EDITORIAL: Lessons from a retired lifeboat
It is clear the politics around the leaked report on Bankorp are simply poisonous
Not long ago, African Bank released its maiden set of results for 2016, surprising the market by making a comfortable profit instead of the expected loss.
The bank, created from the "good bank" that was salvaged when the old Abil failed in 2014, is the result of a process in line with best practice for bank rescue globally.
The process was transparent. There was careful attention given to who should bear the costs of a bail-in and who should suffer the losses resulting from the bank’s failure. Depositors were protected; so were SA’s financial system and its taxpayers. It could hardly have been more of a contrast to the "lifeboat" — or rather the series of three lifeboats — secretly granted to the ailing Bankorp in the late 1980s and subsequently extended when Absa bought Bankorp in the early 1990s.
If there is a silver lining to that dodgy old piece of apartheid-era banking history, it is that SA’s management of bank failures and potential banking crises since then has been exemplary. SA did experience a banking crisis in the early 2000s, but the threat to financial stability was well contained and we have avoided bank failures, other than Abil, since then. That makes SA one of very few countries to be free of financial crises in recent years.
Making sure that SA avoided a repeat of the Bankorp debacle was one of the objectives of the Davis committee that in 2001 probed allegations of wrongdoing at Bankorp. Its findings helped to entrench best practice.
Yet the public protector appears, in the leaked provisional, preliminary report on Bankorp, to have ignored the practical conclusions of the Davis report. Everyone agreed long ago that the government and the Reserve Bank were wrong in the way they granted assistance to Bankorp between 1985 and 1992. Grants were made to look like loans; the usual safeguards in bank rescues were not applied; the conflicts of interest were not managed and the process was utterly nontransparent.
The question, however, was what to do about it and the Davis committee found this was rather complicated. Not only was it not clear what the benefit was, in the end, but it was not clear either who benefited. Davis established that it was, in fact, Bankorp’s shareholders, led by Sanlam. But Sanlam was still a mutual entity at that time and the beneficiaries, therefore, were Sanlam policyholders. Getting them to pay back the money could be a problem.
Disregarding all this, the public protector reportedly recommended in the leaked report that Absa should pay back R2.25bn.
We don’t know yet what the findings will be once the public protector has actually heard the views of Absa and others who were the subject of the report and has read the documentation that Absa had long ago offered to make available to the public protector’s office.
What is increasingly clear, though, is that the politics around the leaked report are simply poisonous.
Although the Davis panel found that recovery of the money from the actual beneficiaries would be extremely difficult, this fact has been swept aside in a torrent of emotion and a theory of grand conspiracy involving the ANC’s leaders at the time and Afrikaner capital.
This theory fits very neatly with the narrative about "white monopoly capital" being spun by the Guptas’ spin doctors in an effort to counter allegations of state capture.
It is certainly true that Bankorp got free money from the Reserve Bank, very likely as a result of the influence of Afrikaner business and the Afrikaner Broederbond. But what is not true at all is that a democratic government is engaged in a gigantic cover-up, as the public protector report implies.