Mac Maharaj has resigned as a director and an employee of South African financial services group FirstRand Group and as a director of seven subsidiary boards on which he serves, FirstRand said on Thursday.
Maharaj’s resignation will be effective from 31 August.
The group said in a statement on Thursday that the board of FirstRand has accepted Maharaj’s resignation.
The Board has approved that an amount of R1,092-million — comprising pay in lieu of notice, leave pay, and pro-rata bonus for the year ending 30 June 2003 — is due to Maharaj.
“This payment represents what Mr Maharaj is legally owed by all the companies in the FirstRand Group of which he was a director, and as an employee of FirstRand Bank,” the group said.
Maharaj’s resignation comes after the conclusion of a four-month independent enquiry into newspaper allegations of corrupt practices by Maharaj.
In February, FirstRand commissioned an investigation of allegations that Maharaj received R500 000 from businessman Schabir Shaik before he quit his position as South Africa’s transport minister in 1998.
The final report was submitted to the Board by accountancy firm Deloitte & Touche and attorneys Hofmeyr Herbstein & Ginwala on July 30 and Maharaj had seven days to submit a response to the findings of the report.
Maharaj offered to either resign or take a leave of absence in February when the original allegations appeared in the Sunday Times newspaper. The Board felt that to accept his resignation at that point would have led to a presumption of guilt, and therefore chose the option of granting Maharaj leave of absence.
The full report has been submitted to the group’s regulators, the Bank Supervision Department of the South African Reserve Bank and the Financial Services Board. The Bank Supervision Department and the Financial Services Board are also in possession of Maharaj’s response to the findings of the report and the investigating team’s assessment of his submission.
The report investigated the accusations and implied accusations of criminality or corruption and an alleged breach of the Parliamentary Protocol as contained the Sunday Times article of 16 February 2003.
FirstRand said the Board has accepted the report’s finding that the investigative team did not find any evidence to substantiate allegations of corruption and did not find any evidence linking payments from Shaik to Mr Maharaj or Mrs Maharaj to the awards of the N3 Toll Roads and Drivers Licence contracts.
Maharaj believes however that given the current emotional debate being publicly waged around his personal affairs, his continued association with FirstRand may lead to further negative publicity for the group.
He consequently submitted his resignation.
Under the circumstances the Board has accepted his resignation, FirstRand said.
The FirstRand investigative team’s findings were:
“The team did not find any evidence in the available information that Mr Maharaj intervened with the process or influenced the awards of the N3 Toll Road tender or the drivers licence card contract to Mr Shaik. The team did not find evidence linking payments from Mr Shaik to Mr Maharaj with the award of this tender.”
“Both Mr Maharaj and Mr Shaik do not dispute that Mr Shaik made payments into bank accounts held by Mr and Mrs Maharaj. Mr Shaik, Mr Maharaj and Mrs Maharaj stated that the payments were made to Mrs Maharaj on the basis of a consultancy agreement between Mr Shaik and Mrs Maharaj”s business Flisan Investments. The investigative team found that the payments involved totalled R328 898. Following interviews with Mr and Mrs Maharaj and Mr Shaik, and following a comprehensive review of documentation pertaining to the consultancy agreement, the report concluded as follows:
“There was some form of consultancy agreement between Mr Shaik and Mrs Maharaj.
“The extent of the agreement cannot be determined; nor is it possible to express an opinion on whether Mr Shaik indeed received value for money (in terms of the nature and value of Mrs Maharaj’s deliverables).
“Due to a lack of corroborative evidence, it is not possible to find that the reason for all payments (and the off-sets) was in fact service in terms of the consultancy agreement,” said the report
In a lengthy article on the opinion pages of Business Day today, FirstRand chairperson Laurie Dippenaar wrote that they had three choices when the allegations against Maharaj had surfaced.
“We could have taken easy way out and argued that the allegations related to a set of circumstances that was none of our business.
“We could have sidestepped the issue, and argued that if there were questions about Maharaj’s conduct while he was transport minister, these should be adressed by his “employer” at the time — namely the South African government,” he wrote in the paper.
“To take the other extreme, if we had had something to hide as FirstRand we could have accepted Maharaj’s resignation there and then,” he wrote in Business Day.
He said that, after all, when the allegations were first published, there was no suggestion that Maharaj had since, joining the FirstRand board, been involved in any sort of impropriety.
Dippenaar wrote that the allegations against Maharaj had grown, and “along the way have collected a series of insinuations: insinuations of a ‘swinging door’ that brings politicians into business”.
He wrote in Business Day that there had been suggestions that FirstRand was a beneficiary of contracts granted by Maharaj while he was transport minister and there had been suggestions that FirstRand had something to hide, “for example the situation relating to the awarding of the N3 toll road contract”.
Dippenaar said FirstRand believed thay had done the correct thing in ordering a full investigation into the initial allegations and had appointed a team of lawyers to do this.
“These are not the actions of an institution engaged in a cover-up,” he wrote in Business Day.
Dippenaar wrote that it was important to comment on their approach to corporate governance and “‘conflicts of interest'”.
“Concerns have been raised about perceived conflicts of interest regarding nonexecutive, independent directors of FirstRand who sat on the board of the National Roads Agency at the time of the award of the N3 contract.”
He wrote that FirstRand had absolute faith that the actions taken by their directors had been beyond reproach, saying the “real issue” was not that conflicts of interest may exist, but “the manner in which they are managed”.
“It is not feasible to tell our independent directors that once they join the FirstRand board they cannot sit on any other board for fear of conflicts. We must trust them and the well established and provien regulatory mechanisms at their disposal, to manage these conflicts in an honest and professional fashion”. – I-Net Bridge, Staff Reporter