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Andile Ntingi

THE David-and-Goliath tussle between Absa and the Eastern Cape’s black business community intensified this week, reducing any prospect of an amicable resolution before a special shareholders’ meeting that will decide the fate of Meeg Bank.

The Eastern Cape branches of the Black Management Forum (BMF) and the National African Federated Chamber of Commerce and Industry (Nafcoc) on Friday instructed their lawyers to apply for a court order to prevent the provincial government from selling its shares in Meeg Bank to Absa.

The two black business organisations have been at loggerheads with Absa over its planned total takeover of Meeg Bank, which until recently was the country’s only black-controlled lender.

“We want to reverse the irrevocable undertaking (to sell Meeg shares) that the government has with Absa. The government cannot sell a public asset without following proper procedures, and if it does we will take legal action. We want the bank to remain in black hands,” said Justice Zotwa, the president of Nafcoc in Eastern Cape.

Earlier this week Nafcoc and the BMF met with the province’s finance MEC, Billy Nel, and the provincial treasury boss, Newman Kusi, with a view to putting pressure on the government not to sell its shares.

The government is now reviewing its decision to sell, as it was not informed about an offer by micro-finance lender Teba Bank for Absa shares in Meeg Bank.

Nafcoc and the BMF have been asked by the provincial government to supply it with any correspondence relating to the Teba offer. This could give the Eastern Cape government ammunition to renege on its “irrevocable” agreement with Absa.

However, the final decision will be taken by the province’s cabinet, which is under pressure not to be seen as an obstacle to black people’s desire to own a bank.

Teba had just completed a due diligence assessment on Meeg Bank when it learnt in March that Absa, which owns 74% of the Eastern Cape-based bank, had decided to raise its stake to 100%.

A letter dated February 27 from Teba chief executive Mark Williams and addressed to Meeg Bank chairperson Wiseman Nkuhlu confirms that Teba was going ahead with its acquisition of Absa shares in the Eastern Cape lender.

In the letter Williams, who had caught wind of Absa’s about-turn on Meeg, warned Nkuhlu not to breach an exclusivity agreement, in which Meeg Bank undertook not to entertain offers from other bidders while Teba was conducting a due diligence exercise. Teba spent R1.8 million on the exercise.

“We wish to place it on record that your decision to accept Absa’s offer to acquire Meeg Bank’s shares was taken within the exclusivity period. We therefore reserve all our legal rights in this regard,” warned Williams in the letter.

The BMF and Nafcoc made it clear that they wanted Absa to go back to its original decision to sell its Meeg shares to Teba, while blocking government from allowing Absa to raise its shareholding to 100%. Teba indicated that it was prepared to put an offer on the table provided Absa is a “willing seller”.

Absa is seeking to buy the shares it does not own in the Eastern Cape bank from the government and 1 600 individual investors, most of whom are based in the former Transkei homeland.

The strong opposition by black organisations to the deal has fallen on deaf ears as Absa is going ahead with its takeover plans.

A special shareholders’ meeting has been scheduled for July 31 to vote on Absa’s offer to purchase 24% of Meeg Bank. The banking group will pay R35.7 million for the stake if Meeg shareholders agree to its price.

Former Meeg Bank founding investor Eric Molefe, who is suing Absa for R100 million, has also applied for an interdict to stop the vote from happening until his money has been paid back. Molefe has accused Absa of playing a role in fraud and mismanagement that led to his losing the money that he had invested in the bank.

“Eric is fighting a personal battle with Absa. Our battle is different.

“We are fighting for transformation and we don’t want the government to sell its shares to a white-controlled Absa,” said Zotwa.

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