ITHALA SOC Limited’s repayment administrator (RA) Johan Kruger might soon be summoned to appear before the KwaZulu-Natal Parliament to answer allegations of hamstringing the bank and rendering its management dysfunctional.
In its plea for MPLs’ intervention, the bank’s managers told the Standing Committee on Public Accounts (Scopa) about the conduct of Kruger, who was appointed as the RA soon after the bank’s exemption expired in 2023.
After listening to the bank’s CEO, Dr Thulani Vilakazi, and CFO Mohamed Gafoor’s under oath testimony on Thursday, one MPL suggested that Kruger be called to answer to the Scopa of which its chairperson Tim Brauteseth agreed and even promised to phone him immediately.
One of the MPL first told this reporter that Kruger couldn’t appear before Parliament because he was accountable to the South African Reserve Bank (SARB)’s Prudential Authority (PA).
However, Brauteseth told this reporter that he was considering calling Kruger because Scopa has the power to do so.
“The rule of the KZN legislature allows committees, particularly Scopa, to call any person that may have information that is useful to the inquiry that is conducted by the committee.
“We can call any company, we can call even the president to come and account,” said Brauteseth.
Asked when would Kruger be called, Brauteseth said: “We are gonna consider as a committee if that is going to be our next step.
“Scopa can call and even summons people and when they appear here, they have to testify under oath.”
Gafoor told the MPLs that Kruger had hijacked the power of running the bank, including signing powers.
“He refused to pay an SMME (small, medium, and micro enterprise) that was contracted to provide us with computer equipment. He refused to pay a lot of service providers,” said Gafoor.
Ithala’s urgent application to Pietermaritzburg High Court to force Kruger to stop interfering with the bank’s daily operations was due to be heard on January 28 but was postponed.
Another application by the PA for the bank’s provisional liquidation, which was due to be heard on January 30, was postponed to March 17.
KwaZulu-Natal Judge President Poyo Diwati had early this month requested that the matters be heard together.
In these matters, the provincial Economic Development, Tourism and Environmental Affairs, Provincial Treasury, and Development Finance Corporation are supporting the bank.
SARB spokesperson Mahlatse Mahlase did not respond when asked if the PA would allow Kruger to appear before Scopa.
Instead, the PA said Kruger was appointed in terms of the exemption notice and the Banks Act.
“As an independent regulatory authority, the PA is mandated to protect depositors and adheres to established laws and regulations in fulfilling this responsibility. It (RA) does so without fear or favour,” PA said.
It further said the liquidation was to safeguard the funds of more than 250 000 Ithala depositors.
“Contrary to what has been stated by the management of Ithala and other parties, the RA does not perform his duties outside of the purview and support of the PA. All the RA’s decisions and actions are discussed, agreed, and executed under the direction of the PA.”
Gafoor said the bank was so indebted to the extent that even if it were to successfully fight off the PA’s liquidation matter, it would still face other litigations from creditors
“In terms of the service providers, they are suffering and a lot of them have started legal actions against Ithala, and our concern is that if the RA or PA does not win liquidation, we will be forced into liquidation by our creditors,” he said.
Gafoor said even the provincial treasurer was also involved in notifying the PA about the Public Finance Management Act requirement that when the services have been provided, contractors had to be paid within 30 days.
“They refused to follow that,” he said.
He said while Ithala’s mandate was beyond deposit-taking as it was also an insurance institution, Kruger shut down all the bank accounts and insurance business.
“Ithala has been completely handcuffed. No income, we cannot even collect the loans because they have informed Absa to cut off all services.
“If you have a loan with Ithala, you will probably know that you cannot pay it back because the accounts are frozen,” he said.
In what could be seen as being sympathetic to PA, Brauteseth said a public image was that the PA was a “horrible bunch of people”.
“But the PA is there to protect all of us for the money we hold in our accounts.
“Do you agree that PA is a good organisation? You were told that you could not take a deposit (after the exemption had expired on December 15, 2023),” said Brauteseth.