17/01/2017 16:33 SAST | Updated 18/01/2017 16:08 SAST

The Ciex Report: Chase The Absa Billions

More than R3 billion is recoverable from the banking giant, the report said.

Pieter du Toit
The cover-page of the Ciex Report presented to the South African government in 1999.

The Ciex Report: "Operations on behalf of the South African government, August 1997 — December 1999."

What is it?
The Ciex Report consists of 52 pages and was drawn up by Michael Oatley, a former British operative and founder of Ciex, a company based in the United Kingdom specialising in recoveries.

What was the report's objective?
It outlined where the South African government would be able to recoup monies that were due to it but were lost because of alleged apartheid era looting or illicit activities. The report outlined the focus areas on which Ciex would concentrate in order to refund the fiscus. Ciex sold its services to the government on a fixed-fee and sliding scale basis.

What does it say?
It argued that the country's banking and financial systems were inherently corrupt, under the control of the Broederbond and serving the interests of the old regime. "Huge sums of money have been misappropriated, some were recoverable, an example being the Absa 'lifeboat', of which government then was unaware," the report states.

What did Ciex propose?
The company wanted to launch Project Spear, which consisted of an operation to recover all illegal so-called "lifeboats" granted by the South African Reserve Bank (SARB) to financial institutions, including Absa and Nedbank, as well as investigate all other allegations of misappropriated funds. Spear would also have enabled the government to gain control of the SARB and the banking system as a whole. It also targeted the then-Rembrandt Group and the Anglo American Corporation.

Was there any chance of success?
Ciex told government it identified three major opportunities to recover funds: Absa (R3.2 billion), Sanlam and the then-Rembrandt Group (between R3 billion and R6 billion) and up to R5.5 billion from Aerospatiale and DaimlerChrysler. It was also looking at illicit Armscor transfers to bank accounts in Luxembourg totalling R14.4 billion.

What did it say about Absa?
The bank allegedly budgeted to pay back the lifeboat it received, but was not entitled to, and its executives "tried every trick in the book" to avoid repayment. Ciex helped the investigation by the Heath Special Investigating Unit, commissioned by government, which found the lifeboat was illegal and had to be repaid. Ciex disputed fears about threats to the banking system and the economy and reported Absa is ready and able to pay.

Sanlam was the main shareholder in Bankorp, were they enriched?
According to Ciex, Sanlam received shares in Absa when the latter bought Bankorp. Because Bankorp was kept afloat with taxpayers' money, Ciex believed the entire value of the Sanlam shareholding it received for Bankorp should be claimed by government — an amount (in 1999) of R3.8 billion.

Were there other opportunities for reparations that Ciex identified?
Yes, including a deal the apartheid government did with France in which they overpaid for helicopters by $900 million, the recovery of state funds in secret apartheid government bank accounts in Switzerland and Germany, and Armscor accounts in Europe out of which commission was paid to enable arms deals.

And other "lifeboats"?
Nedbank received one from the SARB in 1986 to save it from losses after it lent more than R100 million to mogul Louis Luyt. Interest (in 1999) amounted to R500 million, Ciex said. Trust Bank (now defunct) also exported R300 million per year to the Cayman Islands and reinvested it from there. It yielded between $50 million and $130 million per year, which Ciex believed could be recovered. The company also advised there are questions about the actual value of the SARB's gold deposits and it should be examined.

What happened?
Ciex was under contract with government between October 1997 and December 1998, after which it was suspended. Ciex informally and on advice of senior government officials continued to investigate alleged malfeasance, but government never renewed the contract and never acted on its recommendations.