The postmortem of damaging business practices at failed lender African Bank has laid blame for reckless and negligent lending activity at the feet of its leadership, but nobody will face any punishment. Finally made public more than a year after it was presented in draft form, the report, led by Advocate John Myburgh SC, detailing the inquiry into the demise of African Bank, reads like a modern-day version of the fable of the emperor's new clothes.In assembling a board of yes-men around him and running a "mono-line" business of unsecured lending in a reckless and negligent fashion, former CEO Leon Kirkinis bullied and cajoled fellow directors and major shareholders into corporate action that was overly risky, Myburgh found.Kirkinis, for example, drove the acquisition of struggling furniture retailer Ellerines in 2007 without board involvement. He somehow maintained the illusion of a sound strategy even after a 2013 rights issue where African Bank raised R5.5-billion to stay afloat.story_article_left1"Mr Kirkinis believed that he was right; everyone else was wrong," the report said.In reality, a series of strategic missteps were piling up. Myburgh's report disputed the claims that synergies existed between African Bank and Ellerines, which was placed in business rescue after Kirkinis resigned in August 2014.Ellerines' book had been full of nonperforming loans, and Myburgh found African Bank's decision to lend Ellerines R1.4-billion, with no prospects of being repaid, to be reckless.After making a profit of about R1-billion in 2012, by May 2013 Abil had made a loss of R47-million. At its peak, Abil had a loan book of R60-billion across three million customers.The Reserve Bank had begun engaging with Abil's leadership in 2012, citing concerns over liquidity, its impairment provisioning policy, aggressive and rapid growth in credit extension, and the need for a strategic rethink of its business model.Registrar of banks Rene van Wyk said there had been no way to institute more checks and balances before African Bank had run into trouble since "the objective of the office of the Registrar of Banks as a regulatory and supervisory authority can never be to avoid the failure of banking institutions".Warnings from the regulator went unheeded. The Myburgh report said that if Abil had not raised the emergency R5.5-billion, African Bank would have folded a year earlier.By May 2014, Abil announced a headline loss of more than R3-billion, and on August 6 2014 it was announced that Kirkinis had resigned and that the bank would make a loss of R4.6-billion, along with a basic loss from Ellerines of at least R2.9-billion. The group had lost more than R7.6-billion and Abil said it needed a capital injection of at least R8.5-billion to stay afloat.Institutional shareholders that suffered losses included Coronation Fund Managers, Stanlib, Allan Gray and the Public Investment Corporation.Coronation sold down its stake from 22% to 9% in the two days following Kirkinis's resignation before the bank was placed under curatorship and the share was suspended at 31c later the same week. Coronation declined to comment. Allan Gray and Stanlib said they needed to study the report.story_article_right2Lwazi Bam, CEO of African Bank's auditors Deloitte Africa, welcomed the report's exoneration of the auditing company.But Bernard Agulhas, CEO of the Independent Regulatory Board for Auditors, said the board would investigate the conduct of African Bank's auditors, acknowledging that Myburgh's report was light on detail on the role of the auditors.Myburgh's report described Kirkinis as riddled with "hubris", and although not all board members were as guilty, all were complicit in not standing up to dicey decisions.Hlumisa and Eyomhla ba, Abil's BEE investors, say they lost around R2-billion. By contrast, board members such as the late Tami Sokutu, who was chief risk officer without any formal training or suitable experience, made R89-million in share options. Kirkinis and his family benefited from R286-million in dividends.The draft report described Kirkinis as "unrepentant and unapologetic".Responding to the draft report, Kirkinis said the process was unfair and an aggressive ambush. It entailed searching computers and laptops, obtaining 51 affidavits and interviewing 26 Abil and associated representatives. He claimed the interviews forced staff to try to remember events from almost a decade before, and had not given him and others time to review the contents of the report.He also queried the use of the term "questionable management practices" in Myburgh's inquiry mandate from Van Wyk.Myburgh conceded that he could find no intent in Kirkinis's or the board's actions to defraud depositors, creditors or shareholders.Kirkinis could not be reached for comment.full_story_image_hleft1sub_head_start Rooi-Els pad a white elephant sub_head_endThe Rooi-Els home built by Kirkinis has been on sale for nearly two years.Mirroring strategic missteps blamed for the demise of the bank, Kirkinis has been unable to shift the property in the village that sits at the opposite side of False Bay to Cape Point.Factors weighing against a quick sale include Rooi-Els's location - removed from the Cape Peninsula and not on the prime Atlantic seaboard strip, where properties are wind-free during the prevailing summer southeaster - as well as its price tag of R70-million.The "smart" house, full of modern gadgetry, features four en-suite bedrooms and three other bathrooms, a six-car garage, gym, steam room and swimming pool, with 450m² of interior space on an erf of 1.46ha.Ranked alongside other Rooi-Els property on sale through various agencies, the Kirkinis house is more than R60-million more expensive than the next-priciest local property, at R9.5-million.peacockb@sundaytimes.co.za..