Protector slams illegal bank loan
PUBLIC Protector Busisiwe Mkhwebane has criticised the government and the Reserve Bank for failing to recover more than one billion rand from Bankorp Limited/Absa Bank advanced as an “illegal gift” to the Bankorp group, which was bought by Absa in the early 1990s.
“The allegation whether the South African government and the Reserve Bank improperly failed to recover from Bankorp Limited/Absa Bank an amount of R3.2 billion cited on the CIEX report, owed as a result of an illegal gift given to Bankorp Limited/Absa Bank between 1986 and 1995, is substantiated,” Mkhwebane told a media briefing in Pretoria.
“The correct amount of the illegal gift granted to Bankorp Limited/ABSA Bank is in the amount of R1.125 billion.”
Mkhwebane added that South Africans had been prejudiced by the government’s failure to recoup the huge sums of money.
“The amount given to Bankorp Limited/Absa Bank belonged to the people of South Africa. Failure to recover the ‘gift’ resulted in prejudice to the people of South Africa as the public funds could have benefited the broader society instead of a handful of shareholders of Bankorp Limited/ Absa Bank,” she said.
“The conduct of the South African government and the South African Reserve Bank goes against the ethos laid out in the preamble of the constitution and section 195 of the constitution in respect of redressing social injustices and promoting efficiency.”
Mkhwebane said the conduct of government and the bank constituted “improper conduct and maladministration”.
For remedial action, Mkhwebane has referred the matter to the Special Investigating Unit, which must in turn approach President Jacob Zuma to reopen the presidential proclamation R47 of 1998 “in order to recover the misappropriated public funds unlawfully given to Absa Bank in the amount of R1.125 billion”.
The Public Protector had probed allegations that CIEX, a covert UK-based asset recovery agency headed by Michael Oatley, was contracted by Pretoria to assist in investigating and recovering misappropriated public funds and assets allegedly committed during the reign of the apartheid regime.
The CIEX report made reference to “lifeboats” given by the apartheid government to entities including Bankcorp, but the report was not acted on by the government after 1994.
“The allegation whether the South African government improperly failed to implement the CIEX report… after commissioning and duly paying for same is substantiated.
“CIEX Limited was paid £600 000 for services which were never used by the South African government. No evidence could be found that any action was taken specifically in pursuit of the CIEX report,” said Mkhwebane.
Advocate Paul Hoffman, the director of Accountability Now, which made the complaint with the public protector, has hailed her report as not only an indictment on Absa, but one on the South African government as well.
“The report is a vindication of the complaint which was about the government spending 600 000 Pounds Sterling on (the CIEX) report which they did not use,” he said.
Hoffman said because the public protector’s recommendations were binding, this meant the government would be careful about spending public funds on reports that were never pursued.
He said the CIEX report dealt with other allegations involving apartheid lifeboats.
“Why the focus seems to be on Absa, I will not speculate,” he said.
While saying he was generally happy with the report, Hoffman was less impressed with Mkhwebane’s suggestions regarding amending the constitution to change the mandate of the Reserve Bank.
He said he found such comments bizarre as they had nothing to do with the complaint, and had nothing to do with the public protector’s scope and mandate.
“The constitutional amendment to me is completely off the wall.
“The role of the reserve bank is constitutionally determined and the terms were worked out carefully”.
Asked if he thought the money would be repaid, Hoffman said he thought Absa would contest the findings and may question the jurisdiction of the public protector or argue that the case had prescribed.
Mkhwebane also said she would oppose President Jacob Zuma’s bid to review the State of Capture report. That case will be heard in October.
Absa yesterday was adamant that it had done nothing wrong. In a statement yesterday, the bank said they had met all their obligations regarding the loan offered by the Reserve Bank in 1995.
“It is our firm position that there is no obligation to pay anything to the government,” the bank said, stating they were willing to go to court to get a ruling on the matter.