Payback time for Ingonyama

The Ingonyama Trust Board (ITB) has been ordered by the auditor general to pay to the treasury millions of rands in mining royalties it has collected since 1994.

The royalties from companies mining on land under the ITB, which controls about three million hectares of tribal land in KwaZuluNatal on behalf of King Goodwill Zwelithini, will now have to be paid into the National Revenue Fund (NRF).

The decision is a blow to the ITB, which is fighting for survival in the wake of Parliament’s high-level panel report that recommended the trust be phased out and that the land it controls be transferred to the state and then to individual residents to improve security of land tenure.

Last month Parliament’s portfolio committee on rural development and land reform instructed the ITB to stop converting residential permission-to-occupy certificates into leases.

There are coal and iron ore deposits in the north of the province, and zinc and titanium slag on the North Coast. The ITB receives royalties from mining houses, which also lease the land from which they extract minerals.

ITB chairperson Jerome Ngwenya has, for years, resisted pressure from the committee to declare the money received in royalties to the NRF.

The ITB, which has been under pressure from MPs to detail how it has used the funds it collects from royalties and leases to benefit residents, instead challenged attempts by Parliament and the auditor general to have it pay royalties to the central fiscus.

In October 2014, the committee’s budget review noted that the ITB “incorrectly recognises the royalties received from mining operators as revenue”.

The committee said the auditor general had found the ITB’s practice contradicts the requirements of state accounting regulations, among them the Generally Recognised Accounting Practice (GRAP) 9, regulating revenue from exchange transactions, and GRAP 17, which governs revenue from property and equipment transactions.

The new directive from the auditor general to the ITB was made public last week at a meeting of the land reform committee. At the meeting, the auditor general reported that the ITB was continuing to record royalties as revenue, a practice that would now be stopped.

The committee heard the ITB would have to make arrangements to transfer the royalties it had received since its inception in 1994.

Committee deputy chairperson Phumzile Mnguni said, although there had been no “conscious calculation of the amount” in mining royalties the ITB had collected, it amounted to millions of rands.

Ngwenya has not responded to requests for comment.