How Pityana trumped the SARB

The Gauteng high court this week delivered a far-reaching ruling that raises awkward questions about governance in South Africa’s financial regulatory system. 

At the centre of the case is Sipho Pityana, the former chair of AngloGold Ashanti, who according to the ruling was unlawfully blocked from becoming chair of Absa’s board through a series of informal back-channel discussions, untested allegations and regulatory overreach.

The story is that Pityana was appointed as a non-executive director of Absa in May 2019, and in 2021 was shortlisted as the “preferred internal candidate” to chair the bank. But it all soured when the South African Reserve Bank (SARB) Prudential Authority, which regulates banks, vetoed his appointment. 

Curiously, this happened after Kuben Naidoo, who headed the Prudential Authority at the time, spoke to former Absa CEO Maria Ramos about rumours of a sexual harassment case against Pityana. As a result, Pretoria high court judge Flatela Luleka said, “Absa resolved not to proceed with the formal nomination process for [Pityana] and did not provide reasons.”

Luleka said the Prudential Authority had “acted unlawfully and in excess of its power [under] the Banks Act” in doing so, though this ruling is simply a declaration of law rather than an attempt to undo the process. 

It is also a controversial ruling, as the Prudential Authority is tasked with ensuring the soundness of the banking sector – which includes how bank chairs and CEOs are appointed.

Pityana, however, says this is more than just a personal vindication, it exposes a serious breach of due process by public officials who acted in secrecy and outside the scope of their legal authority.

“This is not just about restoring my name,” says Pityana. “This ruling reveals the abuse of institutional power and the weaponisation of regulation to serve personal agendas. It is a wake-up call for everyone who believes that the rule of law can be bent in private without consequence.”

‘Institutional bullying’

It’s a messy case, with the claims of sexual harassment against Pityana stemming from his time at AngloGold. While a preliminary report on the outcome of these claims had been drawn up by AngloGold, the mining company had opted not to pursue the matter further.

But Absa, fearing “reputation risks” for the bank, had wanted to get to the bottom of it before formally appointing Pityana as its next chair. 

The bank’s top brass held a number of discussions with Naidoo and, in August 2021, Naidoo called Absa’s former chair, Wendy Lucas-Bull, and said the “deliberations regarding a sexual misconduct allegation” against Pityana had “raised significant concerns rather than providing endorsement”. 

As a result, Absa’s committee then “resolved not to support” his nomination as chair. 

Pityana felt these allegations, unproven as they were, had sabotaged his nomination. And the court found this to be procedurally unfair and unlawful.

He says Absa did not follow the law as this wouldn’t have delivered the result it wanted. “They deliberately chose a route that allowed them to block me without accountability,” he says.

The regulatory process that governs appointments to bank boards is set out in legal instruments, such as the BA020 form, which outlines what information can be considered when determining whether a person is fit and proper. This includes past convictions or proven misconduct. 

But Pityana says the SARB acted as if he’d been found guilty. “I gave access to my location records, phone tower data, and answered every question. They ignored it all. They treated me as if I had been convicted of something I had not even been charged with.”

Absa, to its credit, had hired respected legal expert Peter Harris to assess the allegations. When Harris found the investigation by AngloGold Ashanti to be flawed and said it should not be relied upon, Absa stood by Pityana’s nomination. But the SARB remained unmoved.

“They had the legal opinion. They had the facts. Yet they chose to pressure the Absa board into withdrawing my nomination,” says Pityana. “This was not regulation; this was institutional bullying.”

The judge said the communication between Naidoo and Ramos was improper, as there had never been any formal request for information. 

Pityana says the relationship between Ramos and Naidoo is the problem. “She exploited that relationship to pursue a vendetta, and he allowed a respected regulatory institution to be used for personal ends.”

(Contacted this week, Naidoo told Currency to contact the SARB for comment.)

Abuse of power?

The SARB has not yet said if it plans to appeal this ruling, but there are implications for the institution’s independence, as other senior officials had supported Naidoo.

Pityana believes this signals a deeper problem.

“This was not just Naidoo. Other governors met, considered the matter, and agreed with him. That says a lot about how compromised the institution has become,” he says.

If he is right, and there is a pattern of “informal decision-making”, which suggests an abuse of power, and where rumour is elevated to fact, this would be a problem. 

The regulators argued that it is their job, under international regulations, to assess if someone is fit and proper. But Pityana believes this sort of conduct, in which the rules are bent to suit a specific agenda, undermines public trust and confidence in the country’s financial system.

“This is no different from using state institutions to pursue political opponents,” he says. “It is scandalous. It is dangerous. It must stop.”

Though the SARB may appeal, Pityana believes the damage to the institution’s credibility will linger. “This judgment draws a clear line,” he says. “It reminds us that even the most powerful institutions must be held accountable. No-one is above the law.”

_{Top image: Sipho Pityana. Picture: Gallo Images / Netwerk24 / Felix Dlangamandla.}