Malusi Gigaba. Picture: REUTERS
Malusi Gigaba. Picture: REUTERS

Public Protector Busisiwe Mkhwebane’s contention that Absa had not paid fair value for Bankorp was, by her own admission, based on an opinion sought after her report into the matter had been published.

This meant that her directive that about R1bn should be recovered from Absa was without any factual foundation at the time she made it, the big four bank’s counsel, Advocate Gilbert Marcus, argued in the High Court in Pretoria on Thursday.

"There is no admissible evidence that Absa was, in the words of the public protector, the ‘recipient of an illegal gift’, and that means the remedial action was simply without any factual foundation at all," he said.

In a June report into the matter, Mkhwebane directed the Special Investigating Unit to move to recover R1.125bn from Absa for an apartheid-era bailout given to Bankorp, which was later bought by Absa.

Absa, the Reserve Bank and Minister of Finance Malusi Gigaba are seeking to have Mkhwebane’s findings reviewed and set aside. The matter was heard before three judges this week and judgment was reserved.

In her report, Mkhwebane did not dispute that Absa had paid fair value for Bankorp, said Marcus. It was disputed for the first time only in her answering affidavit, based on the opinion of Wits economist Tshepo Mokoka, who was consulted only after the report had been finalised. The report’s findings could not be based on reasons not given in the report, Marcus said.

"In Absa’s initial submissions to the public protector, the point was pertinently made that fair value was paid," Marcus said. Evidence from the bank had also supported this.

Absa had adopted the findings of the panel chaired by Judge Dennis Davis, who found during a 2000 investigation that the price Absa paid for Bankorp accounted for the Reserve Bank assistance and that Absa had therefore received no financial benefit. The lifeboat was used to offset Bankorp’s bad debts.

"If the public protector wants to dispute those findings, she must then advance a proper and rational basis on which to do so," Marcus said

Mkhwebane had referred to the Davis panel in her report, but only insofar as the panel found the structure of the loan granted to Bankorp was flawed and breached the Reserve Bank’s statutory powers.

She ignored Davis’s conclusion, saying in papers that the "summary as selected by me was for the purpose of my findings". "Where I differ with the conclusions of any person it is within my judgment to omit reciting those conclusions with which I differ." She further admitted she had not interrogated how the proceeds of the Bankorp lifeboat were utilised.

Mkhwebane had violated the government’s right to procedural fairness, by withholding the Ciex reports on which she relied, said Gigaba’s counsel, Advocate Tembeka Ngcukaitobi. In fact, none of these reports, compiled by British intelligence officer Michael Oatley, were based on independent investigations, he said.

On receiving the Ciex reports, the government commissioned Judge Willem Heath, then head of the SIU, to conduct an investigation into the lifeboat.

That investigation, concluded in 1998, found that any attempt at recovery would harm the economy. "What we have is a public protector who did not apply her mind to the question of reopening an investigation closed in 1998," said Ngcukaitobi. "If that is right, the investigation by the public protector was a momentous waste of taxpayers’ money."

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