AfriForum’s Private Prosecution Unit and the family farmer network Saai today assisted the owner of the family farm Langspruit Landgoed with submitting criminal charges of fraud against the management of the Bloemhof silo complex. This alleged fraud was committed during the first quarter of 2020. This follows after Langspruit Landgoed BK suffered a losses due to alleged silo certificate fraud. The charges were submitted at the Bloemhof Police Station.
In a nutshell, silo certificate fraud involves silo complexes issuing more silo receipts serving as guarantees for maize than the actual quantity maize available in the silos. Silo receipts are issued as a guarantee to the owners of the maize and can be traded. This receipt is supposed to guarantee three things:
According to Francois Rossouw, CEO of Saai, it seems as though all three of these guarantees were disregarded by the silo complex in this instance. “A fundamental cornerstone of the JSE’s agricultural derivatives market is the integrity of JSE silo receipts and a reliable physical delivery process. When a silo storage facility issues a proof of receipt, the whole market must have absolute trust and certainty that the quantity and quality of the commodity is indeed stored at the location indicated on the receipt. Furthermore, the receipt holder must be able to receive delivery of his commodity without any delay. It is of grave importance for the integrity of the entire South African grain market that silo storage facilities uphold the JSE’s requirements. At a time where the consequences of COVID-19, the threat of expropriation without compensation and the implosion of agricultural financing structures threaten the livelihood of many family farmers – a fair, efficient and clear market will help to ensure a profitable future for the industry.”
The agricultural company Senwes last year had to pay a fine of R1,5 million to the JSE particularly because the Bloemhof silo complex – that was up until last year still owned by Suidwes (that was later in the year taken over by Senwes) – had a shortage of 17 035 tonnes WM1-grade maize in comparison with the amount of maize available according to the silo receipts that were issued. The JSE silo receipts were composed by Suidwes Agricultural that had to know, within reason, that they didn’t really have that amount of WM1-grade maize available in the silo complex and subsequently couldn’t supply it on demand to receipt holders.
Langspruit also suffered a further loss seeing as maize couldn’t be supplied to them sufficiently and timeously when they could have sold it for higher prices. According to Chris Gouws, Senior Investigator at AfriForum’s Private Prosecution Unit, it also means that Langspruit had to pay for storage costs of maize that didn’t exist. “This alleged silo certificate fraud comes down to an illegal and deliberate misrepresentation to receipt holders. AfriForum’s Private Prosecution Unit was particularly established to ensure that corporate bullies are punished if they commit transgressions and that is why we will continue monitoring this case and cooperate with the police and the National Prosecuting Authority (NPA) to see to it that justice prevails.”
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