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Pityana heads to court over Absa chairmanship

‘The processes followed were outside of the law and unfair; they have compromised my dignity and impugned my character’ – Sipho Pityana, lead independent director, Absa.

RYK VAN NIEKERK: In a day of some boardroom drama Absa announced it had appointed Sello Moloko at its new chairman to replace Wendy Lucas-Bull when she retires in March next year.

The announcement followed after Absa’s lead independent director, Sipho Pityana, served court papers on the Prudential Authority of the Reserve Bank, claiming his nomination to become the bank’s chairman had been unfairly blocked.

He claims his nomination was blocked after Maria Ramos informally informed the Prudential Authority’s head, Kuben Naidoo, of a sexual harassment incident and investigation involving Pityana while he was the chairman of AngloGold Ashanti.

Ramos was a former CEO at Absa and succeeded Pityana as chairman at AngloGold Ashanti when he resigned late last year. Pityana strongly denied the harassment charges and claims the Prudential Authority did not follow proper procedures and did not offer him an opportunity to defend himself.

Sipho is on the line. Sipho, thank you so much for joining me. Tell us what happened.

SIPHO PITYANA: Ryk, thank you very much. In my court papers I make a very simple argument that my prayers are that the court declares the conduct of the Reserve Bank as Prudential Authority as unlawful and ultra vires, in that they circumvented the provisions outlined very clearly in Section 60 of the Banks Act, which requires that the bank’s board of directors makes a determination of this criteria and select whomever it decides as the chair of the board, after which it then submits [that] to the regulator for assessment of its chosen candidate – whether that person is fit and proper, or whether it is in the public interest for that person to be a chairperson of a bank.

In fact, what transpired is that the regulator involved itself in certain criteria and also in engaging in the selection process to the extent that it involved itself with determination of more than one person nominated by the board, and consequently ran processes that were enquiring into my past in a way that did not allow me my right to be heard, which is a constitutional and legal right that I enjoy under South African law.

So the processes that they followed were outside of the law and unfair indeed. They have compromised my dignity and have impugned my character.

RYK VAN NIEKERK: So Absa put your name forward to become the new chairman, and during a process that nomination was blocked. When did you become aware of this?

SIPHO PITYANA: I became aware of this as early as April – that there were concerns that were being expressed by the regulator which had clearly indicated that it was running what [it] called an ‘informal process’.

I was told what the objections were about, and the concerns that were expressed, and these related to allegations of sexual harassment that I had thought were completed at AngloGold Ashanti and confidentially with the consent of all parties – that is myself, the person who laid the accusation against me, and the Absa board.

To my surprise these were raised and brought to the attention of the regulator of banks in the context of this process by Ms Maria Ramos – if one accepts the feedback that I got from the chairperson of Absa, who told me about all of this. Remember, Ryk, that I was never afforded an opportunity to engage directly with the Prudential Authority at all throughout this process.

RYK VAN NIEKERK: You found out that Maria Ramos relayed this information to Kuben Naidoo, the head of the Prudential Authority via Wendy Lucas-Bull. That seems also to be an informal communication. You were never formally informed of what had transpired.

SIPHO PITYANA: All of this was through an informal process, and it did appear that the Reserve Bank was talking to other people with regard to my candidature. I was not furnished with evidence of what they were saying, or statements of what they were saying. I was not afforded an opportunity to respond to whatever it is that they were saying. I was not afforded an opportunity to put my side across and explain the circumstances of what they were enquiring about.

But it certainly would appear that one key issue that they were raising was pertaining to the so-called allegations of sexual harassment, as a result of which the Absa board, to their credit, in fact instituted an independent review process of that investigation, which then proceeded to conclude that its outcomes were flawed and that it hadn’t taken into consideration all the material evidence that has been presented before it, effectively setting that investigation outcome aside – enough for the Absa board to then conclude that it remained confident in its nomination that I be appointed chairman of the board.

