Sunday, January 16

The growing problems at Absa when Pityana was ousted as lead independent director


You can hardly imagine the awkwardness at Absa Towers in Joburg CBD when Sipho Pityana arrives for a board meeting.

In essence, he has accused the bank’s former chief executive, Maria Ramos, of ruling out her chances of becoming president of Absa by relaying information she found about allegations of sexual harassment against Pityana while she was chairman of AngloGold Ashanti (AGA).

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Ramos recently moved into AGA and Pityana had a reasonable expectation of taking over as Absa’s chairman.

Only Pityana says he never had the opportunity to contest the sexual harassment allegations, which he denies, or to call witnesses who would corroborate his version of events.

Here’s the problem: supply and demand in this case are insurmountable.

The alleged victim says it happened, Pityana says it didn’t. If not, your career and reputation could be ruined by false accusations. If true, Pityana is playing with the system and making fun of the alleged victim. We will probably never know.

AGA initiated an investigation, led by a lead defender, that was “independent, fair and thorough, and we are confident of its findings,” AGA said in a statement to Moneyweb.

As AGA has not been cited as a defendant in this case, it is likely that we will not see the content of that investigation.

“The AngloGold Board emphatically rejects the allegations made by Mr. Pityana against Ms. Ramos and AngloGold Ashanti, which are unfounded. The issue of the Presidency of Absa is one between Mr. Pityana and the Board of that company, ”the statement reads.

Discomfort

Here’s the awkwardness: Pityana has subpoenaed Absa Bank, the bank where he serves as an independent director (although as of last Friday he is no longer a lead independent director), as a defendant in his case directed primarily against the Reserve Bank’s Prudential Authority. from South Africa. (Sarb), claiming that he broke the law by adopting an informal process when considering his nomination for the Absa presidency.

Pityana did not get the chairman’s job, which went instead to Seal Moloko, who replaces Wendy Lucas-Bull at the end of March next year.

The reason he did not obtain the position, as stated in his court application, is that the Prudential Authority, which must oversee high-level bank appointments like this one, adopted an informal process in violation of Section 60 of the Banking Act. Banks, which deals with these types of appointments. Apparently, he accepted evidence from Ramos without giving Pityana any chance of rebuttal or objection.

Read: Candidate for president of Absa sues the regulator for rejection

Pityana was appointed a director of Absa in May 2019 and was appointed a principal independent director in June 2020. Although he was removed as a principal independent director last Friday, he remains a director on Absa’s board of directors.

He previously served as director of AGA since 2007, and from 2014 to December 2020 he assumed the position of president of AGA.

Succession search

In 2020, Absa began looking for a replacement for Absa chairman Lucas-Bull, who will serve for nine years as an independent director, the maximum allowed by the Reserve Bank.

A succession committee initiated the interviews and concluded that Pityana was the most suitable candidate for the position.

Absa appointed a search firm to help with the succession, and some of the work included reference checks, which in turn included interviewing Ramos, who had later assumed the chairmanship at AGA, and Rhidwaan Gasant, lead independent director of the board of AGA. All questions about the suitability of Pityana for the position of president of Absa were directed to Ramos.

Allegations

Absa’s board gave the go-ahead to the appointment, when suddenly there was a problem: Prudential Authority executive director Kuben Naidoo, a former colleague of Ramos from the days of the National Treasury, had apparently received information from Ramos about the allegations. of sexual harassment.

Those allegations come from a senior AngloGold Ashanti manager and were investigated by defender Heidi Barnes SC, who produced a report that reached an unfavorable conclusion for Pityana.

That report was released on November 30, 2020, and Pityana’s lawyers responded four days later, noting what they saw as flaws in the report, including the failure to interview the bodyguards who were with Pityana at the time of the alleged sexual incident. and [they said] they have been able to refute the accusations against him.

Despite his objections, Pityana’s court documents say that Barnes went ahead anyway and issued his final report on December 9, 2020, rejecting his statements and confirming his original findings that “my alleged statements and actions, by telling him to the plaintiff who was in love with her, to take her by the hand in the car and ask me if I could park my car and go up to her room ”, in her opinion, had occurred and constituted sexual harassment.

