ABSA fires next shot in Public Protector's Bankorp challenge | Fin24
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ABSA fires next shot in Public Protector's Bankorp challenge

Sep 14 2017 18:12
Jan Cronje

Cape Town - ABSA filed a supplementary affidavit with the North Gauteng High Court on Thursday in its case to have Public Protector Busisiwe Mkhwebane’s findings that it pay back R1.125bn over the apartheid-era bailout of Bankorp set aside. 

Mkhwebane in June ordered ABSA to pay back the money that the SA Reserve Bank used to bail out Bankorp, which was later bought by ABSA.

This “lifeline” was provided to Bankorp starting in 1985, and continued into the early 1990s. ABSA acquired Bankorp in July 1992.

The affidavit is part of a scheduled sharing of documents between the bank and the Public Protector before the matter comes to court. 

We didn't benefit 

The supplementary affidavit lodged on Thursday is the second affidavit the bank has lodged with the court. 

This after ABSA asked the Public Protector to provide the bank with all the records that she used to make the findings in her original report that she released on June 19.  

In that report, Mkhwebane found that the South African government had a duty to recover R1.125bn from ABSA. 

In its new affidavit, ABSA argued that it did not benefit from the financial assistance the SARB provided to Bankorp.

“In fact, (ABSA) suffered a loss from its acquisition of Bankorp,” it states. “The result is that the Public Protector’s finding that ABSA should repay R1.125bn lacks a proper factual or analytical basis, and is unsustainable in law.”

It further questions why the Public Protector failed to grant ABSA a request to discuss her remedial action. 

“Shortly before releasing the final report, the Public Protector had meetings with the Presidency's legal advisers, the State Security Agency and an unidentified economist regarding the remedial action against ABSA," states a media release accompanying its new affidavit. 

ABSA states that the Public Protector “failed to afford ABSA a similar opportunity to discuss her proposed remedial actions - despite our express requests”. 

The bank said it was looking forward to the matter coming to court.

“Because the business of the courts is conducted in the open, South Africans will get an opportunity to hear the facts and watch them being interrogated, so this matter can be put to rest.”

No court date has yet been set for the case to start.

'Illegal gift'  

In her June report, Mkhwebane found that money given to Bankorp, which was later bought by ABSA “belonged to the people of South Africa” and was an ‘illegal gift”.

She based her findings, in part, on what has become known as the the CIEX report.

This report, commissioned in 1997, found that the bailout to Bankorp during the apartheid era was unlawful and monies paid had to be recovered.

As part of her remedial action, she said that the Special Investigating Unit must approach the president to collect the alleged misappropriated funds from ABSA. 

In late June, after the report was released, ABSA first approached the High Court to have the findings set aside.  

In their founding affidavit, ABSA said that her findings were “procedurally flawed and unfair to ABSA.”

At the time, ABSA argued that it paid a fair price for Bankorp. 

"The eventual price paid for Bankorp by ABSA was R1.23bn and the net asset value of Bankorp was R1.222bin (calculated including the total net yield payable under the financial assistance programme to Bankorp). ABSA was therefore not enriched."

It further argued that one of the Public Protector’s conclusions, that the SARB assistance to Bankorp was not in the public interest, is not proven. 

"On the contrary both the Davis Panel and Heath investigation, the two statutory investigations on the matter, found that the assistance was warranted to protect the financial system of South Africa."

Further remedial action 

The case has been complicated by the fact that the Public Protector made another remedial finding in her report, not related to ABSA. 

Instead, it dealt with the mandate of the SARB. 

She also found that the Constitution should be amended, and the SARB’s mandate to be changed so that its "primary object" was to ensure the socio-economic well-being of citizens, and to achieve socio-economic transformation.

The SARB challenged the Public Protector's power to institute such a change in court.  

This week the SARB said that a meeting Mkhwebane had with advisers of the Presidency 12 days before the release of her report was “highly irregular” and compromised the independence of the office.

The Public Protector however denied she had done anything wrong.

“The Public Protector would like to place on record that the meeting with the Presidency did not discuss nor was the Presidency consulted with regard to the amendment of the South African Reserve Bank’s mandate.”

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