Absa says it doesn’t need to pay back the money

Absa has filed its court papers to review Public Protector Busisiwe Mkhwebane's recommendation that it pay back the money that the SA Reserve Bank gave to bail out its predecessor‚ Bankorp.

Additionally‚ it is asking the court to force Mkhwebane to show all the documents she used to make her decision against Absa after she refused to do so. The bank suggested it may make these public due to the overwhelming interest in the matter.

In a statement on its court action Absa said: "We look forward to this case being brought to court. The years of baseless accusations have been unfair and prejudicial to Absa. Because the business of the courts is conducted in the open‚ South Africans will get an opportunity to hear the facts and watch them being interrogated‚ in order for this matter to be put to rest."

In a media statement‚ Absa said it was challenging the Public Protector’s report on several grounds‚ namely: there is no debt owed by Absa; the process was procedurally flawed; the three year period to recover the so-called debt has prescribed as it is 21 years after the loan to Absa's predecessor.

It is also arguing she doesn’t have jurisdiction to investigate the matter as her office was not in existence when the loan was given by the government to its apartheid predecessor.

Bankorp received a bail-out from the SA Reserve Bank in 1995 to pay back debts of its bankrupt clients and keep the bank from collapse and the banking system stable. This‚ says Absa‚ she concedes was a "lifeboat" to a bank that kept it and the financial system from collapsing.

Mkhwebane has said Absa who later bought Bankorp benefited from the government loan and must return it with interest‚ but her findings contrast with the Davis Panel and Judge Heath statutory investigations into the matter. She relies on a report called the Ciex report - which was written without asking Absa for input.

"During its ‘investigation’‚ Ciex never afforded Absa an opportunity to make representations and to provide any relevant evidence‚ completely disregarding Absa’s basic right to a fair hearing."

Absa also says it didn’t benefit from the loan because it paid R1.23 billion to buy Bankorp‚ which was its value at the time.

"In reaching her finding that Absa benefited from the SARB financial support‚ the Public Protector appears to have impermissibly ignored facts and disregarded evidence provided to her.

"It also says that the Ciex investigation offered no reasoning whatsoever for its conclusion that Absa was liable for R3.2 billion. It was merely advice from Ciex that the government should coerce Absa into paying." 

It also quotes public protector's own report admitting she didn’t have jurisdiction over the matter as the law establishing her office and powers didn’t exist at the time of the loan.

In the final report‚ the Public Protector correctly states that: “It should be noted that the Public Protector has no jurisdiction to investigate matters that took place before the coming into effect of the Public Protector Act or the establishment of Public Protector Office in 1995. It would be in contravention of the Public Protector Act for this office to investigate matters that took place before the coming into effect of the Public Protector Act or the establishment of this office in October 1995.”

Absa says that Mkhwebane's recommendation is unlawful and insists the Special Investigating Unit ask the President that it reopen an investigation into the matter despite two previous ones.

It also tells the SIU what to do .

Absa states "the Public Protector has exceeded her own powers and usurped the powers of the SIU and the President".

"Furthermore‚ since the debt has prescribed‚ the remedial action requires the SIU and the President to embark upon a process which is entirely irrational in the circumstances.”

The SA Reserve Bank and Parliament and the Finance Minister in their legal challenges to the same report also argue she overstepped her mark when she recommended that parliament change the constitution.

She asked parliament to change the constitution and modify the Reserve Bank's powers from managing the currency to improving the economy.

They said she overstepped her powers in telling parliament what to do‚ which she this week admitted in court documents‚ saying she wouldn’t challenge the Reserve Bank's legal action.