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Land Bank slaps suspended Daybreak CEO with R3.5m penalty

For irregularly paying out dividends without the bank’s consent.
Boas Seruwe allegedly turned whistleblower against Daybreak officials in return for some form of compensation from Daybreak, which he apparently never received. Image: Supplied

When it rains it pours for Daybreak Farms’s Boas Seruwe.

In January he was abruptly suspended as chief executive of the poultry producer midway through his five-year contract, and now he’s been slapped with a R3.5 million penalty by the Land Bank for irregularly paying out dividends to Daybreak’s shareholder without consent from the development finance institution.

Daybreak is one of South Africa’s leading chicken companies, producing 1.4 million birds a week at its facilities in Sundra and Delmas in Mpumalanga.

It became wholly owned by the Public Investment Corporation (PIC) in 2015. 

The report of the Commission of Inquiry into allegations of impropriety at the PIC found that six months after the PIC’s investment, Daybreak became technically insolvent. The inquiry found that at the time of the hearings, the PIC’s investment had not been serviced – “although proactive measures had been taken by the PIC and it [Daybreak] was recovering well”.

Read: PIC’s investment of R1.2bn in failed chicken farm unpacked at inquiry

Under Seruwe’s watch, Daybreak paid its shareholder R50 million in dividends in May 2020 without informing the Land Bank, through which it has had a R250 million revolving credit facility since October 2017.

Breakdown of Daybreak’s R250 million revolving credit facility. Source: Land Bank

The bank has written two letters to Seruwe; one in October and another in December last year requesting him to explain the nature and significance of the dividend payouts. The bank also gave Seruwe 20 days to provide it with actions to “remedy the breach”.

The 20-day period has lapsed and Seruwe has not provided the bank with written representations as requested. 

In a letter dated March 2, 2020, the bank’s general manager for post-investment management services, Kabelo Chaane, notified Seruwe of the multi-million rand penalty imposed on him following his alleged failure to explain the dividend payout.

When contacted by Moneyweb regarding the dividend payout, Seruwe declined to comment, saying the matter is “confidential company information”. The Land Bank referred Moneyweb to the poultry producer, which had not responded to queries at the time of publication. 

Six initial charges

Seruwe initially faced six charges at a disciplinary hearing held in January following his suspension. Charges include gross insubordination, fraud and corruption, and gross dishonestly where he is accused of circulating a report to the board which allegedly detailed damning findings against the company’s manager for legal and compliance. Seruwe allegedly withdrew the report and presented the board with a report that detailed less damning findings.

“The initial, less favourable report highlighted numerous instances of procurement of services without valid contracts and the lack of proper contract management,” Daybreak said in a letter to Seruwe, which Moneyweb has seen. 

Moneyweb understands that Seruwe is also the subject of a forensic investigation by Daybreak. The probe’s findings are expected to be released this month, according to people familiar with the matter.

Six additional allegations

In February, Daybreak notified Seruwe of six additional allegations of misconduct which he is required to provide an explanation to when the disciplinary hearing continues this month.

One of the allegations Seruwe is required to answer to is contained in a dossier by Kgomotso Ramotlou, a former employee of Hlehle-Lwazi Solutions, a company that was awarded a R144 million contract by Daybreak to clean its abattoirs. 

In the dossier, submitted to Daybreak’s board and the PIC, Ramotlou accuses Seruwe of being one of the masterminds behind a scheme that would expose the alleged fraud and corruption at Daybreak.

For blowing the whistle on those Daybreak officials who were allegedly behind the corruption, Ramotlou alleges that Seruwe’s “needs” would be provided for by the poultry producer – an offer that he allegedly accepted. 

Ramotlou however says that despite “exposing” the alleged multi-million-rand corruption at Daybreak, he was not “taken care of” and instead has had to relocate his children to Limpopo from Gauteng following threats to his life.

Ramotlou has further been requested by the company to pay back R1.8 million paid irregularly to him, according to the dossier. 

Seruwe declined to comment on the charges he faces while the PIC declined to comment saying it cannot get involved in the matter because it “is a labour relations matter between the employee and the Daybreak board, who is responsible for governance at Daybreak”.

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Dare I say it ?
The chickens are coming home to roost.
Sorry, a tatty comment

Followed by the turkeys, then the vultures…..

Not too sure about the Hawks though..?

WOW – – – pay R50m irregularly – – – get a ‘fine’ of R3.5m – – – – – WHAT A BARGAIN!!!!!!!!!!!!!!!!!
And the guy lives to do it again and again and again……………..

In what time do we live that letters are still being send? In various other political articles this one send a letter to that one. Send a bloody email and you have a trail!!!! Fricken hillarious!!!

Most new CEO’s and ANC MPs in SA will fail the governance test.

I presume the management at Landbank can also expect penalties for their in house poor performance ??
Will only be equitable imo

Is the R3.5 penalty being collected in lieu of taxes? In which case, the earners of the dividend ( who should be named and shamed) have earned twice!

Sounds like this business will be bankrupt before long.

End of comments.

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