The Land Bank CEO Alan Mukoki is on leave from the bank, but will not say whether it was his or the department of agriculture's decision. He does however say that a number of the bank's controversial loans happened before he took over at the bank.

Bruce Whitfield:
It has really been difficult to get a straight answer from the department of agricultural affairs yesterday on the situation at the Land Bank. Was anybody suspended? How much money really is being forwarded to the Land Bank by the Treasury?

Alan Mukoki, the chief executive who was called Alan Mkoti by Steven Grootes earlier today which means Alan 'in a hole'. Is Alan in a hole? You are the chief executive of the Land Bank, are you still the chief executive of the Land Bank?

Alan Mukoki:
Yes Bruce I still am.

Bruce Whitfield:
Now please explain this to me? The Department of Agricultural Affairs yesterday said that three senior executives, including yourself, the financial director, and the head of lending have been suspended.

Alan Mukoki:
Well Bruce I think that that issue is an issue that should be handled by the minister as well as the chairperson of the board. My understanding is that the chairperson of the board did issue a statement to the media last night and he did clarify the issue, there are no suspensions for anyone in terms of any wrongdoing. So I think that we should just leave that to the minister and the chairperson and to the board. I'm not going to be taking any questions on that myself.

Bruce Whitfield:
Okay, so the minister had one particular impression yesterday, the chairperson of the board issued a statement today. Who actually runs the bank though?

Alan Mukoki:
Well as I say Bruce I am not going to comment on who said what between the minister and the chairperson of the board. I think that the issue is those particular questions should be referred to the principles around the board.

The Land Bank act certainly does empower the minister to take certain decisions, the Land Bank act does empower the board and the CEO to take certain decisions and I think that we should just let the decisions that are being taken at the right place to be answered at the right place and right now I'm not going to comment about the issue of suspensions because I think that the chairperson as well as the minister should comment on that.

Bruce Whitfield:
One broad general question then. Who has the say over who runs the bank on an executive basis? Does the chairperson have that say or does the minister have that say?

Alan Mukoki:
Well as I say, the powers of the Land Bank are to be found in the Land Bank act as amended in 2002. I mean the Land Bank act is a formulation of statutes so it reports to Parliament so I think the powers are to be found there and there are a whole range of powers allocated to a whole range of people. The minister has powers, the board has got powers, the chief executive officer has powers.

Bruce Whitfield:
In your personal capacity then how secure do you feel in your tenure as chief executive of the Land Bank tonight?

Alan Mukoki:
I feel very secure. I don't have any issues that I could say I am not secure about but of course we all serve at the pleasure of our board of directors and we also serve at the pleasure of our shareholders. And I don’t think that anybody can ever say when you're running an organisation, whatever the organisation is, I listened to you talking to Phuthuma earlier on and he was trying to answer exactly the same question in terms of is he going to be around for the next five years. It is always going to be the pleasure of the board and it is always going to be the pleasure of the shareholder.

Bruce Whitfield:
The difference between you and him I assume is he has got hundreds of millions of rands worth of shareholding; but is the Land Bank terribly generous? I mean what are salaries like at the Land Bank? It was hugely controversial a couple of years ago. Do you get paid market related salaries in the same sort of level as the commercial banks?

Alan Mukoki:
No, I wouldn't say that they are market related but they are competitive. I would say that obviously as you would appreciate chief executives of banks would be paid a lot more money but of course the Land Bank is not such a major huge bank in terms of the size of its asset base.

Bruce Whitfield:
It is tiny.

Alan Mukoki:
It is tiny. It probably would be the size of a major division of a bank depending on the size of that particular bank. So I think that we try to pay at a level that is competitive but it is quite difficult because it is a public sector type entity. It is not the same as the private sector where people get options and huge bonuses and that kind of stuff.

Bruce Whitfield:
What is the mandate of the Land Bank because this is an important issue? The mandate used to be to give farmers cheap loans and it was the first port of call for many farmers in the apartheid era in terms of rather than going to the commercial banks they went to the Land Bank; however that mandate has changed and there was a lekgotla last year where the mandate of the Land Bank seemed to change.

