Home » South African Government Allowed to Recover R1.125 Billion from Absa

South African Government Allowed to Recover R1.125 Billion from Absa

PRETORIA – Government is allowed to recover R1.125 billion in misappropriated public funds from Absa Bank and its predecessor Bankorp. This follows a proclamation by Public Protector Busisiwe Mkhwebane on Monday when she released a report into misappropriate use of public funds pre democracy. The Public Protector investigated the matter after the complainant, Advocate Pual […]

By SAPeople
19-06-17 19:30
in Business

PRETORIA – Government is allowed to recover R1.125 billion in misappropriated public funds from Absa Bank and its predecessor Bankorp.

This follows a proclamation by Public Protector Busisiwe Mkhwebane on Monday when she released a report into misappropriate use of public funds pre democracy.

The Public Protector investigated the matter after the complainant, Advocate Pual Hoffmann, alleged that government and the Reserve Bank failed to implement the recommendations by UK-based asset recovery agency, Ciex, and to recover the money from Bankrop Limited, which eventually becomes a part of Absa, without providing reasons to that effect.

The Ciex report alleged that R24 billion was unlawfully given out to Bankorp from 1985 to 1992 by the Reserve Bank (as a “lifeboat”/gift). It then provided Absa with a further R2.25 billion in bailouts from 1992 to 1995.

Briefing the media in Pretoria on Monday, Mkhwebane said the 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.

Mkhweban said Ciex was paid £600,000 for services which were never used by government. No evidence could be found that any action was specifically taken in pursuit of the Ciex report.

“The amount given to Bankrop/Absa Bank belonged to the people of South Africa. Failure to recover the ‘gift’ resulted in prejudice to the people of South Africa as the funds could have benefited the broader society instead of a handful of shareholders of Bankrop/ABSA Bank.”

The public protector report found that the failure by government and the Reserve Bank was inconsistent with the Constitution and it constitutes improper conduct and maladministration.

“The South African Reserve Bank in granting the financial aid failed to comply with section 10 (1) (f) and (s) of the South African Reverse Bank Act No.90 of 1989. The Ministry of Finance had a duty as obliged by section 37 of the South African Reverse Bank Act of 1989… this failed to adhere to section 195 of the Constitution by failing to promote efficient and effective public administration.”

Some of Mkhwebane remedial action include that the Special Investigation Unit re-open the case and recover the funds which she said were given unlawfully to Absa.

“The public protector refers the matter to the Special Investigating Unit …to reopen and amend the proclamation R47 of 1998 published in the Government Gazette dated 7 May 1998 in order to recover misappropriated public funds unlawfully given to Absa in the amount of R1.125 billion and to investigate alleged misappropriated public funds given to various institutions as mentioned in the CIEX report,” Mkhwebane said.

The Public Protector said the Reserve Bank must fully cooperate with the SIU and also assist it in recovering the funds.

Another recommendation is that the Portfolio Committee on Justice must initiate a process that will result in the amendment of section 224 of the Constitution to emphasize that the Reserve bank must promote a balanced and sustainable economic growth, while ensuring that the wellbeing of the citizens are protected.

Absa has responded, saying it “has noted the Public Protector’s statement today regarding her investigation into the SA Reserve Bank’s assistance to Bankorp between 1985 and 1995. Absa acquired Bankorp in April 1992. We have not yet received a copy of the report and we are urgently requesting the Public Protector’s Office to send it to us. Once we have read it we 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.”

Sources: – SAnews.gov.za, Absa