BUSINESS Public protector reopens probe into apartheid-era Barclays bailout

THE PUBLIC Protector has reopened an investigation into whether the Barclays Africa Group benefited from an apartheid-era bailout, the bank said yesterday.

A preliminary report has found that the apartheid government breached the constitution by supplying Bankorp, which was acquired by Barclays Africa unit Absa in 1992, with a series of bailouts between 1985 and 1995, the Mail & Guardian said.

Barclays Africa could have to repay R2.25 billion if the finding by Public Protector Busisiwe Mkhwebane is upheld, the newspaper added.

A previous investigation in 2000 by a central bankappointed panel found that the loans were made to stabilise the banking system and that Absa shareholders did not derive any undue benefit.

The panel recommended that no further action be taken in the matter.

Former public protector Thuli Madonsela instituted the follow- up investigation after a 2010 complaint by Paul Hoffman of the NGO Accountability Now, the newspaper said.

Barclays Africa said it would continue to co-operate with the public protector, but it believes that Mkhwebane’s preliminary report contains “several factual and legal inaccuracies”.

“In its current form it creates the incorrect view that Absa Bank Limited (Absa), a subsidiary of the group, received undue benefits by virtue of the South African Reserve Bank (SARB) assistance to Bankorp,” Barclays Africa said in a statement.

At 11.11am, shares in Barclays Africa were down 1.46 percent to R168.50.

Barclays Plc is in the process of trying to reduce its stake in Barclays Africa to 20 percent from 50.01 percent as it focuses its business on other markets.

A spokesman for Barclays in London declined to comment on whether the case had any implications for the bank’s plans to sell its stake in Barclays Africa.

The Governor of the SARB, Lesetja Kganyago, said yesterday that the central bank would also co-operate with the public protector’s investigation.

Mkhwebane, whose office did not immediately respond to requests for comment, has given Absa, the SARB, the National Treasury and the Presidency until February 28 to make further submissions before finalising her investigation, the Mail & Guardian said, citing a copy of a preliminary report.

In her suggested remedial action, Mkhwebane proposed that President Jacob Zuma should consider a commission of inquiry to determine whether other apartheid-era loans should be repaid by other institutions, the newspaper said. – Reuters