I read the minister's statement yesterday in which it was a case of the transformation imperative has become important and the department of agriculture wants 30 percent of agricultural land in black hands by 2014 and it is the role of the Land Bank to facilitate that.

Alan Mukoki:
Well I don't think that the Land Bank mandate in particular has changed. If you look at the objects of the Land Bank which are actually to be found in the Land Bank act itself, it would seem to impose both a very strong commercial for instance ethic for the Land Bank in terms of agricultural entrepreneurship. We still have to be able to the people who guarantee the issue of food security and that is to be found amongst the big commercial farmers.

Again there are the developmental issues because we do come from a history in South Africa where there are people in terms of the history of this particular country who have never actually had access to finance, who have never had access to opportunities in that particular space. So the development mandate is also a very core mandate of the bank. So you have a duality of a mandate, both the commercial side of it as well as the developmental side of it and in particular what exactly is the Land Bank going to do to allow access for people who are previously historically disadvantaged.

Bruce Whitfield:
Has the Land Bank been making bad loans?

Alan Mukoki:
Well I mean if you look at the financial statements of the Land Bank over many years I mean this is a period that precedes my own involvement with the Land Bank. I mean I only came into the Land Bank in November 2004; I had an arrangement with the board that I would go on leave in December and in reality we as new management really started in January 2005. Yes there was a history of a lot of bad loans that had been issued; there was a history of bad loan write-offs that had to be undertaken by the bank.

Bruce Whitfield:
But now, why has the bank had to be recapitalised to the tune of R700-million and further guarantees of R1.5-billion provided by the Treasury?

Alan Mukoki:
The answer is very simple Bruce. I mean just like any other bank in the private sector, generally the Land Bank is not governed by the Banks Act, if it were it would have had to have a requirement of having 10 percent of its own shareholders money in respect of a comparison with risk weighted assets.

In other words for every 100-million worth of loans it would need to have 10-million of its own money but because of the history of these bad loans what happened is that the capital contribution in the Land Bank that belongs to the shareholder had dissipated, in other words it had gone down from what would have been a 10 percent level to somewhere around six percent but that was caused largely by the bad loans that had to be written off over the years.

Bruce Whitfield:
What about that R800-million Pamodzi loan? That was made under your tenure.

Alan Mukoki:
I know that a lot of people make a lot of noise about the R800-million loan. Number one, that loan was not made under my tenure. When I showed up at the Land Bank that loan was already in the books of the Land Bank. It is a loan that was made for very good reasons in terms of looking at the history of that particular loan and it was paid off.

The Public Protector was given an opportunity because some people complained about why the Land Bank had to make that loan and the Public Protector cleared the Land Bank or who ever had made that particular loan which I assume would have been the board at that particular time in terms of the level of the loan. So there were no issues around that but it had nothing to do with any of the people who are in the bank right now.

Bruce Whitfield:
We have a Development Bank, why do we also need a Land Bank?

Alan Mukoki:
I think that the mandates of all these particular banks are all different. In other words the Land Bank is specific to Land Bank objects as to the Land Bank act, largely in agriculture and the issues that agriculture should play and the Development Bank also has its own mandate. I think that they are all development financing institutions belonging to different departments of government.

Bruce Whitfield:
Final question, are you going to work tomorrow?

Alan Mukoki:
I can't answer that question for you because I am on leave right now.

Bruce Whitfield:
Did you choose to go on leave or were you told to go on leave?

Alan Mukoki:
No, I'm not going to answer that question. If I choose or I am told to go on leave that is the same thing, Bruce.

Bruce Whitfield:
No it is not.

Alan Mukoki:
If I say to you that I chose to go on leave, what would you say?

Bruce Whitfield:
Then we would know that you weren't told to go on leave. Alan Mukoki from the Land Bank.