Mkhwebane: Funds given to Bankorp belonged to people of SA

Mkhwebane says failure to recover the gift resulted in prejudice to the people of South African as public funds could have benefitted the broader society.

Public Protector Busisiwe Mkhwebane. Picture: Kgothatso Mogale/EWN

JOHANNESBURG - The Public Protector has found that the public was prejudiced by government’s failure to recover more than a billion rand unlawfully paid to Absa bank and its predecessor Bankorp.

Busisiwe Mkhwebane has ordered the reserve bank to co-operate with the special investigating unit to recover more than R1.1billion.

The details are contained the public CIEX report, which was released at a briefing in Pretoria on Monday.

Mkhwebane says the funds given to Bankorp belonged to the people of South Africa.

“Failure to recover the gift resulted in prejudice to the people of South African as public funds could have benefitted the broader society instead of a handful of shareholders of Bankorp and Absa.”

She says the conduct was contrary to the constitution.

“The conduct of the South African government and the South African Reserve Bank goes against the ethos read in the preamble of the Constitution and section 195 of the constitution respect of redressing social injustices and promoting efficiency.”

The Special Investigating Unit has been tasked with recovering the funds from Absa bank.

ABSA RESPONDS

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.

(Edited by Zinhle Nkosi)