While Ithala Bank management has failed in their duties to keep the exemption licence in place, there has been no evidence produced to date of intentional criminal activity.
This was the view of Tim Brauteseth, the Democratic Alliance (DA) KZN spokesperson on Finance/KZN Standing Committee on Public Accounts (SCOPA) chairperson and MPL.
Brauteseth said the DA has noted with concern the ongoing crisis at Ithala Bank and the extremely serious impact this is having on its clients.
The crisis has its origins in the simple fact that Ithala lost its exemption to accept funds from depositors in December 2023, yet continued regardless. The matters raised by the Prudential Authority (PA), the move to deem Ithala Bank insolvent is contradicted by the bank’s financial statements as of March 31, 2024.
The PA - a division of the Reserve Bank - raised the alarm and appointed a Repayment Administrator (RA) to protect depositors’ funds.
Brauteseth said this is the normal course of events when the PA is dealing with a criminal enterprise such as a Ponzi scheme.
Brauteseth said SCOPA will meet with the bank’s directors in February. He added that a vast number of clients - from pensioners dependent on South African Social Security Agency (SASSA) grants to small businesses and employees’ dependent on Ithala accounts - have placed their funds with Ithala.
“Not on the promise of crazy Ponzi-style returns but in the hope of realising their aspirations. If Ithala is liquidated, these same clients will be devastated and what could follow will make KZN’s 2021 riots pale in comparison. This is a province with a severe case of post traumatic stress disorder and does not need much encouragement to sink into anarchy,” he said.
“It is interesting to note that the Judge President, after removing the matter from the roll, has called the parties involved to a meeting on Wednesday, presumably to discuss the matter and find solutions.”
The KwaZulu-Natal Provincial House of Traditional and Khoisan Leaders Inkosi uShinga said it is not only premature to resolve to liquidate the bank, but also a decision that would severely impact the poorest members of society, based on issues that remain disputed.
“Ithala is the only bank that has played a pivotal role in developing rural areas on communal land under amakhosi. Our people have access to banking services, and through Ithala, they have been able to build family homes using the Rural Home Loan programme. Ithala has provided our people with dignity and improved their quality of life.
“The services delivered by this bank to rural communities are far-reaching compared to other commercial banks, which make it impossible for the previously marginalised portion of our society to access financial services,” said Inkosi uShinga.
Amakhosi view this decision as a direct affront to His Majesty, iSilo uMisuzulu kaZulu, all amakhosi, and the subjects of the Kingdom.
Encouragingly, the House has noted positive statements from the KwaZulu-Natal Provincial Government and several political formations that support the position of Amakhosi. This united stance gives hope that the matter will be addressed decisively in the interest of the people.
The amakhosi resolved to mobilise all members of traditional communities, led by amakhosi alongside izinduna zamabutho, to take mass action against the liquidation of Ithala Bank.
On January 23, the department and Ithala SOC, through their lawyers, submitted a request for Justice Ncube to preside over the urgent application regarding Ithala SOC matters, initially set for hearing on Tuesday. However, the Registrar of the Pietermaritzburg High Court advised that Justice Ncube is currently on leave and will only resume duty on February 17.
Following this, the department approached the Judge President to allocate another judge for the hearing.
A meeting has been scheduled for Wednesday, with the parties’ respective senior counsel to discuss the way forward.
As a result, the liquidation application remains scheduled for January 30, and the Registrar will inform the department’s and Ithala SOC’s lawyers as soon as the Judge President makes a further determination on this matter.