“I have always denied and continue to deny that these statements and actions occurred. I also deny that we were together in the car, ”reads Pityana’s affidavit.

This is an insurmountable factual dispute. AGA supports Barnes and his conclusions.

However, none of this will appear in the ongoing legal action.

Problematic

This is where it gets problematic.

The Absa board had appointed Peter Harris, lead attorney for Harris Nupen Molebatsi Inc, to review the sexual harassment investigation documents and decide whether the Barnes report’s findings were reasonable.

Harris found that the report did not take into account all the relevant evidence, and was flawed to the extent that it did not obtain corroborating evidence from independent sources, such as the aforementioned bodyguards.

With these reports in hand, Absa’s board maintained its confidence in Pityana’s suitability for the position of president. That decision was supported by 10 of the 13 directors (not the full board support that existed previously).

These same reports reached the Prudential Authority, and on August 2, 2021, Lucas-Bull received a call from Naidoo informing him that the majority of the governors of the Prudential Authority would oppose the appointment of Pityana.

The Authority did not give reasons, but instead of jeopardizing the bank’s relationship with the Reserve Bank, Absa decided not to challenge Sarb on his decision.

Pityana’s lawyers sent a letter to Naidoo asking why the authority had compromised his rights under Section 60 of the Banking Act (which deals with the appointment of bank directors and senior officials) denying him the right to respond to objections to your nomination.

Naidoo replied that since the authority had not received any formal nomination (from Pityana as Absa’s president), it had not made a decision for the required reasons.

Pityana is asking the court to decide whether, by adopting an informal process not covered by law, the authority had exceeded the limits of its powers, which are strictly restricted by Section 60 of the Banking Law.

The Banking Law makes it clear that the appointment of an executive director, director or executive officer of a bank must be approved by the authority, but that any objection can be challenged by the bank or the candidate.

If the authority was running a parallel and illegal process here, then Pityana wants the court to say so.

Pityana talks to Moneyweb

“I don’t care if someone more suitable was selected as president at Absa, but what I am opposed to is this back door process where I am denied positions based on wrong and false information that I am not It has given the opportunity to respond, ”Pityana told Moneyweb.

“The accusations that have been made against me are false and extremely damaging to my reputation and I had a reasonable expectation of being appointed president of Absa, as this was the finding of the Succession Committee and the Absa board.

“You cannot have an authority that is based on rumors and innuendo.”

Pityana claims in her court documents that Ramos spread false information about the reasons for her resignation from the AGA board, as happened immediately before the Barnes report was released. He allegedly claimed that Pityana left AGA to avoid any adverse reaction stemming from the report, while Pityana, in her court documents, offers a completely different view of a board at odds with itself in certain key areas as the reason for her departure.

Absa’s posture

Absa issued the following statement: “We confirm that Absa Group Limited and Absa Bank Limited have been subpoenaed in a process initiated by Mr. Sipho Pityana in which he seeks a declaratory order against the Prudential Authority. Absa is cited as an interested party, but no redress is sought against him.

“Absa has carried out a robust presidential succession process, which began in October 2020. During this process, which involved an exhaustive search, Absa considered the internal and external candidates who applied for the position of president of the boards of directors of Absa. Once this process was completed, Absa’s Boards of Directors decided to nominate Mr. Seal Moloko for the position and submitted his appointment as independent non-executive director and president to the Prudential Authority for approval. The Prudential Authority approved the appointment of Mr. Moloko and Absa has made the corresponding announcements in this regard ”.

On Friday, Absa issued a brief statement from Sens saying that the boards of the Absa Group and Absa had resolved that Pityana “will cease to be the principal independent director of Absa Group and Absa Bank, chairman of the Remuneration Committee (RemCo) and, as a consequence, member of the Directors’ Affairs Committee (DAC), with immediate effect ”.

“The Boards will appoint a new Lead Independent Director and Chairman of RemCo and advise shareholders in due course,” he said.

The Prudential Authority has indicated its intention to oppose the ‘declarant’ (who was carrying out an informal and illegal process to block his nomination) requested by Pityana.

Listen to Ryk van Niekerk’s interview with Pityana (or read the transcript here):


www.moneyweb.co.za

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