Flaws in Absa report – Kganyago
Number of errors spotted
GOVERNOR of the Reserve Bank, Lesetja Kganyago, is studying the Public Protector’s report into Absa and has already found inaccuracies in it.
Kganyago said on Friday he will give an extensive feedback this week.
“We are checking it for factual accuracy. We have already spotted a number of errors. We are going through the report with our lawyers and we are grateful that the Public Protector has given us an extension,” Kganyago told Radio 702 on Friday.
The provisional report by Busisiwe Mkhwebane into an apartheid era bailout for Bankorp by the Reserve Bank was leaked to the Mail & Guardian, which published its contents on Friday. Bankorp was bought by Absa in 1992 and Absa is now a unit of Barclays.
Barclays Africa dropped as much as 2.1 percent on Friday and was down 0.4 percent at R170.25, making it the sole decliner among South Africa’s four biggest banks.
Mkhwebane’s provisional report has found that the apartheid government breached the Constitution by supplying Bankorp with a series of bailouts from 1985 to 1995. She has given Barclays Africa, the Reserve Bank, the National Treasury and the Presidency until February 28 to make submissions before finalising her investigations.
Absa may have to repay R2.25 billion if the finding by the Public Protector is upheld.
In her suggested remedial action, Mkhwebane proposed that President Jacob Zuma should consider a commission of inquiry to see whether other apartheid-era loans should be repaid by other institutions that looted the state.
Former Public Protector, Thuli Madonsela, whose contract ended last October, started an investigation in 2011 into whether some South African companies had looted the state during apartheid, following a complaint by advocate Paul Hoffman of the non-governmental organisation, Accountability Now.
This followed a 1997 investigation by Ciex, a covert UK-based asset recovery agency headed by former British intelligence official Michael Oatley.
Absa said the report contains inaccuracies and any repayment claim would lie with Sanlam, from whom it bought Bankorp.
The bank said the provisional document had been released to a limited number of parties for comment and further input and might change materially following further submissions. Absa said it had fully co-operated with Mkhwebane.
“Following an interview with senior executives of Absa in 2016, the Public Protector accepted our written offer for her to inspect confidential documents in our possession that are very pertinent to the successful finalisation of the investigation. The public protector accepted this offer in writing, but never actually took it up. This offer remains open.”
The Reserve Bank supported Bankorp from 1992 out of concern, which had just suffered three bank collapses that year.
The lifeboat given to Absa has been a thorn in its side since June 2000, when the then Reserve Bank Governor Tito Mboweni appointed the Davis Panel to investigate the bailout.
This was before the Public Protector instituted her own investigation.
The Davis Panel found the decision by the Reserve Bank to provide financial assistance to Bankorp was seriously flawed.
“The conclusion that the Reserve Bank acted ultra vires (outside its powers) leads to a consideration of restitution. In principle, restitution from the beneficiaries may be sought, but it will be difficult and extremely costly to achieve through litigation, because of the difficulty of determining the exact class of beneficiaries, apportioning the enrichment and the fact that duly appointed officials of the Reserve Bank made the key decisions.”
A woman walks past a branch of Barclay’s South African subsidiary Absa bank in Cape Town. Barclays Africa shares dropped as much as 2.1 percent on Friday after a leaked report by the Public Protector that the bank had from 1985 to 1995 received a series of apartheid era bailouts, breaching the Constitution.