Judgment on apartheid era bank bail-out goes against Protector Busisiwe Mkhwebane

Public Protector Busisiwe Mkhwebane’s Absa-Bankorp report has been set aside by the High Court in Pretoria.

In papers‚ the finance minister‚ the SA Reserve Bank and Absa asserted that Mkhwebane’s findings paid no regard to the evidence before her‚ including the findings of previous probes into the Absa-Bankorp lifeboat and submissions made by various parties on the matter.

The matter dates back to a 2010 complaint laid with the public protector's office by Paul Hoffman‚ the director of Accountability Now‚ over the government’s alleged failure to implement the "Ciex report".

The report was the work of British Intelligence officer Michael Oatley‚ who in 1997 agreed to help the government recover misappropriated apartheid-era public funds. This included a bail-out granted to Bankorp.

Absa later bought Bankorp and‚ Oatley alleged‚ benefited from the Reserve Bank assistance - a conclusion with which Mkhwebane agreed.

In a report published in June last year‚ she directed that the Special Investigating Unit approach the president to reopen an earlier probe into the matter in order to recover R1.125-billion "in misappropriated public funds unlawfully given to Absa".

Such a directive was neither permitted by the Public Protector Act nor the Special Investigating Units and Special Tribunals Act‚ said counsel for Absa.

Mkhwebane also found that‚ in failing to implement the findings of the Ciex report‚ the government had neglected its constitutional duty.

This relied on a "fundamental misunderstanding of the Ciex agreement"‚ said Tembeka Ngcukaitobi‚ counsel for Finance Minister Malusi Gigaba.

"It is factually inaccurate that the government did not act on the report. It referred the matter to the [Special Investigating Unit]‚" said Ngcukaitobi.

The head of the unit at the time‚ Judge Willem Heath‚ found that recovering the money from Absa would cause systemic risk to the banking system.

A second independent investigation by Judge Dennis Davis in 2000 found that the amount paid by Absa for Bankorp accounted for the Reserve Bank assistance and Absa was therefore not a beneficiary of the lifeboat.

- Staff reporter‚ with background from BusinessLive