Flaws in Absa re­port – Kganyago

Num­ber of er­rors spot­ted

The Star Early Edition - - COMPANIES - Wise­man Khuzwayo

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.

Looted state

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.

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