US investment bank Bear Stearns was one of the first major institutions to be hit by the US sub-prime crisis early in 2007. Intimations of trouble emerged in March that year when the bank admitted that two of its flagship hedge funds had been hit by big losses, as low income borrowers started to default.

In July, Bear Stearns said the assets of the funds were almost worthless. That set the ball rolling as banks and other institutions across two continents started to collapse like skittles.

Now Bear Stearns is going to be called to account. A task force of US federal and state investigators will be bringing lawsuits against a number of Wall Street banks, according to CNN.

This came after the New York attorney-general sued JPMorgan Chase-owned Bear Stearns for its alleged role in triggering the crisis. CNN reported: “The suit seeks unspecified damages and claims that risky mortgage-backed securities issued by Bear Stearns in 2006 and 2007 caused investors some $22.5 billion (R189bn) in losses.”

CNN said US investigators had until January to take action against other offending banks because lawsuits must be brought within five years of the fraud.

The moves against major banks in the US follow scandals in the UK. One involved the rigging of the Libor (London interbank offered rate). The chief executive of Barclays was forced to resign and Barclays was fined a record $453 million on June 27 for manipulating the key rate.

Standard Chartered agreed in August to pay a $340m fine in a settlement with a US regulator over money-laundering charges. The Royal Bank of Scotland is being investigated by US authorities over failings in its money-laundering controls.

And banking giant HSBC has been forced to publicly apologise to the US Senate for allowing a multibillion-dollar money-laundering operation for drug gangs, terrorists and rogue nations.


Transport Minister Ben Martins says his department has taken steps to prevent other vessels entering South Africa’s economic exclusion zone (EEZ) and “running aground as the Eihatsu Maru fishing vessel did” off Clifton Beach in May.

In reply to a question from DA MP Pieter van Dalen, he said the department was now working on a piece of legislation – the Marine Security Bill – that would regulate vessels with a gross tonnage of 300 and above.

“This will ensure that the vessels such as the Eihatsu Maru are regulated and closely monitored when moving in the republic’s waters.”

Asked by Van Dalen whether his department had issued a safety permit to the offending vessel and whether the department had launched an investigation into the running aground, he said it had not.

“The reason was that there was no legislation requiring safety permits to foreign fishing vessels visiting South Africa and the port of Cape Town.

“Only foreign vessels such as passenger ships, cargo ships of 500 gross tonnage or more and mobile offshore drilling units are regulated under the Merchant Shipping Regulations, 2004.”

As a result, the department also did not assess the risk associated with the incident as there had been no application for a clearance certificate. There was no local or international regime requiring mandatory insurance from foreign vessels entering South Africa’s EEZ.

The department had, however, launched an investigation and found that it was “not appropriately manned” and it only had “lookouts” on the bridge-wing “who were not allowed inside the bridge where the captain was asleep”.

The department had ultimately decided to settle out of court and the vessel’s owners tabled an offer to the South African Maritime Safety Authority (Samsa). Samsa accepted this as the vessel was not insured, the owner could only afford the settlement offer while still having “enough money at his disposal to effect the necessary repairs to make the vessel seaworthy again and remove it from Cape Town harbour (to which it had been towed)”.

It sounds as if some sense prevailed in government circles.


Floundering from the ambush of the “bizarre” resignation of eight SAA board members, including chairwoman Cheryl Carolus, former JSE boss Russell Loubser, Bonang Mohale, Louis Rabbets, Jabulani Ndhlovu, David Lewis, Teddy Daka and Maggie Whitehouse, Public Enterprises Minister Malusi Gigaba has turned to none other than Vuyisile Kona – who becomes SAA’s new chairman.

Kona told Business Report that the strategy formulated by the previous board under Carolus would be scrutinised by the new directors once they had familiarised themselves with the issues.

“We won’t scrap it, we will make changes to it if necessary.”

Kona of course, is the perfect person to turn to. In his last association with the SAA six years ago, he was suing the entity for more than R3.3 million.

He said it was part of his R4.7m termination package. SAA had, according to reports at the time, already paid him R1.4m. He had apparently been verbally promised this termination package by then SAA chief executive Khaya Ngqula.

Big packages and the SAA have a long tradition. Andrew Coleman, who ran the airlines during the 1990s and who now lives in Jackson Hole, Wyoming, took with him the tidy sum of R232m in 2001, which was a lot of money at the time.

It was also in a year when the airline posted a net loss of R700m.

Ngqula was paid R9.35m but he looks set to pay back much more.

His predecessor Andre Viljoen was paid out R3.6m on top of a performance bonus of R1m and a salary of R2.2m.

Perhaps Gigaba will also turn to one of these gentlemen for help on the board.

Edited by Peter DeIonno. With contributions from Ethel Hazelhurst and Donwald Pressly.