Ibex Group, formerly Steinhoff, has taken the SA Reserve Bank to court after the Bank reneged on its approval to allow R9bn of funds to be used to repay foreign creditors who agreed to extend the maturity of their loans to the company.
This helped prevent an uncontrolled liquidation and the loss of up to 50,000 jobs in SA after Steinhoff crashed in 2017.
The Bank’s decision to block the funds has raised concerns in the market that it might deter foreign investors and bankers from lending to SA companies, for fear the Bank might prevent them from repatriating interest and capital on their loans — as central banks have done in some other African countries.
The refusal in July to allow the R9bn to be taken out of SA to repay debt owed to international creditors came despite explicit exchange control approvals the Bank’s financial surveillance (FinSurv) department granted in 2019/20 as part of Steinhoff’s restructuring and settlement process, and as recently as April 2024, Ibex said in court papers.
The previous approvals by FinSurv were a keystone of the restructuring and settlement process, and the creditors would not have agreed to extend the maturity date of their debt without them, the company said.
If they had refused to extend, and had called in their loans, this would likely have forced Steinhoff into liquidation and a fire sale of its assets — including shares in Pepkor, one of Steinhoff’s main remaining assets in SA. That could have meant extensive job losses.
The R9bn the Bank blocked in July was the proceeds of a sale by Ibex of 500-million Steinhoff shares. The sale relied on the Bank’s so-called 0433 approval to meet obligations to international financial creditors, and the Bank was fully aware of and approved of this, Ibex argues.
The latest block came after the Bank had earlier blocked and then seized R6bn of Ibex/Steinhoff assets on the grounds that they were allegedly linked to exchange control contraventions by Steinhoff, whose previous management under the leadership of the late Markus Jooste perpetrated SA’s biggest fraud when it created fictitious offshore shell companies to inflate profits and hide losses, the full extent of which emerged only in late 2017.
Ibex CEO Louis du Preez said the company’s new management team had kept the FinSurv fully informed about progress in implementing the restructuring and settlement process.
“After six years of carefully constructed, complex, multi-jurisdictional and value-enhancing processes post December 2017, which involved court-sanctioned processes and were made possible in significant part by the financial creditors’ co-operation and forbearance, Steinhoff has now reached the stage where it is obliged to discharge its obligations to the financial creditors,” he said in court papers.
Paying them was the final step to implement the process. But on two dates in early July the Bank refused to allow two cross-border payments to be made in terms of the 0433 approvals, with no clear communication of why.
Ibex approached it to try to get an explanation. On July 25 the Bank imposed a blocking order on the funds. According to the papers, the Bank’s deputy governor, Fundi Tshazibana, reportedly told Ibex banker FirstRand that under no circumstances would any money leave the country without her consent.
Du Preez said the Bank’s conduct placed Ibex and its management in a position where they could not implement the restructuring process in accordance with agreed terms. It had caused Ibex and its stakeholders immediate losses due to funds not being repaid under approvals the Bank had previously granted.
The company had no option but to approach the court for urgent relief. Ibex launched an urgent application on July 30 to set aside the blocking orders and allow it to implement cross-border loan and dividend payments.
“The Reserve Bank had approved these payments pursuant to a specific application made to it by Ibex, but it first frustrated its own approval by preventing FirstRand from making payments and then undermined the approval completely by blocking the very funds that Ibex had realised as a direct consequence of the approval,” Du Preez said.
Reserve Bank spokesperson Thoraya Pandy declined to comment, saying the matter would be ventilated in court.
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