Ramaphosa authorises SIU to investigate Ithala and its employees

A week after the KwaZulu-Natal government announced it had approached President Cyril Ramaphosa in a desperate attempt to save the Ithala Development Finance Corporation from liquidation, the Special Investigating Unit (SIU) will now investigate the bank’s affairs.

Ramaphosa signed new proclamations on Monday authorising the SIU to investigate allegations of maladministration and corruption at Ithala, Greater Kokstad Local Municipality, Llepele-Nkumpi Local Municipality and Greater North Transport.

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The SIU will investigate serious maladministration concerning Ithala’s affairs. It will focus on tendering for the supply, implementation, and maintenance of an integrated banking solution.

“The probe will determine if contract payments adhered to national treasury guidelines were irregular, wasteful, or led to financial losses for the department or state.

“The SIU will also investigate any unlawful conduct by Ithala employees or officials that may have resulted in improper benefits,” said the SIU on Monday.

“Furthermore, the investigation will assess whether fraudulent actions occurred, identify any resultant losses or damages, and examine any irregular or unlawful behaviour by Ithala employees or other entities.”

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The proclamation covers allegations between 1 January 2017 and 31 January 2025. However, it will include any activities not covered in the period that are important to the investigation.

Ithala liquidation

Last month, the South African Reserve Bank’s (SARB) Prudential Authority (PA) applied to the Pietermaritzburg High Court for the provisional liquidation of Ithala. This after it was found to be “technically and legally insolvent”.

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Ithala is a development finance agency owned by the KwaZulu-Natal province. It operated under a banking licence exemption, which expired on 15 December 2023.

Despite applying for a full banking licence in 2016 and 2023, both applications were declined by the PA.

Last week, KZN premier Thami Ntuli said the province had escalated the matter to Ramaphosa for intervention as the bank’s liquidation could affect at least 250 000 clients.

He argued that the PA should have provided guidance and support to address Ithala’s compliance concerns instead of applying for liquidation.

“As the Provincial Cabinet, we unanimously resolved to bring this issue to the president’s attention to ensure that the national government is fully engaged,” said Ntuli.

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“I am pleased to report that my discussion with the president was productive and constructive, with a firm commitment to prioritising the Ithala SOC issue.”