After consultation with its legal team, Absa has decided to approach the High Court in order to have the report of the Public Protector that was released on Monday 19 June 2017 reviewed and set aside. This is due to the numerous misrepresentations and factual inaccuracies which are used as the basis for its findings, and what we submit are the report’s clearly irrational and unreasonable legal conclusions.
Absa respects constitutional institutions and has to date done everything possible to cooperate with the Office of the Public Protector during the course of this investigation. However the report leaves Absa with no choice but to seek recourse in the courts as provided for by the Constitution when an affected party disagrees with the findings of the Public Protector.
The office of the Public Protector appears to have either effectively ignored or misunderstood Absa’s detailed submissions, which were made to it on two occasions. A copy of our February 2017 submission has been released to the public.
We also note that the Public Protector’s remedial actions include a directive to Parliament to amend the Constitution in order to change the mandate of the South African Reserve Bank. We are advised that the Public Protector Act does not empower the Public Protector to direct that constitutional amendments be made. Her recommended amendments pose a very serious risk to the financial system and they cannot be allowed to stand.
It is noteworthy that the report’s findings and remedial actions in relation to Absa are mainly premised on the conclusions of the Davis Panel of Experts, which delivered a comprehensive report on the same matter in February 2002. The Public Protector also uses the statement of the Heath Special Investigating Unit as a further basis for her conclusions on Absa.
In the case of the Davis Panel, the Public Protector’s final report misrepresents or misconstrues its findings. While it concluded that the manner in which the assistance was provided to Bankorp was unlawful (ultra vires), the Davis Panel unequivocally found that Absa is not liable to pay because it paid fair value for Bankorp.
The Davis Panel Report reads as follows:
“The Reserve Bank’s assistance conferred benefits on Sanlam’s policy holders, its pension fund beneficiaries and on the minority shareholders of Bankorp. That is contrary to public perception published in the media, and contrary to the conclusions of the Heath Special Investigative Unit. Those perceptions and conclusions have incorrectly asserted that major benefits were received by the shareholders of Absa.”
It goes on to say:
“The Panel is of the view that Absa paid for the continued assistance of Bankorp by the Reserve Bank and could not be regarded as beneficiaries of Reserve Bank assistance package. Absa paid fair value for Bankorp. Due to the complex nature of the impact that the various packages might have had on the value of capital invested in Bankorp, it is difficult for the Panel to assess with accuracy, the extent of the benefits derived by Bankorp shareholders.
Evidence supports the conclusion that Sanlam, the major Bankorp shareholder was aware that it would have received no value, or less value, for its shareholding absent Reserve Bank assistance.”
While the Public Protector’s final report accepts large parts of the Davis Panel Report as a basis for its findings and remedial actions, the report fails to explain why the rest of the Davis Panel’s findings on Absa are not accepted. In this respect, the Public Protector’s report appears irrational. The Public Protector’s final report not only omits the rest of the Davis Panel’s finding, it also does not explain how it comes to the diametrically opposite conclusion that Absa’s shareholders unduly benefited, rather than Sanlam’s policy holders and pension fund beneficiaries – which is what the Davis Panel found.
It is also noteworthy that in the provisional report that was leaked in January 2017, the office of the Public Protector had relied on the alleged testimony of former SA Reserve Bank Governor Dr Chris Stals. In that report, it was claimed that Dr Stals had testified that the Bankorp/Absa loan was at an interest rate of 16% instead of 1%, and that he had produced a contract to support this. Dr Stals strongly refuted the claim in the media shortly thereafter.
The alleged testimony of Dr Stals and the document he was said to have produced are conspicuously absent from the final report. In the final report this basis is abandoned and instead it selectively relies on a report that in any case found that Absa is not liable.
Ahead of our submissions to the Public Protector, we requested access to documents in her possession that had a material impact on our position. That request was unjustifiably refused. The Public Protector’s report’s assertion that its findings are not in dispute, when Absa was never given insight into, let alone the opportunity to dispute what is supposedly contained in those documents, is therefore contested.
In any event the information upon which the report bases its findings is not new. It was at the disposal of the Public Protector’s office before the findings in the provisional report were made. It appears that this information was not regarded as relevant at the time.
The misconceptions and inaccuracies in the report are profound and damaging to Absa’s reputation. We have instructed our lawyers to immediately prepare an application to the High Court to have the report’s findings and its remedial actions (including the remedial action concerning the intervention of the Special Investigative Unit and the amendment of the Constitution) reviewed and set aside.
We firmly maintain our position – supported by uncontroverted evidence – that Absa met all its obligations to the SA Reserve Bank in full by October 1995.