Absa replies on report findings

Submissions made to counter public protector’s ‘inaccuracies’ regarding apartheid-era loan

Absa Bank has made submissions to public protector Busisiwe Mkhwebane‚ hoping to counter several adverse findings against the bank which are contained in her provisional report on Absa’s role in the purchase of Bankorp.

In January‚ a leaked provisional report from the public protector’s office recommended that Absa pay R2.25-billion to the fiscus for an unlawful apartheid-era bank bailout.

It recommended that the national Treasury‚ together with the South African Reserve Bank‚ institute legal action against Absa to recover 16% interest accumulated over a period of five years, amounting to R1.15-billion, plus interest.

The interim report‚ titled “Alleged failure by government to recover funds borrowed [lent] to Absa”‚ also proposed that President Jacob Zuma consider appointing a commission of inquiry to investigate alleged apartheid-era corruption.

Absa promised last month‚ at the time of the release of the leaked report‚ that it would make further submissions within the deadline of yesterday, to correct inaccuracies.

Barclays Africa spokesman Songezo Zibi confirmed yesterday that Absa had made submissions to the public protector on Monday. He would not comment on them. However‚ it is understood Absa’s submissions state that there was a misunderstanding on the part of the public protector of the contracts that were signed between Absa and the Reserve Bank after Absa had purchased Bankorp.

In the provisional report‚ the public protector said it was her considered view that the government and the SARB should have taken a decision on whether to recover the 16% interest accumulated over the period of five years, plus interest.

It is understood Absa’s submissions state the Reserve Bank put in place an assistance programme to Bankorp between 1990 and 1992‚ whereby a capital loan of R1.5-billion was provided to Bankorp.

That loan was used mainly to purchase government bonds‚ and the yield on those bonds would be used only to set off specified bad debts owed by customers to Bankorp.

The R400-million remained deposited with the Reserve Bank as security for the loan.

The interest on the capital amount was 1% per annum‚ and not 16% as stated in the public protector’s provisional report.

However, the yield on the government bond was 16% per annum.

When Absa bought Bankorp in 1992‚ the agreement was Absa would receive the yield on the bonds.

Absa paid off the loan amount on October 13 1995. – TMG Digital

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