CapeTalk/702's Stephen Grootes speaks to Judge Dennis Davis who in 2000 led a panel of experts on the investigations that that Bankcorp, Absa's predecessor, received a bailout during the apartheid era.
Recently, Public Protector Busisiwe Mkhwebane released her recommendation drawing on the same investigation saying that Absa should pay back over R1 billion that Bankcorp received.
On Wednesday, Absa released a statement that the findings of the Public Protector were flawed and that they will be approaching the courts to challenge the matter.
We came to a conclusion that the structure of the lifeboat was illegal and certainly not best central bank practice.— Judge Dennis Davis
What we found was this, when Absa came to acquire Bankcorp...they did an evaluation of Bankcorp, which was essentially a bank in serious trouble. The only asset as it were, was this interest component from the lifeboat and they paid an overvaluation for the acquisition of Bankcorp.— Judge Dennis Davis
A transaction which was unquestionably in breach of the law, it would've been Bankcorp shareholding which is Sanlam. The problem by then was that Sanlam had been neutralised so where was one going to recover the money from?— Judge Dennis Davis, Chair at Davis Tax Committee
There's no doubt that it shouldn't have happened...— Judge Dennis Davis, Chair at Davis Tax Committee
Davis acknowledged that the Public Protector was right in quoting him that the lifeboat arrangement was in breach of the South African law.
He says recovering the money from Bankcorp's shareholders who at the time had already sold their shares was going to be legally impossible.
So our advice unfortunately was that there was nothing that could be done about it.— Judge Dennis Davis, Chair at Davis Tax Committee
Davis makes it clear that he is unable to understand how Busisiwe Mkhwebane came to a different conclusion to the panel.
To hear more of this interview with Judge Dennis Davis, listen below:
This article first appeared on CapeTalk : Exclusive: Judge Dennis Davis on why Absa wasn't ordered to pay back the money