were too afraid to ask
Fear and loathing and confusion surround the Absa saga. Justin Pearce gives a guide to all the main players in the drama
IT’S been a sweaty fortnight for anyone who may have put their fingers into an Absa till in the past five years. The first beads of perspiration would have broken out last week, when former Absa banker Bob Aldworth came
But damp foreheads surely became damper this week, when the inquiry into Tollgate in terms of Section 417 of the Companies Act went public for the first time. In the witness stand was Hennie Diedericks, former chief executive of Tollgate, Volkskas, and TrustBank, whose testimony spoke of a chain of deceit and collusion stretching to the heart of the Afrikaner business establishment, and to the door of the South African Reserve Bank itself. No doubt more names will be mentioned as the saga unfolds. In the meantime, we offer a guide to the dramatis personae as they appear at the moment.
Tollgate Holdings
The sometime bus company which burnt its fingers while dabbling in pantihose, car rental, and jam. By 1990 Tollgate was suffering from “too much debt, a clumsy structure, simply a mess”. That’s Julian Askin talking, shortly after he arrived from London to take over the company.
In 1992, Tollgate shares plunged, and talk of irregularites began to circulate: accusations included insider trading arising from the sale of company assets to directors, and the transfer of millions of rand into overseas bank accounts under false pretences. The Office for Serious Economic Offences (OSEO) initiated an inquiry into Tollgate’s affairs shortly after its collapse.
In December 1992, TGH’s various subsidiaries owed Absa — through TrustBank — more than R300-million. Askin dismissed Absa’s intentions to liquidate Tollgate as unnecessary — an argument which resonated this week, when Diedericks told the inquiry the liquidation had been necessitated by bad management by TrustBank’s owners, Bankcorp, and parent company Sanlam.
In 1989 and 1990 TrustBank had insisted on Tollgate being restructured in such a way as to make liquidation inevitable, Diedericks
Absa nevertheless pressed ahead with liquidation proceedings, and that was the end of Tollgate.
Absa was born in 1991 when a consortium, headed by the United Building Society, bought the mainly English-speaking Allied Group. Volksas and TrustBank, and part of the Sage Group were brought on board, making the Afrikaner-controlled Absa the largest banking group in South Africa. Accusations of foul play during the Allied takeover — including spying on Allied executives — have been levelled at Absa officials.
In 1992 TrustBank was on the point of collapse. The Tollgate affair was widely blamed. It was revealed, for example, that TrustBank had allowed Tollgate to rev up its debts from zero to R600-million in 14 months.
Others have suggested, though, that since Trustbank had been mismanaged for years, if Tollgate hadn’t pushed the bank over the edge, something else would have done so soon.
The SA Reserve Bank
The Reserve Bank secretly bailed out the ailing TrustBank to the tune of at least R1,1- billion. It’s normal for the Reserve Bank to rescue failing banks as long as the rescue can be expected to serve the broader economic interests of the country — as happened in the case of last year’s African Bank collapse, for example.
But observers have commented that the TrustBank rescue, which was initially kept secret and which may have been worth more than the official figure of R1,1-billion, was a case of “boontjies vir boeties” — interests within the Reserve Bank sympathetic to TrustBank’s then majority shareholder, Sanlam, allowing Sanlam to dodge its own obligation to bail out TrustBank.
This week Diedericks said Absa executives had neglected the Tollgate disaster in the knowledge that the Reserve Bank would come to their rescue. “At that time there was a special relationship with Volkskas, which was very close to the government,” Diedericks told the hearing.
The Reserve Bank rescue came after Sanlam had already used about R3-billion of its policyholders’ money in “soft” loans which Sanlam had used to prop up the struggling TrustBank, according to Diedericks — a claim denied by Sanlam.
Julian Askin
The British financial columnist turned Jaguar- driving tycoon who turned his attention to South Africa, and ill-advisedly bought into Tollgate. Accused of having misappropriated millions in Tollgate funds, he returned to
Though some media have pilloried Askin as the nasty rooinek who lived the high life in South Africa and then made a run with the money, his status as villain-in-chief is in fact not established. Indications are that the rot in Tollgate began long before the arrival of Askin. There is evidence to dispute the claims that Askin built his Constantia mansion and funded his lavish lifestyle with Tollgate money. Askin has spent thousands of pounds on his own intelligence network in an attempt to clear his name. Any mud that sticks to Absa during the Aldworth trial will be to Askin’s
Hennie Diedericks
Occupies a fascinating position in the saga, having served as chief executive both at Tollgate (from 1988) and at Volkskas and TrustBank (simultaneously, from 1992). In June 1994, Tollgate’s liquidators accused him of stealing R18,9-million and applied for his sequestration at a time when Diedericks’s health made him ill-equipped to defend himself. Last year, Diedericks started fighting back, and the liquidators settled for a mere R375 000.
Convinced he was framed, Diedericks has joined forces with Askin in a campaign to demonstrate both men’s claimed innocence. This week, he accused Sanlam and the Reserve Bank of collusion relating to the TrustBank bail-out. Yet Diedericks’s position first in Tollgate and subsequently in the banks suggests that he could still tell a lot more about how Askin was apparently duped twice: into investing in Tollgate in the first place, and into believing that Absa would come to Tollgate’s rescue rather than call in the liquidators.
Danie Cronje
The former Volkskas chief executive, brought in to give Absa a new face after the shady days of the Piet Badenhorst regime, has now been named by Diedericks as one of the people who could provide insight into the Reserve Bank lifeboat.
Dave Brink
Sanlam’s former money man brought in to clean up the mess left behind by Absa’s founding chief executive Piet Badenhorst. Now Absa
Bob Aldworth
Former Barclays MD, appointed by Absa as Allied MD, and later to the Absa board. He left South Africa with Absa accusing him of fraud and theft. Absa pressed charges. On returning to South Africa, Aldworth was arrested on a warrant which detailed only one charge, concerning fraud and theft to the tune of over R400 000. Further charges of fraud and/or theft, involving a total of over R7- million, as well as contravention of the Companies Act and the Prevention of Corruption Act, are being investigated.
While the decision on the criminal charges now rests with the Witwatersrand attorney general, Absa, as the affected party, could still have some influence over whether charges are pressed. Absa has declared its intention to stand by the charges, saying the group has “nothing to hide”. However, if individuals in Absa decide not to testify, it would weaken the attorney-general’s chance of making charges stick.
Aldworth spent Monday and Thursday this week in meetings with Absa chairman Dave Brink. The Mail & Guardian understands the agenda for these meetings included discussion of which charges Absa would request the attorney general to proceed with, although this is emphatically denied by Absa. Brink would not comment on the subject of the meetings. It could yet happen that Aldworth faces no more than the trifling matter of the R400 000 — money which Aldworth has already claimed was a loan he intended to repay.
So just what are these beans that Aldworth could spill?
1. He could flesh out the allegations of phone buggings and other dirty tricks surrounding the takeover of Allied Bank, which have already been directed at Absa management.
2. Tollgate was in a mess before Askin bought into the company. An astute businessman like Askin would never have sunk money into such an operation unless he had at some stage been deliberately misled as to the condition of the company. Other shareholders who were persuaded to follow Askin’s lead by putting more money into Tollgate were also deceived, as were the banks who followed Trustbank in lending to the firm.
Aldworth knows who was responsible for pulling the wool over a great number of eyes.
3. Aldworth is well-placed to expand on questions about why the Reserve Bank chose to bail out TrustBank — and why the affair was kept secret.