Capitec Bank Holdings was unaware that a transaction to increase the proportion of the company owned by black South Africans might have benefited the ANC after the Mail & Guardian said the deal was tied to members and funders of the ruling party, it said on Friday.
“We were unaware of the possibility that the ANC could benefit from the transaction,” the bank’s financial director, Andre du Plessis, said in a response sent to the Mail & Guardian newspaper and to Bloomberg.
“We believe it is wrong for the ANC, as a political party, to participate in a black economic empowerment deal,” it said.
Capitec, the best-performing share on the JSE over the last five years, entered into a so-called empowerment deal in 2006, selling shares to black investors as part of a national initiative to make up for discrimination during apartheid, according to a statement issued via the JSE that year.
Coral Lagoon Investments 194, mostly funded by the state-owned Industrial Development Corporation, bought 10 million shares, giving it 12 percent of the Stellenbosch-based provider of unsecured loans to poor people, according to the statement.
The parties that make up the Coral group, which benefited from the sale of shares and the accruing dividends, are linked to the ANC, and its treasury, according to the Mail & Guardian newspaper.
“We didn’t do anything that wasn’t above board and we think it was a very good transaction for black economic empowerment and for Capitec,” Du Plessis said on Friday.
To repay debts Coral sold just over half of those shares in February this year to the Public Investment Corporation, which manages the pensions of government workers, for R825 million, according to a JSE statement.
Coral’s remaining shares are worth more than R1 billion. Capitec does not “believe that somebody who is employed by the ANC or any other political organisation can for that reason be disqualified from participating in an empowerment deal,” the banking group said.
Mathews Phosa, the ANC’s treasurer, said the ANC had no comment on Capitec.
In 2006, when the deal was first structured, Capitec did not do a due diligence on Coral’s shareholders, according to the statement from Du Plessis, ”because the shares were taken up for cash and no credit was provided by Capitec Bank”.
“We’re doing a rights issue now and some shares may be sold and we won’t know to who – you can’t do a due diligence on every party that buys,” Du Plessis said.