It’s at that point that the Reserve Bank, without interrogating a competent report of a review process that I’d undertaken at Absa, decided on the basis of whatever feedback they may have received from Ms Ramos, according to the reports that I was getting from Wendy Lucas-Bull, clearly suggesting that the governors of the bank had met and considered my candidature and, if Absa were to put forward my name formally, they would object to that sufficiently to basically render the formal process of whatever it is that Absa would have wanted to do with regard to my candidature completely redundant.

So they basically, effectively in an unlawful fashion, took me out of consideration without ever giving me an opportunity to be heard.

Section 60 of the Banks Act would otherwise have allowed them to make that determination and give reasons why they would have come to that view. In this instance, they didn’t have to give any reasons, and they refused to give reasons, as I asked them to advise me why they had come to that conclusion. Instead they denied that they’d come to that view. And yet the Absa board was labouring clearly under the feedback and impression that they had come to that view and they proceeded to withdraw my name from its recommendation formally.

RYK VAN NIEKERK: AngloGold Ashanti told Business Day today that after the sexual harassment allegations emerged, it initiated an independent investigation and the group confirmed today that it was confident in its conclusions. Why did you not take the conclusions of that formal process at AngloGold Ashanti on review?

SIPHO PITYANA: Well, I think that’s a very important question because in reality what happened is that an investigator was appointed and I gave my full cooperation to that process. The investigator initially released a preliminary report, what is called the ‘draft report’, which came to negative findings against me. I wrote in response to give a detailed outline of the shortcomings of that process, because I was keen that we get to the bottom of the issues. I thought there were things that they had overlooked. In order to assist the investigation I highlighted those. I also indicated that if those things were not attended to properly, it would undermine the integrity of the report, and I would await the outcome and see where we take the matter.

Once that draft report had come out, because of the conflicts that were happening on the board which made my chairing of the board completely untenable, as well as the outcome of this report, I took a view that it would be appropriate in anticipation of the finalisation of the report for me to step down as the chairman of the board without resigning as a director.

I made it clear at the time that the reason was that I wanted to await the finalisation of the report to allow the board to take a view on how it wanted to proceed with it. In the event that there was any reason to take action against me, I would contest it and I would be prepared to take the matter on review through our courts.

In the event, AngloGold Ashanti, through its legal representatives, came to me to propose that the matter be settled and that we accept that the process of the investigation would be completed. Once it was completed, I’d be afforded an opportunity to comment on the report – whether positive or negative in its outcome. Both the report and my comments would be kept together and anybody who enquired as to how this matter had been concluded would be furnished with both of those.

Of course, this was always going to be predicated on the complainant agreeing to that outcome. From AngloGold Ashanti’s point of view, clearly that was the agreement that I was happy to settle for, because indeed the legal processes, given the vulnerability of the company at the time, would have caused a lot of uncertainty and would have impacted the company negatively at a time when it was vulnerable in terms of its positioning. The reason why it never went on review was because it was settled at the instance of AngloGold Ashanti and the complainant.

RYK VAN NIEKERK: Yet, when you were appointed onto the Absa board, there was a review process on the Absa side.

SIPHO PITYANA: And yet, when there was a succession process for the chairmanship at Absa, Maria Ramos, whose board had issued a very colourful statement about the circumstances of my leaving the board of AngloGold Ashanti when I left in December – and indeed, in the integrated report published to shareholders of 2020, which was released in March of 2021, they were similarly quite colourful and raised none of these issues.

But in the event of this process, when the board of Absa’s search firm that was assisting them with this asked Maria specifically if she had a reference feedback, she said she had none and that she could only provide a certificate of tenure instead, which was never going to be helpful for what they were looking for – but curiously then, behind the scenes, [she] proceeds to talk to Kuben Naidoo and say[s] oh, there are problems here; you must look into those and there’s a negative report arising from this investigation.

It is only at that point that the Absa board then takes that report through an independent legal-review process to ascertain whether it can place any reliance on it in terms of determining whether I would be an appropriate person to appoint or not.

The report came back. That report was shared with Kuben Naidoo and his colleague, and they had all the clear analysis of what the shortcomings of the AngloGold process were. If he was unhappy with it, he should have subjected it to a proper legal review and scrutiny, and not just place himself on a dogged feedback from Maria Ramos and take a decision that he was going to ignore it.

