Top banks ditch Auction Alliance
Johannesburg - Two banks have stopped trading with Auction
Alliance, which has been accused of paying kickbacks for preferential
treatment, it was reported on Wednesday.
Investec [JSE:INL] and First National Bank (FNB) have halted
trading with Auction Alliance, whose CEO Rael Levitt has stepped down pending
the outcome of an investigation into the allegations.
"We've temporarily suspended giving work to Auction
Alliance and are reassessing our relationship with them," Ciaran Whelan, global
head of risk at Investec, told The Star newspaper.
The newspaper reported that FNB had also cut ties with
The Saturday Star recently reported that it had been alleged
that banking staff were paid large sums of money to ensure that Auction
Alliance receives preferential treatment.
Levitt has denied all the allegations.
In an interview published in The Citizen on Wednesday,
Levitt said only 15% of Auction Alliance's business was generated from banks
He said he was unaware of commission payments by Auction
Alliance to bank employees, liquidators or court officials in their personal
capacity, but that the company was investigating each allegation through a firm
of independent forensic analysts.
He stood by the company's belief that vendor bidding - or
"ghost bidding" was "100% lawful" to protect reserve
"What we have discovered is although they are industry
norm and are lawful, the public finds them distasteful. That is one of the
issues that our independent report will look into," he told the newspaper.
He said people sometimes asked for a vendor bidder if they
had not bid before, or to avoid media attention.
The mistake Auction Alliance had made as a business was in
not clearly explaining the intricacies of auction methodology, he said.
"For that mistake I have personally fallen on my
He felt that the media coverage given to the allegations was
a one-sided disaster, and that there had been no credibility check of those who
had made the allegations.