Johannesburg - The directors of African Bank Investments Limited (Abil) acted in breach of their fiduciary duties to the bank, the business of the bank was conducted negligently and recklessly in making loans of up to R1.5 billion to Ellerines.
These are some of the explosive findings by the commission led by advocate John Myburgh into the demise of the bank released yesterday.
The report was submitted to the Reserve Bank in February.
Negligent
The commission found the bank had conducted itself negligently in retaining Toni Fourie as an executive director as he did not work for the bank and did not attend executive committee meetings after he had been appointed chief executive of Ellerines in 2008.
It also said the bank was negligent in the appointment of Tami Sokutu as executive director of Abil, managing director of retail lending and its chief risk officer.
“So, for the whole period of 10 years that Mr Sokutu had the title of chief risk officer, there was in effect no chief risk officer as one would understand that title in the banking industry. And this was the bank which needed an experienced, qualified, person to occupy that position,” the commission said.
It claimed Leon Kirkinis, one of Abil’s founding members and chief executive from its inception to August 2014, was out of touch with reality.
“Considering the personality of Mr Kirkinis the word ‘hubris’ comes to mind. Hubris often indicates a loss of contact with reality and an overestimation of one’s own competence, accomplishments or capabilities, especially when the person exhibiting it is in a position of power,” the commission said.
It said either Kirkinis regarded himself as Abil, or he assumed the board would meekly go along with the recommendation of management that the acquisition be made. Abil bought Ellerines for R9.1bn in late 2007.
Reckless conduct
By the time Ellerines was placed in business rescue, it owed the bank R1.4bn. The commission found that the business of the bank was conducted recklessly in making loans to Ellerines in aggregate of R1.4bn.
The Reserve Bank placed Abil, which had 3 million customers, under curatorship in 2014 after its collapse on fears that its failure would impact the country’s socio-political environment.
Abil said it needed to raise R8.5bn in a new round of funding from shareholders.
BUSINESS REPORT