Protector beats a retreat on Bankorp loan
• Mkhwebane tells court remedial action calls only for public funds to be recovered — and not necessarily or only from bank
Absa does not necessarily have to pay back the money for the lifeboat loan Bankorp was granted by the South African Reserve Bank in the late 1980s and 1990s, Public Protector Busisiwe Mkhwebane says in court papers.
Absa does not necessarily have to pay back the money for the Reserve Bank’s lifeboat loan to Bankorp in the ’80s and ’90s, Public Protector Busisiwe Mkhwebane says in court papers.
It is unclear who should be held liable as Sanlam, the major Bankorp shareholder when Absa bought it, is not mentioned in the remedial action she ordered earlier this year.
It is understood Absa will contest this point, as it is mentioned in her report on Bankorp and in her remedial action.
“The remedial action, insofar as Absa is mentioned, directs that steps be taken with a view to the recovery of the public funds given to Absa,” Mkhwebane said in an answering affidavit filed on Friday in the court application by Absa, the Reserve Bank, the minister of finance and the Treasury to have the public protector’s report reviewed and set aside.
“There is no suggestion from the wording of the remedial action that the amount should exclusively or necessarily be recovered from Absa,” she said.
Finance Minister Malusi Gigaba said in court papers that the conclusions Mkhwebane reached in her report did not take into account the documents before her and were “manifestly lacking in logic”.
The case will be heard early in December.
“The R1.125bn may well be recovered from either the shareholders or the other role players in the transaction,” Mkhwebane said.
Judge Dennis David found in his investigation — one of three that completed in the ’90s — that the amount (R1.23bn) paid by Absa for all of Bankorp’s ordinary shares accounted for the continued Reserve Bank assistance between 1991 and 1995, and that Absa could therefore not be regarded as a beneficiary of the Reserve Bank “lifeboat”.
It was more plausible that Sanlam would have benefited from the higher price paid, Davis found. The public protector’s report challenges the central bank’s role as a lender of last resort. Absa took Bankorp over in 1992.
Mkhwebane referred the matter to the Special Investigating Unit (SIU) to recover R1.125bn from Absa. Mkhwebane said in her answering affidavit that the president still had to consider the request to have the SIU investigation into the bail-out reopened. She also argued that the remedial action was not directed at Absa, but at the SIU.
Mkhwebane disputed the claim that Absa had paid fair value for Bankorp, saying, “Absa did not pay any money in that there was no transfer of funds”.
She said there was a share swap in terms of which Bankorp and Absa exchanged 100 shares for every 390 Bankorp shares to the value of R1.2bn.
The initial complaint asked the public protector to investigate why the government had not implemented the CIEX report — the dubious work of retired British intelligence officer Michael Oatley.
While Mkhwebane appeared to rely heavily on the report in reaching her final conclusion, she contested this in Friday’s papers. She insisted that her findings, especially on the lifeboat loan, were not based on the CIEX report but in law.
Absa spokesman Songezo Zibi said that Absa would dispute assertions of law and fact in Mkhwebane’s affidavit.