Sunday, September 19, 2021

    Barclays Africa Faces Apartheid-Era Investigation on Bankorp

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    Naija247news Editorial Team
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.
    • Bank says it bought Bankorp at fair value from Sanlam in 1992
    • Public Protector’s report has factual errors, lender says

    Renee Bonorchis

    Barclays Africa Group Ltd. is being investigated by South Africa’s graft ombudsman over whether it received undue state support when it bought Bankorp during the apartheid era, and whether it should repay the money.

    The Barclays unit said it’s “regrettable” that a preliminary report by the ombudsman was leaked to the media, adding that the document contains “several factual and legal inaccuracies.” The Johannesburg-based lender, then known as Absa, did not benefit from undue assistance from the central bank and will make further submissions to the Public Protector, it said in a statement Friday.

    Absa bought Bankorp from its shareholder Sanlam Ltd. in 1992 after the central bank helped keep it afloat. The purchase was made at fair value, Barclays Africa said. The most recent findings on the matter came from a panel appointed by former South African Reserve Bank Governor Tito Mboweni which found in 2002 that Absa’s shareholders didn’t necessarily derive undue benefit from the central bank’s intervention and said restitution shouldn’t be pursued.

    “Following an interview with senior executives of Absa in June 2016, the Public Protector accepted our written offer for her to inspect confidential documents in our possession that are very pertinent to the successful finalization of the investigation,” Barclays Africa said. “The Public Protector accepted this offer in writing, but never actually took it up. This offer remains open.”

    The central bank cannot comment until the report is finalized, Reserve Bank Governor Lesetja Kganyago told Johannesburg-based Radio 702 on Friday.
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    The central bank’s loans to Bankorp began when the ruling African National Congress was still banned, former president Nelson Mandela was in jail, and South Africa was under international sanctions. The Reserve Bank supported Bankorp out of concern that its failure might destabilize the financial system, which, in 1992, had just suffered three bank collapses. Absa agreed that year to buy Bankorp for 1.23 billion rand ($90.9 million), with the central bank having loaned 1.12 billion rand to Bankorp in total.

    In 1999, the Heath Special Investigating Unit, which was set up by Mandela three years earlier, found it wasn’t within the central bank’s authority to have granted the loans to Bankorp and said a claim against Absa could have been pursued. The unit didn’t opt for legal proceedings because it was concerned that pursuing a claim would damage confidence in the nation’s banks.
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    Former Public Protector Thuli Madonsela, whose contract came to an end in October last year, started an investigation in 2011 into whether some South African companies had looted the state during apartheid. Recommendations from the graft ombudsman are enforceable. Madonsela told Johannesburg-based broadcaster eNCA in 2013 that the probe had turned into a “minefield.”

    The news of the graft ombudsman’s renewed investigation into Absa is trending on Twitter in South Africa with the bank moving to assure clients that it has enough cash reserves and will continue to service all its customers.

    Barclays Africa dropped as much as 2.1 percent and was down 0.4 percent at 170.25 rand as of 2:29 p.m. in Johannesburg, making it the sole decliner among South Africa’s four biggest banks.

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