ABSA Apartheid Loan Saga: Here Are 5 Fast Facts You Need To Know

On Monday, Public Protector Busisiwe Mkhwebane released the findings of her investigation into what is called the ‘CIEX Report’ which has to do with the Absa apartheid loan saga.

The report centred on her investigation into the SA Reserve Bank’s assistance to Bankorp – a group that later acquired Mega-bank Absa – between 1985 and 1992. The bailout, widely regarded in some quarters as a looting of the state was implemented after Bankcorp went bust.

Facts To Know About The ABSA Apartheid Loan Saga

1. The First Investigation Was Conducted By CIEX

CIEX is a covert United Kingdom-based asset recovery agency headed by former UK intelligence official, Michael Oatley. In 1997, the firm was contracted to investigate the allegations by the South African government through the South African Secret Service, (SASS). SASS’ representative at the time was Billy Masetlha.

The CIEX report at the time was titled: Project Spear. It investigated how the Bankorp group of banks received R1.5 billion disguised as a distressed bank lifeboat. In 1999, the firm recommended that Absa should pay back the billions it received back to the Reserve Bank. The Mandela government paid Ciex for a period of six months amounting to 600,000 pounds, an equivalent of R10 556 972.40.

But the government and the Reserve Bank failed to ensure Absa paid the money, this is according to a preliminary report by the Public Protector.

2. The Complaint Was Officially Lodged By Advocate Paul Hoffman

Advocate Paul Hoffman opened the case in 2011 at the office of the Public Protector, on behalf of the Institute for Accountability in Southern Africa, the parent body of Accountability Now.

Hoffman recently said he believes that it is still important to implement the CIEX report despite the fact that it happened a long time ago because the government’s failure to follow up on the report was not appropriate – not to mention the money spent on the investigation alone.

3. The Correct Amount Of The Illegal Bailout Granted Is R1.125 Billion

The Public Protector’s provisional report released in December 2016, upheld that Absa ‘unduly benefited’ to the tune of R1.25‑billion plus interest over two decades. She said the government and the Reserve Bank could have recovered up to R2.25‑billion from Absa but they failed the nation by not doing so.

Investigator Tshiwalule Livhuwani helped Mkhwebane in the investigation. This sentiment was re-echoed in her report published on June 19, 2017.

4. Government’s Spending On The Report Militates Against The Batho Pele Principles

Batho Pele (People First) is a South African political initiative first introduced by former President Nelson Mandela Administration on October 1, 1997. The initiative was launched to facilitate a better delivery of basic goods and services to the people. The term, has, however, gained ground in the political sphere.

In this case, the government spent money on the ‘project spear’ but refused to implement the remedial action. It, in other words, didn’t place value on the money spent – which of course could have helped the people, if it was channelled to another people-centred project.

5. The Case Has Been Referred To The Special Investigating Unit (SIU)

The case has been referred to the SIU and the unit is expected to approached President Jacob Zuma to obtain the relevant proclamation that would facilitate an investigation and ultimately, the recovery of the money.

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The Public Protector also asked the SA Reserve Bank to co-operate with SIU for early closure on the matter. She reiterated that the money given to Absa belonged to the citizenry.

See Also – Apartheid: The Beginning, What Happened, And When It Ended

Past Findings

In 1999, the then Special Investigating Unit head former Judge Willem Heath found that the bailout was unlawful, but recommended against pursuing the money, saying it would have repercussions on the financial sector.

Judge Dennis Davis, in 2000, after investigation also found that the bailout was illegal. The investigation was commissioned by former Reserve Bank governor Tito Mboweni.

ABSA Likely To Challenge Advocate Mkhwebane’s Findings

In response to the public protector’s findings, Absa said it might go to court to contest the findings.

The company said in a statement:

“Absa has received the public protector’s report on her investigation into the Reserve Bank’s assistance to Bankorp between 1985 and 1995. We are 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 Reserve Bank by October 1995. It is our firm position that there is no obligation to pay anything to the government.”

Absa’s Strengths

There are strong indications that Abas will almost certainly win in court against the Public Protector. This is because:

1. A part of the Public Protector’s Act stipulates that a complaint must be lodged at the office within two years of an alleged incident. But this particular case was lodged in 2011 – several years after the incident. So, Absa would probably tackle Advocate Busisiwe’s decision to probe an incident that happened even before the office of the Public Protector was created. Advocate Thuli Madonsela had started the investigation but could not finish it.

2. The bank alleged that the Public Protector did not give them a chance to properly respond to the case against them. This is obviously an advantage on Absa’s side.

3. Absa also claimed that Busisiwe did not release the documents she used to make her findings to them (in the same way that a person accused of a crime was barred from seeing witnesses testify against them). This is not legally right.

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Reactions

Meanwhile, the ANC Women’s League (ANCWL) has welcomed the findings. The league called on government departments and all State-owned entities doing business with ABSA to terminate their contracts with the bank with immediate effect.

They maintained that the government and its entities cannot continue to patronize the same ABSA who has failed to repay the loan it received from the South African Reserve Bank.

Likewise, Hoffman welcomed the findings of the Public Protector, saying they substantiated his complaint. “We have waited seven years for this. We complained that not following up on the CIEX report was a waste of public money,” he said.

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