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Top banks ditch Auction Alliance

Feb 29 2012 09:08 Sapa

Company Data

INVESTEC LIMITED [JSE:INL]

Last traded 106
Change -1
% Change -1
Cumulative volume 630133
Market cap 0

Last Updated: 17-04-2015 at 05:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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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 Auction Alliance.

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 and liquidators.

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 prices.

"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 sword."

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. 

investec  |  auction alliance  |  fnb  |  rael levitt  |  fraud

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