18 Feb 2018
A South African court has ruled that Absa, a subsidiary of Barclays Africa, will not need to repay loans taken from the apartheid government in the eighties and nineties.
South Africa’s anti-corruption watchdog, the Public Protector, had argued that the then government illegally issued bailouts to Bankorp, which was later acquired by Absa.
Public Protector head Busisiwe Mkhwebane sought a repayment of around one billion rand ($83 million).
In a 2017-18 report, the Public Protector stated that two investigations established that the financial aid given to Bankcorp/Absa was illegal, and that the then South African government had failed to promote ‘efficient and effective public administration.’
“The amount given to Bankcorp/Absa belonged to the people of South Africa. Failure to recover the ‘gift’ resulted in prejudice against South Africans as the funds could have benefited the broader society instead of a handful of Bankcorp/Absa shareholders,” the report stated.
On Friday, however, the court ruled in Absa’s favour.
“It confirms our position and submissions to the Court that Absa does not owe any money to the government because it paid fair value for Bankorp,” Absa said in a statement on Friday.
The Court also found that “the remedial actions of the Public Protector “were a product of a procedurally unfair process and are unlawful,” the bank said.
The Public Protctor’s spokesman issued a statement saying: “The Public Protector, Advocate Busisiwe Mkhwebane has noted with shock the judgement issued by the Gauteng North High Court today and will study it and decide upon appropriate action.”
When the case was publicised, Absa issued a statement saying it had performed due diligence before it acquired Bankcorp, which it bought seven years after it started receiving government assistance in 1985.
The bank said it had acquired Bankorp in April 1992 “at fair value” and all the obligations pertaining to the SA Reserve Bank’s assistance “were discharged in full by October 1995.”
“It is regrettable that the Public Protector’s Report has been leaked before further submissions and finalization because in its current form it perpetuates an incorrect view that Absa Bank Ltd was the beneficiary of undue SA Reserve Bank assistance,” Absa said.
– Irene Madongo
This article was updated on 19 February 2018 to include a byline and comment from the Public Protector’s spokesman.
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