18/01/2017 17:14 SAST | Updated 19/01/2017 06:15 SAST

The Public Protector's Lead Investigator Into Absa's Apartheid 'Lifeboat' Resigned

Advocate Tshiwalule Livhuwani is the second heavyweight corruption-buster joining the Herman Mashaba-run City of Johannesburg.

City of Johannesburg
Advocate S'du Gumede, right, the City of Johannesburg's Ombudsman, opens the Ombudsman's Office with Johannesburg's then mayor Parks Tau in July 2015. The Democratic Alliance's Herman Mashaba is now mayor and the corruption-busting capacity is being beefed up.

The lead investigator who helped the public protector investigate the possible recovery of the controversial lifeboat to Absa has resigned and is working for the City of Johannesburg.

Advocate Tshiwalule Livhuwani left the public protector in December and started in his new position at the City of Joburg's ombudsman office on January 3. Advocate Busisiwe Mkhwebane signed off on the preliminary report on December 20, with Livhuwani cited as her assistant.

Livhuwani's move to the city's ombudsman's office is the second coup for the city's new administration under Democratic Alliance mayor Herman Mashaba. Shadrack Sibiya, the former Gauteng head of the Hawks, was recently appointed as head of a new internal anti-corruption unit, investigating allegations of graft at City Hall.

It is unclear whether Livhuwani's resignation is related to the report and questions about the manner in which it was compiled. The report, leaked last week, has come under fire from various quarters, including the former governor of the South African Reserve Bank (SARB), Chris Stals, who said the report either misunderstands the deal or is intentionally misleading.

Livhuwani's resignation is the latest in a series of departures by senior staff since Mkhwebane took office in October last year. Oupa Segalwe, public protector spokesperson, confirmed it, saying Livhuwani resigned in November and served his notice period in December.

Tony Taverna-Turisa, the city's chief director of communication, confirmed Livhuwani's appointment. "It is part of our efforts to build the [City of Joburg's] capacity to deal with corruption and complaints. Sibiya has already started making inroads, while we are now strengthening the ombudsman's office, which is a key channel between the city and its residents."

Livhuwani was highly regarded by senior staff in the public protector's office and received training and mentorship during his employment there. According to some, "he needed a job with less drama".

The public protector's leaked preliminary report, which is provisional and has not been finalised, recommends that government recoups about R2,250 billion from Absa because it has allegedly not repaid interest due to the South African Reserve Bank (SARB). The SARB extended a bailout to Bankorp between 1985 and 1990, which was acquired by Absa in 1992. Absa inherited the so-called lifeboat.

The report, however, contains factual errors, while it is unclear on key issues.

The report initially queries why government did not "process" the Ciex report, but eventually shifts its focus to why the report's recommendations were not "implemented". The report said billions of irregularly appropriated taxpayers' rands could be recovered by government and that it would be able to recoup the funds.

The difference between "processing" and "implementation" therefore is noteworthy, because an investigation into the lifeboat was instituted by the SARB and conducted by a panel led by Judge Dennis Davis. This could constitute "processing". The report however concludes that Ciex's recommendations should have been implemented.

The report also seems to be unclear on how the deal between the SARB and Bankorp/Absa was structured. According to the Davis inquiry, Bankorp received the lifeboat at 1 percent interest per annum. The bank had to buy government bonds with a yield of 16 percent and the difference between the two — 15 percent — actually formed the lifeboat. The public protector cites the interest rate levied on the loan amount as being 16 percent, which is disputed by Stals and Davis. According to Davis, the whole amount owed to the SARB was repaid by Absa in 1995.

Finance Minister Pravin Gordhan is also quoted in the report — as minister of justice, and as Pravin "Gordon".