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Court to review Bankorp-CIEX report on apartheid bailout money

Dec 05 2017 10:03
Lameez Omarjee, Fin24

Johannesburg – A court will review the Public Protector’s report on apartheid bailout money for Bankorp, which was bought by ABSA, to determine if monies for the lifeline are still outstanding to the Reserve Bank.

The North Gauteng High Court is set to hear the matter over three days, starting on Tuesday.

Public Protector Busisiwe Mkhwebane released the Bankorp-CIEX report in June. It found that the South African Reserve Bank’s (SARB's) R1.125bn bailout for Bankorp between 1985 and 1995 was unlawful. The report further indicated that ABSA should pay back the money, having bought Bankorp in 1992, Fin24 reported.

Both the SARB and ABSA filed court applications to have the court review the report and set it aside. Both parties have repeatedly declared that the outstanding amounts for the bailout had been paid back.

Earlier this year, former Reserve Bank governor Dr Chris Stals explained that the bailout was made to Bankorp to avoid serious implications for the South African banking system.

At that stage, the closure of Bankorp risked resulting in “epic” problems for the whole of South Africa, according to Stals. “We protected the South African financial system against a major collapse,” he told Fin24.

He also confirmed that ABSA had paid the outstanding monies.

In its responding affidavit, the Reserve Bank slammed Mkhwebane for abusing her office. “A declaratory order that the investigation abused the powers of her office ought, accordingly, to be granted,” the affidavit read.

The SARB further stated that the report is a product of a “procedurally unfair process” and is underpinned by “irrationality and errors of law and fact”.

The SARB also criticised Mkhwebane’s conduct in the review of the application. “She has failed to take this court into her confidence and to address frankly and honestly the serious accusations against her.”  

ABSA wants the remedial action in the report for it to repay the money to be reviewed and set aside, and for Mkhwebane to pay the bank's legal costs on a punitive scale.

In August, the SARB won its court bid against the Public Protector. As part of the Bankorp-CIEX report, Mkhwebane ordered the bank’s mandate to be changed to ensure the socio-economic well-being of citizens and to achieve socio-economic transformation. The courts set this aside. 

Mkhwebane had to pay costs for the application.

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