Absa takes on the public protector

THIS time it is Absa that has turned to the High Court to take issue with a ruling of new Public Protector Busisiwe Mkhwebane. At stake is the R1.125 billion that Mkhwebane wants the bank to repay to the state.

But Absa has approached the High Court to set aside this “remedial action”.

In court papers, the jurisdiction of the office of the public protector regarding the loan, the basis of the ruling and the actual order to the Special Investigating Unit (SIU) were also questioned by the bank.

Absa chief executive Maria Ramos said the remedial action rested on material errors of fact and was imposed without procedural fairness, among other things.

“The main relief is directed against the Public Protector’s remedial action requiring the SIU to approach the president to reopen and amend Proclamation R47 of 1998 in order to recover from Absa funds that were allegedly misappropriated,” Ramos said.

The application was made days after Mkhwebane made a U-turn announcing that she would not oppose an SA Reserve Bank application to set aside and review her decision to instruct the government to change the mandate of the bank – which would have meant changing the constitution. Ramos said that when Absa acquired Bankorp in 1992, it was on condition it repaid the financial assistance it had received from the SARB.

She said amount was paid in full, including the interest due to the central bank.

“Absa had no further obligation,” Ramos said in court papers. She insisted that Absa acquired Bankorp for a fair value and was not liable for the latter’s debt to SARB.

She said that the SIU had in 1998 found no compelling reason to proceed with litigation to recover the money. She also said the so-called CIEX report, which Mkhwebane relied on, did not provide for evidence or advance any legal basis for the recovery of the money.

“The real beneficiaries of the Bankorp assistance were Sanlam policyholders and pension fund beneficiaries.”

Ramos maintained that Mkhwebane had failed to appreciate the consequences of the manner in which the transaction was structured, and that Absa had paid for the “lifeboat” when it acquired Bankorp. She said the remedial action was imposed without procedural fairness, as Absa, despite requests, had never been shown critical documents that formed the basis of the findings. “Not even the complaint was made available to Absa,” she said.

Ramos said that debt allegedly due to SARB by Absa occurred more than 20 years ago.

“No basis for recovery of any debt, assuming it to be due, is set out in the final report,” she said.

“The Public Protector does not have jurisdiction to investigate matters that occurred before the coming into operation of the Public Protector Act or the establishment of the office of the public protector.”

The office of public protector came into being in 1995.

Ramos also said the remedial action stripped the power of the SIU and President Jacob Zuma.

The public protector’s spokesperson, Cleopatra Mosana, would not comment last night, saying the court papers had not been received.

Mosana said the Chapter 9 institution would study the papers upon receipt and then follow court processes on the matter.