ANC tasks transformation sub-committee to rescue embattled Ithala Bank

The African National Congress (ANC) has tasked its economic transformation sub-committee with rescuing the embattled Ithala Bank.

The South African Reserve Bank’s (SARB) Prudential Authority (PA) last week applied to the Pietermaritzburg High Court for the provisional liquidation of Ithala, the development finance agency wholly owned by the KwaZulu-Natal (KZN) province.

“Insolvent’

The PA said the Repayment Administrator it appointed in December last year had established that Ithala was “technically and legally insolvent”.

Moreover, it failed to provide sufficient capital commitments or secure a legally binding renewal of the guarantee over its deposits from its shareholder, the KZN government.

Affecting communities

However, the ANC’s economic transformation sub-committee, which includes the finance minister and other national executive members, has been tasked with saving the bank.

Speaking during a media briefing on the outcomes of the ANC’s NEC meeting, secretary-general Fikile Mbalula said the party is concerned over the challenges facing Ithala Bank.

“It is a critical institution enabling access to banking services for rural communities, stokvels, churches, and small businesses in KwaZulu-Natal.

“The recent application by the South African Reserve Bank’s Prudential Authority to liquidate Ithala SOC Limited due to insolvency threatens over 400 jobs and disrupts financial services for marginalized communities.”

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Rescue plan

Mbalula said the party reaffirms its commitment to financial inclusion and economic justice as articulated in its 2024 Election Manifesto.

“The NEC tasked the Economic Transformation Subcommittee with devising strategies to safeguard Ithala Bank, protect workers, and ensure service continuity.

“The ANC further acknowledged the need for a transformative regulatory regime that accounts for historical economic marginalization, calling for accelerated implementation of policies outlined in the 2017 and 2022 National Policy Conferences to diversify the banking sector and empower public financial institutions,” Mbalula said.

VBS

The ANC also called on the government to help “expedite the resolution of the VBS matter so that the institution is revitalised and continues to benefit our people.”

When VBS imploded in 2018, over R2 billion was syphoned from the bank, devastating municipalities, pensioners and other investors who lost their savings.

A damning report identified more than 50 people who were unduly paid loans and kickbacks between 2015 and 2018. The bank was placed under liquidation in 2018, with its banking licence suspended.

Thembi Simelane

One of those implicated in the VBS saga was former Justice Minister Thembi Simelane who was removed from her post in a cabinet reshuffle by President Cyril Ramaphosa last year.

Simelane allegedly took the R500 000 loan from a company that brokered unlawful investments of R349 million into VBS Mutual Bank by the Polokwane Municipality while she was mayor of the city in 2016.

Simelane allegedly used the “commercial loan” of R575,600 from Gundo Wealth Solutions, owned by Ralliom Razwinane, to purchase a coffee shop in Sandton.

Razwinane and Gundo also brokered investments on behalf of VBS Mutual Bank and the Polokwane Municipality invested R349 million in the bank,

When VBS imploded in March 2018, forensic investigations found it had rewarded Razwinane with kickbacks totalling R24.2 million for being a commissioning agent for various municipalities and state entities.

Pay back the money

In August last year, Mbalula said the ANC would pay back any funds it received if it is found to have benefited from the collapsed VBS Mutual Bank.

“If the ANC got money from VBS that money must be returned. This includes claims that there was money given to Zweli Mkhize. He has given us a report on that matter,” Mbalula said.

Mkhize and two other top Limpopo ANC leaders have been implicated in an affidavit by former VBS Bank chairperson-turned-state-witness Tshifhiwa Matodzi.

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