RYK VAN NIEKERK: Obviously you put your concerns to the Absa board. Did the Absa board come to your defence and object to the Prudential Authority for its apparent conduct?

SIPHO PITYANA: Well, the Absa board advised me through the Wits chair that – and this had been after several iterations between the search committee, the chair of the board and the Prudential Authority on this matter – they had decided that, given the objection came from a meeting of the governors of the bank, which would be the prudential committee of the bank, it seemed to be a firm and final view of the bank and that there would be no point in proceeding in light of the fact that their communicated decision to object to my appointment without due process seemed to be quite firm.

So they took a view that they would not proceed with my name because they didn’t want to offend the regulator and mess up their relationship.

RYK VAN NIEKERK: Will you remain on the Absa board?

SIPHO PITYANA: I’ll remain a director on the Absa board. You will recall that I was recently elected by shareholders overwhelmingly at our June annual general meeting. I have no reason to believe that I should want to end my tenure there. It’s a role I’m enjoying and I look forward to my continued contribution.

RYK VAN NIEKERK: What do you aim to achieve through the legal action? What is your objective?

SIPHO PITYANA: There’s a very important governance principle that has been violated here if you look beyond just the unlawful conduct of the regulator.

What the regulator’s conduct means is that, where shareholders elect directors and entrust them with the company, and entrust them to make decisions with regard to its public officers – including the chair, the CEO and the CFO – to have one of the board’s key and critical responsibilities usurped by the public authority, and that by the Prudential Authority in that fashion, is a serious breach of governance because, when things don’t go well, shareholders must hold the board accountable.

If it is the Prudential Authority that in effect appoints the public officers of a bank, shareholders can’t hold the Prudential Authority to account.

Their ability to hold anybody to account, having invested huge sums of their money, is to hold the board of directors to account. That’s why the board of directors must guard its purview very jealously because it is entrusted with that responsibility and rule, and paid for by shareholders.

The second thing is that, for me, if you allow a Reserve Bank, whose presence in our lives and the economy of the country looms so large and is so pervasive, to act in an unlawful fashion, it creates for a very difficult situation in our economy.

Remember that the public confidence in our economy largely stems from the fact that we are celebrated across the world as a country of laws, that if anybody acts in an unlawful fashion, there is recourse. And the Reserve Bank, as an independent institution of the Constitution, certainly has to conduct itself within the framework of the law. It has to promote good governance. It shouldn’t undermine it. In this instance it has done exactly that.

And, lastly, I’ll say to you that a conduct where without any due process sees the regulator come to a view that it would object to my appointment means that, in its views and perceptions, thinks that I may not be a fit and proper person, and it may not be in the public interest for me to be a chair of the board or director or whatever it is – that impugns my character without ever giving me an opportunity to [reply].

The worst criminals in this country are afforded a better opportunity to be heard than I’ve been provided in terms of the process that the Reserve Bank has followed.

And I trust that our courts will frown upon that and as a result of this they will grant me my prayers and agree that the Reserve Bank has acted unlawfully.

RYK VAN NIEKERK: Are you considering defamation charges against Maria Ramos?

SIPHO PITYANA: I’m considering defamation charges against anybody and everybody who would have been implicated in damaging my name in the manner that it has been through this process. Certainly without doubt the Reserve Bank has conducted itself in that fashion. I stand legally advised as to who else would be enjoined in that action.

RYK VAN NIEKERK: Sipho, thank you so much for your time today. That was Sipho Pityana, the lead independent director at Absa.

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The impossible process of integrating communism with capitalism (and pseudo non-autocracy with pseudo non-democracy) can only create grinding and crunching. The only thing they have in common is greed (for money and/or power) and intimidation (for the defensive fear).

How big must his ego be for him to sue because he is bitter that he lost out on the position due to corporate politics?

Of course as opposed to national politics that legislates racism with BEE laws. At least he didn’t lose out to a white.

Bitter pills.

End of comments.

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