Ithala head suspended

2010-08-28 00:00

KWAZULU-NATAL Economic Development and Tourism MEC Mike Mabuyakhulu yesterday announced the suspension of Ithala Bank group chief executive Sipho Shabalala following reports linking him to a R200 million fraud and corruption investigation.

Mabuyakhulu made the announcement at a press conference yesterday, two days after Shabalala’s assets were confiscated by the Assets Forfeiture Unit. Authorities have confirmed his pending arrest in connection with a R200 million procurement fraud case in the KZN Health Department.

Other former Health Department officials, Dr Busisiwe Nyembezi (former HoD) and Mdu Ntshangase (former procurement officer), and the caretaker chief financial officer of the KZN Legislature, Sipho Buthelezi, were arrested on Wednesday.

Mabuyakhulu said, “While the Ithala board and government have no knowledge of the merits … of these allegations and are watching the developments of the proposed criminal investigations with interest, we are mindful of the seriousness of these allegations and the huge outcry these allegations have had in the public domain where Ithala operates.

“Although the allegations do not strictly fall within the domain of the employment relationship between Ithala and Shabalala, the Ithala board and the provincial government are extremely concerned at the effects the allegations might have on the reputation of the Ithala Group and its standing in the public domain.

“For these reasons the board of Ithala, in consultation with myself as the political head of the institution, has decided to suspend Mr Shabalala on a precautionary basis pending the developments of the proposed criminal investigations,” Mabuyakhulu said.

Shabalala later released a statement saying he accepts the board’s decision to suspend him if it is to preserve the integrity and reputation of Ithala.

The board has set up a task team to monitor the developments relating to the criminal investigations, which will advise the board in three months’ time.

Acting board chairperson advocate Nomcebo Zondi will be in charge until a formal acting group chief executive is named next Wednesday.

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