Barclays Africa challenges findings on apartheid-era bailout

The constitutionally mandated anti-corruption agency said Absa must repay R1.1 billion ($83 million) to the state.

The Barclays bank headquarters is pictured in Canary Wharf in east London, on 3 July, 2012. Picture: AFP

JOHANNESBURG – Barclays Africa launched a court challenge on Thursday to the anti-graft watchdog’s findings that the lender’s South African unit unduly benefited from an apartheid-era bailout.

Public Protector Busisiwe Mkhebane said last month her investigation had found the apartheid government and central bank breached the constitution by supplying a bank later acquired by Absa, the retail banking unit of Barclays Africa, with a series of bailouts from 1986 to 1995.

The constitutionally mandated anti-corruption agency said Absa must repay R1.1 billion ($83 million) to the state.

“In reaching her finding that Absa benefited from the South African Reserve Bank financial support, the Public Protector appears to have impermissibly ignored facts and disregarded evidence provided to her,” Absa said.

The bank said in court filings it had not benefited from the central bank bailout of Bankorp because the price it paid for it took into account the central bank’s financial assistance.

“The Public Protector does not justify her conclusion for finding that Absa is liable to repay R1.125 billion in her report or in her subsequent explanations of her report,” Absa said in court filings

It added the real beneficiaries of the bailout were Bankorp shareholders, the majority of whom were life insurance company Sanlam’s policy holders.

Absa also said the Public Protector was unfair in how she came to her findings because she “refused to provide Absa with documents upon which she relied to make her findings.” The bank also argued she had no jurisdiction over events that took place before her office was established in October 1995.

The central bank is also challenging the protector’s findings in court, as well as her proposal to have the mandate of the Reserve Bank changed to focus on economic growth instead of price and currency stability.

That proposal, also opposed in court by finance minister Malusi Gigaba, set off a political row and sparked a sell-off in the rand currency and government bonds.