Apartheid-era bailouts stalk Barclays Africa

R1.13BN ‘LOAN’ WAS NEVER REPAID

Barclays Africa Group is being investigated by the Public Protector for possible undue state support when it bought Bankorp during the apartheid era, and whether it should repay the money.

The Barclays unit said it’s “regrettable” a preliminary report by the ombudsman was leaked to the media, adding that the document contains “several factual and legal inaccuracies”. Absa did not benefit from undue assistance and would make further submissions to the Public Protector, it said on Friday.

Absa bought Bankorp from Sanlam in 1992 after the central bank helped keep it afloat. The purchase was made at fair value, Barclays Africa said.

Former Reserve Bank governor Tito Mboweni investigated the lifeboat in 2002 and found Absa’s shareholders didn’t necessarily derive undue benefit from the central bank’s intervention and restitution shouldn’t be pursued.

“Following an interview with senior executives of Absa in June 2016, the Public Protector accepted our written offer for her to inspect confidential documents in our possession that are very pertinent to the successful finalisation of the investigation,” Barclays Africa said. “The Public Protector accepted this offer in writing, but never actually took it up. This offer remains open.”

The central bank cannot comment until the report is finalised, Reserve Bank Governor Lesetja Kganyago said on Friday.

The central bank’s loans to Bankorp began when South Africa was under international sanctions and were made in fear that its failure might destabilise the financial system, which, in 1992, had just suffered three bank collapses.

That year Absa bought Bankorp for R1.23 billion, with the central bank having loaned R1.12 billion to Bankorp.

In 1999, the Heath Special Investigating Unit found it wasn’t within the central bank’s authority to have granted the loans and said a claim against Absa could have been pursued.

Former Public Protector Thuli Madonsela started an investigation in 2011 into whether some South African companies had looted the state during apartheid. She said in 2013 that the probe had turned into a “minefield”. The news of the graft ombudsman’s investigation into Absa is trending on Twitter in SA with the bank moving to assure clients that it has enough cash reserves.

Barclays Africa was down 0.4% at R170.25 on Friday.