Bank may write off R700 mln

2009-10-14 00:00

THE controversial Ithala Development Bank may have to surrender to the prospect that it may be unable to get repayment for loans totalling nearly R700 million that it gave out over a number of years.

Appearing before the provincial standing committee on public accounts (Scopa) yesterday, bank officials told committee members that R696 million for loans and advances may be irrecoverable.

Ithala Bank CEO Sipho Shabalala said there is a likelihood that some of these loans may be “impairments” and that some of the loans date back as far as 1988.

Impairments, said Shabalala, are provisions for loans imposed by the bank based on careful analysis of how likely is is that the clients will repay the loans.

The bank has came under fire from opposition parties since it emerged that it gave party-related loans to high-ranking politicians and their relatives and that it has written off huge amounts in irrecoverable loans.

The bank’s financial woes earned it a qualified audit in the 2008/2009 financial year. Listed as a contributory factor in the adverse audit that the bank received in March this year is R46,5 million for equipment, the records of which could not be located on the bank’s fixed asset register.

There are also 35 investigations being carried out on the bank. These include 103 alleged fraud cases, 41 of which have been completed; an alleged instance of money laundering at the bank’s Port Shepstone branch; and a further 23 alleged cases of fraudulent withdrawals and deposits in which he bank’s staff are implicated.



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