Johannesburg - Finance Minister Pravin Gordhan has labelled a court application by Black Land First (BLF) regarding the controversial CIEX report as a "political ploy", according to a Business Day report.
The CIEX Report, which was put together in the late 1990s, outlined how the new South African government could recoup monies that were lost because of alleged apartheid era looting or illicit activities.
The 52-page report was drawn up by former British operative and founder of CIEX, Michael Oatlely. CIEX is based in the UK and specialises in recoveries.
The report spelled out how Absa should repay a bailout for Bankorp, a bank that received a so-called R1.5bn lifeboat from the South African Reserve Bank (Sarb) in the 1980s and 1990s.
The administration under former president Thabo Mbeki decided not to act on the CIEX report.
However, it has come back into prominence amid a leaked report by the public protector, which reportedly says Absa should pay back R2.25bn to the fiscus in interest not previously paid.
BLF leader Andile Mngxitama filed a notice of motion with the high court in October last year in which he called on Gordhan to comply with recommendations in the controversial CIEX report.
Gordhan last week filed responding papers to the BLF’s motion in which he asked that the application be dismissed, according to Business Day.
Gordhan said the report risked failing to abide by the constitution and described the CIEX report as a "26-year-old unsolicited document prepared by retired M16 spies".
Gordhan also said that BLF's application is a "patent political ploy" and "unprecedented in its political intrigue".
He added that BLF’s application is an abuse of court processes.
Questions over report
Investigations into Bankorp’s controversial lifeboat happened twice in the last 20 years.
The Heath Special Investigating Unit, headed by Judge Willem Heath, was instructed by government in 1999 to investigate the Bankorp-Absa deal.
The report itself is unavailable and has never been made public, but its principal findings were made public in November 1999.
It found that despite Absa and Sanlam - the principle shareholder in Bankorp prior to the Absa buyout - being potentially held liable, any possible court challenge could pose risk to the South African banking sector.
Among the reasons for this is that the principal beneficiaries were not Absa shareholders, but Sanlam policyholders, according to Huffington Post’s deputy editor Pieter du Toit.
The Judge Dennis Davis panel investigation found in 2000-2002 that even though assistance to Bankorp was justified in order to protect the banking system, the manner in which it was done was flawed.
“The panel found the scope of the assistance was wrong and the 'loan' was in actual fact a donation or grant and that the principal beneficiaries were not Absa's shareholders, but Sanlam policyholders, who had a stake in Bankorp. The Sarb essentially exceeded its mandate and acted illegally,” wrote Huffington Post’s du Toit wrote earlier this year.
In a telephonic interview with Fin24 earlier this year, former Reserve Bank governor Dr Chris Stals explained the Reserve Bank’s reasoning for extending the controversial R1.5bn bailout to Bankorp in 1985.
He served as Sarb governor between 1989 and 1999 and was director general of the Department of Finance between 1985 and 1989.
“We protected the South African financial system against a major collapse,” he said.
At that stage, the closure of Bankorp risked resulting in “epic” problems for the whole of South Africa, Stals said.
Bankorp was the third largest bank in the country, with assets worth R32bn and over 90 000 clients.
The bank had branches in Hong Kong, London and New York, said Stals. However, it had trouble with bad debt and non-conforming loans and could no longer comply with the minimum capital requirements of the Banks Act.
He explained that the Reserve Bank has a commitment to assist a banking institution in that situation to maintain a “relatively stable” financial system. At the time South Africa was experiencing sanctions from the rest of the world and the withdrawal of capital.
Stals added that Sarb's actions ensured that South Africa has a strong banking system today.
“It all worked out,” he said.