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An article by Hilary Joffe suggests not only a misunderstanding of the importance of a tightly regulated relationship between the SA Reserve Bank and SA’s independent financial institutions, but a complete misreading of my reasons for bringing this issue into the public domain in the first place (“Alarm bells ring over Sipho Pityana’s action against Absa and regulator”, October 26).
In essence, Joffe suggests there’s nothing wrong with unlawful informal processes between the regulator and financial institutions, and that somehow the latter institutions — and, presumably, their shareholders, investors and customers — should just sit back and trust the process.
But it is precisely this “cozy” relationship — and the fact that we all deserve to be protected from undue interference — that has triggered my application to the North Gauteng High Court for a declaratory order against the Reserve Bank.
The fact that the Bank, through its Prudential Authority (PA), ran an unlawful informal process over my nomination as chair of Absa has severely prejudiced me. It is not only irregular — it is illegal in terms of section 60 of the Banks Act, and should not be left unchallenged regardless of Joffe’s faith in the system.
It is akin to two friends “meeting at a braai and deciding who should be in charge of a bank”, as one journalist put it in an interview with me this week. And, as the journalist pointed out, “if one of those friends has a grudge against you, well that’s that”.
The two “friends” in this case are my successor at AngloGold Ashanti, Maria Ramos, and the head of the Prudential Authority, Kuben Naidoo, who have long-standing personal, political and professional relationships. Through her proximity to Naidoo, Ramos appears to have been formally proposed by Absa.
We must not underestimate the impact of this undermining of the law and process. The PA’s “objection” means it has concluded that I am not a fit and proper person or that my appointment would not be in the public interest. Such a conclusion can only be harmful to anybody’s reputation. Given its import, such a decision should and could only be reached after a due process that is fair, transparent, rational and credible — which is what the law provides for.
It is important to note that I was never given an opportunity to discuss, test or respond to Ramos’ claims against me. The prejudice and bias shown here is beyond doubt as the PA, as I state in my affidavit, “had no authority to engage with Absa other than pursuant to its express powers under the Banks Act. Instead, it followed a course which rendered the formal process redundant.”
In essence, my argument before the court is as follows:
As public institutions the Reserve Bank and the Prudential Authority must be required to act in an accountable and transparent manner. After all, the fact that a private citizen such as Ramos can exert such a high degree of influence over the banking regulator on the choice of the bank’s next chair is highly irregular — and deeply concerning. It is a slippery slope, and it needs to be confronted head-on.
There are important precedents at stake here. As a society we need to stand firm on these important issues of principle rather than argue that there are “special cases” or “special people” — and when processes and laws are abused, they need to be exposed and stopped. For the sake of all of us.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.