Absa is seeking a high court review of the public protector’s report on a bailout the bank received during the apartheid years. Busisiwe Mkhwebane found that Absa is liable to pay back R1.125-billion, but Absa refutes this.

The bank accused Mkhwebane of making “numerous misrepresentations and factual inaccuracies” to back up her findings, according to its statement on Wednesday. The public protector released the report on Monday, in which she instructed the Special Investigating Unit (SIU) to reopen an investigation into the bailout to recover public funds that constituted an “illegal gift” to Absa by the Reserve Bank.

Mkhwebane has also faced criticism for instructing the portfolio committee on justice and correctional services to begin a process that “will result” in amendments to the Constitution on the role of the South African Reserve Bank.

Following legal advice Absa is challenging both of the public protector’s recommendations – the SIU investigation and the changes to the Constitution.

“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,” the bank said in its statement.

Absa has accused the public protector of submitting “clearly irrational and unreasonable legal conclusions” in her report.
There were previous investigations into the bailout to Absa, one of which was the Davis Panel of Experts. Absa says that in Mkhwebane report, she extensively uses the Davis panel, headed by Judge Dennis Davis, but her findings differ from the conclusions reach by the panel.

The Davis panel found that it was Sanlam pension beneficiaries and policyholders who benefited from the “lifeboat”, and that Absa had fulfilled its duties because it paid “fair value” for Bankorp – which it took ownership of – in 1995. Instead, the public protector has found Absa liable for R1.125-billion regardless of the money paid in 1995.

When the Mail & Guardian reported on preliminary report of the bailout in January this year, Absa responded saying it had found factual inaccuracies in the report where evidence was unsubstantiated.

Both Davis and Judge Willem Heath, who led a separate investigation into the matter, said they had been misrepresented in the preliminary report, which also found Absa to be liable. The Ciex investigation, which was also partly the basis of the Public Protector’s report, differed from what the two judges presented.

“The only way it [the Ciex report] could have made a difference would have been if it could have shown compellingly that it was Absa, rather than Sanlam, that had been enriched. But we now know that Ciex never dealt with that issue,” said Davis in January .

Absa’s announcement comes after the Reserve Bank announced on Tuesday that it would seek a court review of the final report. The Reserve Bank, like Absa, has accused the public protector of using “evidential factual inaccuracies” and is challenging her remedial action for constitutional amendments.

Absa has said that Mkhwebane’s recommendation of constitutional amendments pose a “serious risk to the financial system” and “cannot be allowed to stand”.

Both banks’ legal teams are preparing court papers to have the report reviewed and set aside.