While conspiracy theorists may be quick to connect the dots, Special Investigating Unit (SIU) spokesperson Kaizer Kganyago has made it clear: President Cyril Ramaphosa’s authorisation for the SIU to probe a controversial Ithala tender is purely coincidental.
The approval came less than two weeks after the Prudential Authority (PA) filed a notice of motion for Ithala’s liquidation, triggering speculation about possible links between the two events.
On 31 January, Ramaphosa signed four proclamations greenlighting SIU investigations into allegations of maladministration and corruption at the Ithala Development Finance Corporation, Greater Kokstad Local Municipality, Lepelle-Nkumpi Local Municipality, and Greater North Transport.
Proclamation 243 of 2025 specifically targets Ithala, focusing on a tender for the supply, implementation, and maintenance of an integrated banking system. The investigation aims to determine whether payments made under this contract adhered to National Treasury guidelines or whether they were irregular, wasteful, or resulted in financial losses for the state. It will also scrutinise any unlawful conduct by Ithala officials that may have led to improper benefits.
Beyond potential fraud and financial mismanagement, the probe seeks to quantify any resultant losses and assess whether employees or external entities engaged in unlawful or irregular behaviour.
The PA’s notice of motion for Ithala’s liquidation was filed on 16 January.
Read: Ithala hits back: sharp criticism of Reserve Bank’s liquidation move
The PA, in a frequently asked questions (FAQ) document accompanying its joint statement with the South African Reserve Bank (SARB), detailed past concerns over Ithala’s financial practices. Among them was a separate PA investigation into the corporation’s failed core banking system modernisation project, contracted to Tech Mahindra. The PA alleges that this project, marred by maladministration, resulted in R34.97 million in wasteful expenditure in 2020.
Read: How Ithala’s banking ambitions crumbled: the rise and fall of a rural icon
“The Prudential Authority’s investigation found that Ithala did not act to recover the lost funds beyond reporting a criminal case to the police,” the document states.
Despite the overlapping timelines, Kganyago insists the SIU’s investigation was prompted by an earlier whistleblower report. Speaking to Newzroom Afrika, he confirmed that the SIU first received information about alleged irregularities at Ithala in 2020.
SIU proclamation targets alleged misconduct
The proclamation covers allegations of misconduct dating back to 1 January 2017, with scope for related activities before that date and any developments after 31 January 2025 that are relevant to the investigation.
Kganyago explained that the contract under scrutiny, involving the acquisition of a banking solution, was awarded in April 2018. To understand the full context, he said they needed to look further back to determine how it all began. Kganyago added there are indications that the contract was not awarded in a fair and equitable manner, nor that it complied with the country’s constitutional requirements.
Kganyago said the SIU submitted the proclamation for approval in 2020, following a tip-off from a whistleblower who indicated that the process was not done in a fair manner.
He noted significant irregularities in the tender process. Among other things, he explained that the company awarded the contract initially received a higher evaluation score than it should have. When the scoring was recalculated, discrepancies emerged.
Additionally, he noted that the winning bidder may have gained access to confidential information from a competing bidder.
Kganyago said the SIU examined these findings, tested the allegations, and then submitted the case to Ramaphosa for approval. The proclamation was ultimately signed on 31 January.
Kganyago clarified that the delay in signing the proclamation was not due to the president. He explained that several proclamations had been pending at the Department of Justice and needed to be forwarded to the president for approval. This process was expedited when Minister Mmamoloko Kubayi assumed office as the Minister of Justice and Constitutional Development on 3 December 2024.
He said, following her appointment, many of these pending proclamations were promptly sent to the presidency and subsequently signed. As a result, the SIU has seen an increase in the number of proclamations being approved since then.
Kganyago said the SIU wants to look into what happened.
“And when we finally get to the outcomes, what we want to achieve is to cancel that contract and then recover the money from the people that are involved.”
He added that, unlike with other institutions, when the SIU recovers the money, it will go back to Ithala.
Support for SIU investigation
Unlike the PA’s notice of motion for Ithala’s liquidation, the news of the SIU investigation into the Tech Mahindra contract has been met with widespread approval.
