Public Protector Busisiwe Mkhwebane has issued a proclamation that the South African government is allowed to recover R1.125 billion in “misappropriated public funds” from Absa bank.
The proclamation comes after an investigation into a report on apartheid-era looting by UK-based asset recovery agency, Ciex, was submitted to the Public Protector for investigation.
According to Mkhwebane, government and the South African Reserve Bank failed to implement the Ciex report, and ordered that the Special Investigation Unit re-open the case and recover the funds.
The Ciex report alleged that R24 billion was unlawfully given out to Bankorp (which would eventually become a part of Absa) from 1985 to 1992 by the South African Reserve Bank. It then provided Absa with a further R2.25 billion in bailouts from 1992 to 1995.
Ciex was paid 600,000 British pounds for services which were never used by government, the Public Protector said.
Mkhwebane said that two investigations into the matter established that the financial aid given to Bankorp/Absa was irregular, but the correct amount attributable was R1.125 billion.
A preliminary report on the Public Protector investigation was leaked earlier in the year.
At the time Absa responded to the report, saying that the Davis Panel of experts appointed by former South African Reserve Bank governor Tito Mboweni in 2000 found that Absa’s shareholders did not derive any undue benefit from the Sarb’s intervention, and as such no claim of restitution could be pursued against Absa.
Mkhwebane said that the Reserve Bank must cooperate with SIU in the recovery of the public funds.