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The state-funded Ithala Bank will no longer give loans to senior government officials, it was confirmed on Thursday.
"Cabinet has taken a resolution that senior government officials and employees of Ithala and public office bearers should not have access to loans from Ithala," KwaZulu-Natal MEC for economic development and tourism Mike Mabuyakhulu said in Durban.
Mabuyakhulu said the government had introduced the related-party policy, which would regulate the lending practice to entities or people who were in positions of power or had indirect influence within the institution on their spouses.
"This included any member of the national Parliament and provincial legislature, national ministers, local government and public office bearers and members of the board," Mabuyakhulu said.
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Existing Ithala clients who would be affected by the new policy would have until the end of March to relocate their loans to other financial institutions.
In 2006 it was reported that May Mashego-Mkhize, the wife of the then minister of economic development who is now Premier Dr Zweli Mkhize, received a loan of R13 million for farming purposes.
It was reported that her partners in the venture were Pretty Mbanjwa and Ntombi Shabalala, the wives of former KwaZulu-Natal director general Dr Kwazi Mbanjwa and Ithala's sitting chief executive officer Sipho Shabalala.
Loans were also reportedly granted to various top Ithala executives, including former Ithala chief executive officer Sipho Nyembezi, who earned R2,45m a year.
Mabuyakhulu said the government wanted to make sure that Ithala did not continue to receive negative media publicity because of the way it conducted business.
"At the centre of negative publicity [were] accusation that there were some who had received financial assistance from Ithala under allegedly questionable circumstances," he said.
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