Uncategorized 25.1.2014 07:00 am

Absa wins fraud case brought by clients

Image courtesy Chance Agrella/Freerangestock.com

Image courtesy Chance Agrella/Freerangestock.com

Absa bank has won a longstanding battle to avoid paying for losses caused by a rogue branch manager, Naresh Mistry.

The claims against Absa were made by alleged victims of Mistry, Arif Mohamed and his nephew, Shiraz Abdul.

The alleged fraud took place in 2009. It has been claimed that as much as R300m was stolen from clients by Mistry, who ran Absa’s branches in the Pretoria suburbs of Laudium and Marabastad.

It is believed Mistry was assisting clients to evade taxes, which could explain why there haven’t been more complaints against Absa.

“The [Supreme Court of Appeal] found Mohamed and Abdul admitted that they had conducted fraudulent dealings to evade taxation,” Absa said this week.

It added the judgment was significant because it established that a commercial bank was not liable for illegal and unauthorised transactions purportedly concluded in its name by an agent.

The court dismissed Mohamed and Abdul’s claims with costs, including the cost of two counsel, and “cleared Absa of the fraudulent dealings conducted by Naresh Mistry, a former Absa agent”, said Absa in a statement.

Absa understands Mistry is a fugitive from justice and Interpol has issued a warrant for his arrest. “In coming to its conclusion, the court found that the type of agreements which Mistry concluded with Mohamed and Abdul, purportedly on Absa’s behalf, did not fall within the category of business or transactions that an agent of a bank would ordinarily conduct.

“It also found Mohamed and Abdul could not reasonably have believed Absa had authorised Mistry to represent it in unlawful activities or that engaging in fraudulent conduct fell within Mistry’s functions.

“In addition, the court found Mohamed and Abdul failed to prove Absa misappropriated their investments and they could not quantify the extent of their own claims,” it said.

Mohamed has previously told Moneyweb he lost R5.4m to the scheme and had spent more than R1m in legal fees to try and recover his funds. This week Business Day reported that Mohamed’s attorney Zehir Omar had claimed a conflict of interest, alleging that appeal court judges Francois Malan and Nigel Willis had been associated with banking institutes that were funded by Absa. Omar’s application was dismissed as “mischievous”.

At the time of writing Omar was not available for comment.

 

 

 

 

 

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