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Bank’s dodgy money

Economy

The South African Bank Note Company, a subsidiary of the SA Reserve Bank, has printed and circulated large quantities of faulty R100 notes bearing the signatures of central bank governor Gill Marcus and her predecessor Tito Mboweni.

The defects on the notes were uncovered in May this year, following an internal investigation.

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SA Reserve bank Governor Gill Marcus. Photo: Leon Nicholas

The Reserve Bank and its printing subsidiary have tried to keep a tight lid on its findings, fearing a disclosure to the public could spook the markets.

Reserve Bank spokesman Hlengani Mathebula declined to answer questions referring to his previous statements in which he had said the central bank was satisfied with the quality of the notes.

Sources say the problems with the printing machines at the SABN were such that in June this year, the Reserve Bank decided to have 80 million R100 notes printed by Crane Currency’s Swedish division. Crane Currency is an American firm.

Following several inquiries by The Sunday Independent this week, the Reserve Bank maintained its cover-up. It could neither deny nor confirm the printing of the faulty notes and whether they were still in circulation. The Sunday Independent has seen one such note which is missing the fluorescent markings that are invisible in normal light, but are evident under a UV beam.

Despite the deafening silence of the Reserve Bank, The Sunday Independent can reveal that:

* Defective R100 notes were printed late last year, circulated and later identified by a customer in the Northern Cape.

* Commercial banks also complained about the notes.

* There was no outright recall of the notes, but the Reserve Bank asked the commercial banks to exchange them for notes with the correct security features.

* An extensive investigation was conducted looking at the two machines – Heidelberg 2 and BPS 2000 – used for printing and verifying security features and technicians found that the incorrect settings were being used during printing.

* The machines, which had not been properly maintained, were operated by apprentices who had not received the correct training.

The scandal around the R100 notes is said to have been the main reason for the suspension of SA Bank Note Company managing director Musa Mbhele, who has been charged with failing to maintain quality printing standards.

He initially fought his suspension in the Labour Court, where he sought to interdict the company from proceeding with his suspension and disciplinary hearing.

Mbhele was adamant that the interdict proceedings did not need to be held in-camera, saying the need for secrecy surrounding the printing company’s affairs did not supersede his right to a fair trial in open court.

The court rejected Mbhele’s application and ruled that the proceedings and his disciplinary hearing should be held in secret.

Strangely, despite the matter having been brought to court, the issue of the faulty R100 notes was entirely excluded from the final charges against Mbhele.

Instead he is facing charges relating to the contracts which the SABN signed with the Banks of Namibia and Zambia.

It is suspected that his alleged mishandling of the contracts might have compromised the quality of the Namibian dollar notes and the Zambian kwacha notes in that he did not ensure that they were printed in line with quality assurance standards.

The disciplinary hearing, chaired by Advocate Michael Antrobus SC, is believed to have continued this week.

The Sunday Independent has seen a memo drawn up by disgruntled employees of the SABN listing several complaints about Mbhele and the way SABN was being run. The memo was given to the board of SABN, which was at the time chaired by Dr Renosi Mokate.

Mokate and two other board members met with some of the employees earlier this year.

Crane Currency marketing manager Martin Thorbjörnson said the company has a “policy not to respond to enquiries of this kind” and referred all questions to the Reserve Bank. - Sunday Independent

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