We don’t owe government anything – Absa
Banking group Absa on Tuesday, explained why it believes it does not owe any money to the South African government, as recommended by the Public Protector.
Public Protector Busisiwe Mkhwebane on Monday issued a proclamation that the South African government is allowed to recover R1.125 billion in “misappropriated public funds” from Absa bank.
The proclamation comes after an investigation into a report on apartheid-era looting by UK-based asset recovery agency, Ciex, was submitted to the Public Protector for investigation.
According to Mkhwebane, government and the South African Reserve Bank failed to implement the Ciex report, and ordered that the Special Investigation Unit re-open the case and recover the funds.
The Ciex report alleged that R24 billion was unlawfully given out to Bankorp (which would eventually become a part of Absa) from 1985 to 1992 by the South African Reserve Bank. It then provided Absa with a further R2.25 billion in bailouts from 1992 to 1995.
Ciex was paid 600,000 British pounds for services which were never used by government, the Public Protector said.
Mkhwebane said that two investigations into the matter established that the financial aid given to Bankorp/Absa was irregular, but the correct amount attributable was R1.125 billion.
Absa said in a statement on Tuesday that it received the Public Protector’s report on her investigation into the SA Reserve Bank’s assistance to Bankorp between 1985 and 1995.
“We are currently studying the report and will consider our legal options including seeking a High Court review.
“Absa met all its obligations in respect of the loan provided by the SA Reserve Bank by October 1995. It is our firm position that there is no obligation to pay anything to the SA government,” the bank said.
Absa noted that it was only formed in 1991, and only bought Bankorp in 1992, while the Bankorp agreement with SARB began in 1985.
“When Absa acquired Bankorp in 1992 the assistance program was already in place.
“The customer debt write-offs that would result from the SA Reserve Bank’s intervention were taken into account in determining the price Absa should pay to buy Bankorp. This price was set at R1.23 billion and Absa paid it in full to the shareholders of Bankorp,” Absa said.
“This is why Absa cannot be expected to pay again,” it said.
It pointed out that Judge Davis and a panel of experts he chaired conducted a thorough
investigation between 2000 and 2002 and produced what is now known as the “Davis
Report”.
Judge Denis Davis said Absa paid fair value for Bankorp and is not liable to pay anything further.
The bank said that Judge Davis’ report determined that the beneficiaries of the SARB assistance were the shareholders of Bankorp.
“The report stated that Sanlam policy holders owned 88% of the bank while the remaining 12% was owned by minority shareholders.
“The R1.23 billion Absa paid was split between these parties.”
Read: Absa must pay back R1.125 billion for irregular apartheid-era gifts: Public Protector
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