KwaZulu-Natal MEC for Economic Development, Tourism and Environmental Affairs (EDTEA) Musa Zondi has revealed that he has received a letter from the National Treasury instructing his department and Ithala Bank to co-operate with the repayment administrator in the transfer of the deposits currently held by Ithala to other commercial banks.
He stated that a similar letter was also sent to the premier’s office.
The SA Reserve Bank’s Prudential Authority has filed papers in the Pietermaritzburg High Court for the provisional liquidation of Ithala SOC Limited. This comes after the authority appointed a repayment administrator responsible for the repayment of deposits.
Although commonly referred to as a bank, Ithala was never granted a banking licence. However, the Minister of Finance granted an exemption to Ithala allowing the entity to receive deposits while it regularised its operations.
According to the SA Reserve Bank, the repayment administrator has established that Ithala is technically and legally insolvent, exposing depositors to potential loss of their deposits.
Zondi has previously raised concerns that the bank is being deliberately undermined for the benefit of commercial banks. In an interview with a radio station yesterday morning, he blamed behind-the-scenes political machinations for the move to liquidate Ithala.
He also claimed to possess intelligence information suggesting that the bank’s troubles are not due to its failure to obtain a licence.
“This issue has more to it than what appears on the surface; that is all that, as a responsible public holder of office, I can say. The analysts do not have access to the intelligence information that I have, which affects black business institutions,” he told the radio station.
Zondi, speaking to The Mercury yesterday afternoon, elaborated on the crisis. Last year, he said, he spoke about the issues that would arise if Ithala collapsed, stating that commercial banks would benefit.
At that time, “I was speaking as a sangoma, prophesising what would happen. As we speak now, I can tell you that is exactly what has happened.
“I have a letter, in black and white, coming from the National Treasury informing us that Ithala and the provincial government must co-operate in the transfer of deposits held in Ithala to commercial banks. Not only that, the letter further advises that once the assets are transferred out of Ithala, the owners of these deposits must be advised to make banking arrangements with other banks, and not us.
“The letter further states that should we wish to apply for a new banking licence after all this process is completed, then we can make another application. What would be the point of making an application when the business would only exist on paper?
“Right now, we are like someone with a warehouse full of stock, and that stock is being cleaned out. After it’s cleaned out, there is nothing left, and we are told we can apply to trade as a business. Ithala has applied for a banking licence on numerous occasions, and it was denied. Its applications were backed by assets; why would it be approved when it no longer has any assets and is a shell?” the MEC asked.
He said commercial banks were set to benefit.
“These banks are going to be handed fortunes in transaction fees that they are going to get from processing these deposits, which are close to R2.5 billion. Furthermore, because these customers of Ithala need new banks, it means these banks are now going to be handed thousands of new customers,” he said.
Zondi warned that wealth could be stripped from black communities.
“The intention here is clear, and it is to do away with any black-owned industry. Thirty years into democracy, where is the economic freedom that we had been promised?” he asked.
Premier Thami Ntuli said he planned to meet Zondi and Finance MEC Francois Rodgers today to discuss the matter.
“At the moment, my stance is that we need to save Ithala,” he said.