Shortly before 8pm on Wednesday December 21, four days before Christmas, an e-mail popped into the inbox of Barclays Africa’s lawyers. Attached was the "provisional report" from new public protector Busisiwe Mkhwebane, detailing how she believes Absa should be forced to repay R1.1bn plus interest to government for the 1985 bailout of the now-defunct Bankorp.
It was an astounding conclusion — not only because it was two decades late. It also contradicted other experts, including Judge Dennis Davis who, in 2002, concluded the bailout was "illegal" but that it would be "impractical" to recover any money.
Mkhwebane’s report seemed to be a rush job, too. For a start, the covering letter spoke of the attached "Eskom" report and said it was "for the attention of the minister". It was riddled with spelling and grammatical errors and, in its apparent haste to smear finance minister Pravin Gordhan, his name was randomly inserted into the report and he was referred to as "minister of justice" — a post he never held.
Far from being a beneficiary of the Bankorp rescue, Johann Rupert objected to the bailout
But first, who was Bankorp, you might ask? What was its sin for which Absa must now atone? The story dates back to the regime of PW Botha in the mid-1980s, when Bankorp was SA’s the third-largest bank, comprising household names like Trust Bank, Santam Bank and Senbank. But Bankorp was apparently run with all the prudence of an SABC remuneration committee. Its loans grew 39% in 1989 despite soaring interest rates, sanctions and a looming recession. As bad loans soared, it asked the Reserve Bank for help.
The bailout took place in three stages including, pertinently, a loan of R1bn at just 1% interest — money it then invested with government for a 16% return. Ultimately, Bankorp (controlled by Sanlam) made a 15% return on this loan — the windfall in question.
This rescue package kept Bankorp alive longer than it deserved, and the flailing bank was eventually bought by Absa for R1.1bn in 1992.
In 2002, Davis’s panel said that while it was justifiable to rescue banks, the way this was done in the Bankorp case was "seriously flawed", "illegal" and characterised by secrecy. But Davis felt it would be "impractical" to try to recover this money from Absa.
Now, Mkhwebane’s report reaches the opposite finding — that government should pursue Absa.
It would surely fail. After all, Davis found that Absa paid "fair value" for Bankorp. On the other hand, Sanlam, as Bankorp’s shareholder, did benefit from the Reserve Bank’s largesse. So if there’s any reparation due, it should come from Sanlam.
But the question is, why is this happening now? A cynic would say this has arisen because it fuels the Gupta-led narrative of "white monopoly capital". Again, businessman Johann Rupert’s name is trotted out as a supposed beneficiary of the Bankorp bailout.
That’s 100% wrong, says Rupert. "We have never been shareholders in Sanlam. We weren’t even friends with Sanlam, as my father [Anton] had a big run-in with Sanlam’s Fred du Plessis. In fact, I was the chairman of Rand Merchant Bank at the time, and I strenuously objected to the Bankorp bailout," he says.
In his objection sent to the Reserve Bank at the time, Rupert argued that while it was right to protect customers, it would be wrong for the Bank (and taxpayers) to save Bankorp’s shareholders. Protect the depositors, not the shareholders, he argued.
"We were doing business carefully and prudently, so why should the Reserve Bank use taxpayers’ money to bail out our opposition for messing up and doing business badly? It was unfair not only to the fiscus, but to other banks who weren’t being reckless," he says.
Mkhwebane conveniently manages to weave all the Guptas’ bogeymen into one neat package. So, the report accuses Trevor Manuel, Thabo Mbeki and Tito Mboweni of "unconstitutional behaviour" for ignoring a 1997 report prepared for government by shadowy intelligence operation Ciex. But you can understand why they ignored it. Ciex’s concern wasn’t about the SA taxpayer: rather it wanted to be paid "10% of whatever is recovered", so any official would be wise to take its recommendations with a pinch of salt.
The word on the street is that while this probe began under Thuli Madonsela, the report was substantially redrafted after she left. So whereas Mkhwebane’s version says government should tackle Absa, Madonsela’s report apparently said nothing of the sort.
The question is, why was it altered so radically and in such a rush that it had to be delivered before Christmas, and in such a state of embarrassing undress?
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