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South Africa Reopens Investigation into Barclays Africa

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The South African government is once again investigating Barclays Africa over allegations it received bailouts during the apartheid era, in an arrangement contrary to legal restrictions at the time. South Africa’s Public Protector has found reason to believe the government was in violation of legislation by providing loans to Bankorp, the bank taken over by Absa, Barclays’ African unit. Local media reported that the anti-corruption agency discovered that between 1985 and 1995 Bankorp received relief funds from the government. Bankorp was acquired by Absa in 1992. The Public Protector, Busisiwe Mkhwebane, is yet to conclude his investigation, but if found guilty, Barclays Africa will repay $166 million to the government. An investigation was first launched in 2000 and the bank was found to have received loans from the government. However, the loans served to stabilise the bank and not to give it or its shareholders an advantage over the competition.

The investigation was revisited in 2010 after a complaint by Paul Hoffman, an advocate with Accountability Now. British forensic research firm Ciex had concluded that Bankorp had received funds from the government during a period when the Treasury was plundered at the behest of prominent South Africans. The former Public Protector Thuli Madonsela reopened the investigation after Hoffman’s insistence. Barclays Africa said it is cooperating with the investigators, but has found some ‘legal inaccuracies’ in their preliminary report. “In its current form it creates the incorrect view that Absa Bank Limited (Absa), a subsidiary of the Group, received undue benefits by virtue of the South African Reserve Bank (SARB) assistance to Bankorp,” Barclays Africa said. Barclays Plc has been slowing lowering its stake in Barclays Africa. It currently owns 50.01 percent of the company, but wants to bring it down to 20 percent. The bank denied that it was as a result of the investigation, but rather said it wants to focus on other regions. South African Reserve Bank is also being investigated, and its Governor Lesetja Kganyago said they are also cooperating fully.

 

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