African Bank Downfall
The reasons for the collapse of African Bank were finally laid bare on Thursday when the report compiled by lawyer John Myburgh was made public.
The study was commissioned by the Reserve Bank in August 2014 after African Bank collapsed and was placed under curatorship because of lending unsecured loans.
The Registrar of Banks had announced last week that the report into the circumstances that gave rise to the previous African Bank being placed under curatorship would no longer be confidential.“The curator of the Residual Debt Services, Tom Winterboer, today welcomed the decision by the Registrar of Banks to lift the confidentiality of the Myburgh report into the old African Bank,” the curator said in a statement.
“The report was commissioned by the Registrar into the circumstances that lead to the old African Bank being placed into curatorship on the 10 August 2014, in terms of Section 69 of the Banks Act, 1990.”
The Myburgh Report, among other things, found that the directors of African Bank acted in breach of their fiduciary and other duties to the bank.
Under Companies Act, directors may be held liable for breaches of their fiduciary duties and any losses, damages or costs sustained by companies.
Myburgh also found that the business of the bank was conducted negligently.
The report said the board allowed itself to be “dominated” by former chief executive, Leon Kirkinis, and unsecured loans to its furniture or retail business Ellerine were reckless.
Most importantly, the report found that there was no evidence that the business of the bank was conducted with the intent to defraud depositors or other creditors of the bank or any other person or for any other fraudulent purpose.
Last month, African Bank said that the remaining viable assets were rescued and started trading last month as African Bank Ltd as “suspensive conditions” for its restructuring had been fulfilled.