from our side we do an appropriate assessment of what actually went on.

But I think from our side we do try and ensure that there are solutions that are sound before we get to legal action. So, if in the case of Musa no attempts will be made, that will be unfortunate and it’s not how we generally operate. And so we’ll find out when we do an appropriate assessment of what went on in this particular case.

FIFI PETERS: Case. Okay, so you’re committing to doing that?

SYDNEY SOUNDY: Yes.

FIFI PETERS: But what about what you are reading in the media, the reports of farmers saying that they have essentially been victims of unscrupulous, very aggressive, strong-arm tactics when it comes to collection of their debt, especially those who are not in a position to pay. You’ve refuted the claims, but the thing is they’re still there. What is the Land Bank’s response to the fact that this is how some farmers are feeling?

SYDNEY SOUNDY: Yeah. As I indicated, it’s a concern that farmers feel that way. But most of them have been raising issues, not necessarily directly with us, and we’ve made this point that these are our clients, and that the first point of call for these kinds of conversations [should be] between the clients and the bank. So to the extent that these comments are being made, which are worrying, we do express our concerns around it, and we still appeal to this client to engage with us directly, as Musa has indicated he has already done that, and as I indicated, I’ll also ensure that from our side we get an appropriate assessment of what happened in the case of Musa.

But the big point to make is the following. We have to work within the confines of the law. So we only really operate on the basis of what the legal prescript of recoveries dictates of us. We can’t do anything beyond the law. If there’s an aggression, which would be a matter of attitude and the way the engagements are being undertaken with the client, those aggression-related activities we condemn. If there are such, we will deal with them on those specific cases.

FIFI PETERS: How do you respond to views that the reason why the bank is so aggressive in the recovery of these loans is because it’s well known that the Land Bank itself is not in the healthiest financial position that it has been in its recent history. We all saw the defaults of the Land Bank itself on interest that was owed to your creditors. And now there are views and there’s a perception that the reason why you’re going so hard on people that owe you is to essentially stay afloat. How do you respond to such views?

SYDNEY SOUNDY: The extent to which you can go through a process of legal collections and recovery is, as I indicated, you have to operate within the law. So you can attempt to fast-track activities, but you are bound by the court in terms of how you operate. To that extent, from the point of view of the bank’s activities, we have always followed the same approach, where we first start by engaging the clients where they’re struggling or have challenges, to attempt to resolve the issues before we go to legal [action], because the legal process is not only expensive for the client, it’s also expensive for the bank.

What is important to also note is that the bank trades in money – I need not simplify this. But to the extent that we get the funding from our lenders, our lenders also expect us to repay them. And so if we do not collect efficiently from scheduled repayments, it also means that we will sit with a cash shortfall to repay our own lenders. So that’s why this process has been undertaken on this basis throughout. It’s not because of the current situation that the project is, as claimed, accelerated. The process has always been undertaken on this same basis throughout

FIFI PETERS: All right, Sydney. Musa, I hope that you caught the part where Sydney said that they would consider your situation. I don’t know if that provides some form of hope or good news for you.

MUSAWENKOSI KUBHEKA: Not really, Fifi, because in 2020, on April 14, before they even took legal action against me, I did let Mr Sydney himself specifically, on his email and on his personal line, know that I’m under this particular distress. What can you do to fix the matter? His response to me was: ‘I’ll get the facts and get back to you.’ Up to this day I’m still waiting for Mr Sydney to come back with my issue.

And not only that, I sent him an email, even eventually from the Department of Agriculture sent him an email stating ‘guys, what’s happening to this particular individual or particular venture is unfair’.

But what I like, what he said to me and to the listeners today, that he admits as the bank that there was no intervention by them to save the situation. All they did was to go straight into litigation.

I’m not sure if I’ll be asking too much from the Land Bank, together with Mr Sydney, that my matter of the liquidation [set] down on September 9, 2022, that my issue gets removed from court so that it gives him enough time to go and investigate, while I don’t have to pay my attorney or I have to go to court and my [inaudible] be taken away from me, because right now I can’t do anything while he’s investigating. I am still not doing anything and all the money I’ve invested into my business has gone with the liquidator.

FIFI PETERS: Sydney, would you like to respond?

SYDNEY SOUNDY: Fifi, I don’t want to get into the detail. I think with the aspect that Musa indicated, he also quoted engagement with the bank in the form of a specific name that he mentioned. So the engagement that occurred, I’ve indicated that what I’m going to do is to establish to what extent that has gone, and whether there were any opportunities that we missed as a bank to resolve it.

I’m unable to make a commitment without going through that process of an appropriate assessment.

So I can’t make the commitment that Musa is requesting. The commitment that I can make is that the bank will look at this aspect in the detail that it requires and then show that, where there is a possibility for appropriate intervention, that intervention would be undertaken there. But that’s all I can commit in terms of an appropriate investigation.

FIFI PETERS: I think that is understood at this at this stage, Musa. Do let us know how that goes. I would definitely like to follow up. But to both of you gentlemen, thanks so much for your time.