IFAISA: Absa should pay back the over R1 billion bailout
The NGO says the bailout was illegal and there was evidence of maladministration by the new South African government.
JOHANNESBURG - The Institute for Accountability in Southern Africa (IFAISA) says Absa should pay back the over R1 billion bailout as ordered by the Public Protector's office.
The NGO's Director Paul Hoffman says the bailout was illegal and there was evidence of maladministration by the new South African government in its failure to follow up on misappropriated money.
Public Protector Busisiwe Mkhwebane has ordered the Special Investigating Unit to recover the money paid to Absa as a bailout during the apartheid era.
Mkwebane has found that the bank and its predecessor Bankorp unduly benefitted from a bailout from the Reserve Bank.
Hoffman says the political wheels have turned since the Nelson Mandela administration when the report was commissioned.
“If you are going to spend 600,000-pound sterling of South African taxpayers’ money for the purpose of finding out what can be done to recover misappropriated monies from the old days, then you can’t simply pull the plug because you don’t feel like carrying on. You have to give a rational basis for doing it and that is the rule.”
While Absa bank says it is still waiting to study the Public Protector’s full report, it doesn’t believe it owes the central bank any money.
It says the Reserve Bank helped Bankorp from 1985 until 1992 when Absa bought it while the assistance agreement remained in place until 1995 with Absa as the new beneficiary.
The bank says the customer debt write-offs that resulted from the Reserve Bank’s intervention were taken into account in determining the price Absa should pay for Bankorp. The price was R1.23 billion and was paid directly to Bankorp shareholders which is why Absa should not be expected to pay again.
Absa insists that the money did not go to Absa shareholders, it instead was used to write off the debts of Bankorp customers.
The bank says after reading the Public Protector's full report it will consider its options which may include a judicial review.
Additional reporting by Barry Bateman.
(Edited by Winnie Theletsane)