DR THULANI Vilakazi, the CEO of ITHALA SOC Limited, told the Standing Committee on Public Accounts (Scopa) how he appealed to South African Reserve Bank’s Prudential Authority (PA), as a matter of one government-linked entity to another, to reconsider the moves to have the bank liquidated, but it was to no avail.
Vilakazi also revealed how they attempted to draw Finance Minister Enoch Godongwana into the fray and play the role of go-betweener between themselves and the PA, but that effort too was in vain.
He appealed yet again on Thursday to KwaZulu-Natal’s policymakers to save the bank from the PA’s action to liquidate it, just as various political parties, rights groups and influential individuals who lent their voices to campaign to save Ithala.
Vilakazi and the bank’s CEO Mohamed Gafoor appeared before the provincial Scopa committee to explain its troubles with the PA and for also failing to secure an operating licence.
In January the PA stated that it believed its intervention was in the best interests of Ithala’s approximately 257 000 depositors.
Vilakazi told Scopa that several attempts to get Minister of Finance Enoch Godongwana to intervene and help the bank obtain a banking licence so that it could continue to operate, fell flat.
Most of Brauteseth’s questions, which Vilakazi refused to answer, were around the insolvency of the bank and why the institution still referred to itself as a bank when its operation exemption expired in 2023.
It was the first time the bank, under the supervision of the provincial Economic Development, Tourism and Environmental Affairs, appeared before parliament since the PA announced the provisional liquidation last month
He said his team approached Godongwana to secure an application under Section two of the Bank’s Act, which grants institutions the capability to function.
“When we approached the Minister we wanted to find an instrument that would replace the exemption notice framework because the PA would not grant a further exemption, which was why we then explored Section 2 of the Bank’s Act.
“The minister expressed reservation in the sense that those institutions that are there (Section 2 of the Bank’s Act) are not deposit-taking institutions but are institutions of development finance. Therefore, he said he could not assist us,” said Vilakazi.
Last month, Ithala’s clients were unable to transact, leading to many employees being without their December salaries, services providers not being paid and depositors not being able to access their funds.
Vilakazi said his team also asked Godongwana to facilitate a discussion between Ithala and the PA to find a solution, “outside of the court forum” so that the bank could obtain a banking license.
“We have tried to engage with the minister out of court, we tried to engage with the PA in 2021 and 2022.
“However, it became pretty obvious that in terms of the status and the constitutionality, the Reserve Bank and the PA felt that they could not be part of the integrated government framework, where we could sit and negotiate,” he said.
Vilakazi said since the PA and Ithala were both state institutions, they should not take each other to court but they should negotiate to find solutions.
“They (PA) declined to participate. Therefore, that road was closed,” he said.
Vilakazi said Ithala was given conditions of exemption in July 2022, which were not pragmatic to deliver on.
He said the bank approached the regulator to raise concerns about the impracticality of the conditions.
“We have written thousands and thousands of pages (letters) to the regulator to ask them to be reasonable and rational about some of these things.
“We ended up where we are because they could not listen to us,” he said.
The bank had previously approached the court to force the PA to be reasonable when it comes to the conditions of the exemptions.
“We understand that the court is not a means to an end, and we went there because we ran out of ways to engage with our regulator,” he said.
He said when the National Assembly passed a law that stated that only national financial institutions could obtain a banking licence, the provincial policy makers did not do anything while it was their duty to deal with policy frameworks.
He said Ithala was not the first black institution formed before 1995 to become a victim of the new dispensation.
“There was the Bank of Transkei, it went the same route.”
Vilakazi said he had worked in other countries that had various development banks.
He said while he was in America he was taught that if the banking industry is concentrated, the country’s economy becomes stagnated.
“That is where we are as a country,” said Vilakazi.
He said despite the challenges, Ithala remains adamant that it is solvent.
DAILY NEWS