The Witness reported that KwaZulu-Natal Premier Thami Ntuli welcomed the SIU investigation into Ithala, praising the president’s commitment to transparency and accountability.
He stated that the probe into Ithala’s dealings, including the Tech Mahindra tender, would help to uncover any irregularities and ensure those responsible are held accountable.
Ntuli reaffirmed his commitment to protecting Ithala Bank, emphasing its role in supporting communities and small businesses in the province.
The Public Servants Association (PSA) in KwaZulu-Natal told SAfm that the investigation into Ithala is long overdue.
PSA provincial manager Ndlovu said the bank has faced persistent allegations of mismanagement, reckless lending, and favouritism toward politically connected individuals. He said the investigation is a crucial step toward restoring accountability, recovering lost funds, and reinforcing the stance that corruption in state entities will not be tolerated.
Parliament questions SARB’s motion for Ithala’s liquidation
However, Ndlovu stated that the PSA still believed the SARB should withdraw its notice of motion for Ithala’s liquidation. This view is widely shared, as evidenced by questions directed to the SARB during a joint sitting of the Standing Committee on Finance and the Portfolio Committee on Trade, Industry, and Competition on Tuesday.
During the session, MK Party MP Des van Rooyen accused the PA – and by extension, the SARB – of disregarding a resolution made by Parliament. Van Rooyen stated that Parliament had recently resolved that all stakeholders should adopt a more “considerate, sensible, and gradual process” to support Ithala in becoming a full-fledged financial services provider.
Ithala has been operating under a temporary exemption from the Banks Act, which expired in December 2023, leaving it unlawfully holding deposits totalling R2.47 billion.
Van Rooyen questioned the PA’s position on this resolution and sought clarity on its reasoning.
Standing Committee on Finance chairperson Joe Maswanganyi echoed Van Rooyen’s concerns, noting that Parliament had decided on 3 December to revitalise Ithala.
“Within a month, you decide to liquidate… Are you above Parliament, yourself and Treasury?” he asked. “You also were so quick to liquidate Ithala. Was it predetermined that you were going to liquidate Ithala?”
Both Van Rooyen and Maswanganyi raised concerns about an alleged decision to transfer Ithala accounts to First National Bank.
Van Rooyen claimed that the Ithala database had been handed over to FNB, and FNB was harassing Ithala clients, pressing them to switch to FNB. He questioned the legality of this under the Protection of Personal Information Act and argued that the action appeared to be politically motivated.
He said it was more a political process “where people are desperate and expeditiously wanting to take over the clientele of Ithala and collapsing Ithala as the only surviving black initiative with an opportunity of potential to have a fully-fledged FSP institution”.
In response, SARB banking supervisor Emanuel Molewa stated that the PA had presented its update on Ithala to the Standing Committee on Finance in September 2024. He added that the matter concerning Ithala was part of ongoing litigation between the PA, Ithala, and its shareholder representatives. As a result, Molewa noted, “unfortunately, we will not be able to provide the direct responses to that given that the matter is sub judice”.
FNB chief executive Harry Kellan denied the allegation of trying to steal Ithala’s clients, explaining that National Treasury contacted the Banking Association South Africa (BASA) to find support for 65 000 social grant beneficiaries. BASA then reached out to member banks, with FNB offering emergency assistance to open accounts for South African Social Security Agency (SASSA) clients banking at Ithala.
SASSA confirmed as much in a statement issued last week.
Read: Treasury asks First National Bank to assist Ithala’s SASSA customers
Kellan said beneficiaries had been paid on 4 February.
“In a very short time, we were asked to open 60 000 to 70 000 accounts with information from SASSA. It would have been much easier for us, from the pressure in the room, to say that it was a financial decision. The cost of opening up and going through the process, issuing cards in our branches, having queues, etcetera, far outweighs the revenue we are going to make,” Kellan said.
The PA planned to submit the application to the High Court in Pietermaritzburg on 30 January, but the matter has been postponed to 17 March.
Source: https://www.moonstone.co.za/siu-investigation-into-ithala-tender-unrelated-to-liquidation-bid/
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