Leading business executive Sipho Pityana has taken the extraordinary step of taking the banking regulator to court, claiming that it acted unlawfully in effectively blocking his appointment as chair of Absa.
In papers filed on Monday, Pityana asks the high court to declare that the Prudential Authority (PA) unlawfully conducted an “informal process” with the boards of Absa Bank and Absa Holdings in connection with his nomination.
Pityana says that the informal process “circumvented procedures set out in the Banks Act” and culminated in board chair Wendy Lucas-Bull being informally told by the head of the PA, Kuben Naidoo, who is also a deputy governor of the Reserve Bank, that he would not support his nomination.
While it is the responsibility of the board of directors of a bank to nominate a shortlist of two for the chair post, the PA must determine if the candidate is “fit and proper” and whether their appointment is in the public interest. The informal interaction ultimately resulted in the board declining to formally nominate him, says Pityana. However, at the same time it affirmed him as lead independent director, an indication, says Pityana, that it retained its trust in him.
But the process has damaged his reputation and is defamatory, he contends, as it implies that he is not “fit and proper” or his appointment would not be “in the public interest”.
The case threatens to engulf Absa, one of the country’s biggest lenders, in yet more leadership turmoil just six months after parting ways with its first black CEO, Daniel Mminele, a former central bank deputy governor who left over apparent differences on strategy with senior staff and the board. The bank, which is being run on an interim basis by Jason Quinn, has been named in Pityana’s suit as a respondent.
Furthermore, Pityana has accused former Absa CEO Maria Ramos of privately lobbying the PA not to appoint him, through her long-standing friendship and professional and political relationship with Naidoo, who worked under her in the Treasury when she was its director-general from 1996 to 2003.
“The fact that a private citizen, even though a chairperson of a mining company, can exert such a high degree of influence over the banking regulator on the choice of the bank’s next chairperson is highly irregular and deeply concerning,” he said in a statement on Monday.
Pityana was appointed to the board of Absa in May 2019 and became its lead independent director in May 2020. Lucas-Bull’s term ends in March 2022. Pityana says that in anticipation of this, the board established a committee to lead a succession search. Among others, the committee approached the PA to inform it of its intentions.
The committee reported back to the board that Naidoo had suggested that it share the shortlist of candidates, to avoid going down a path where there were potential problems.
Naidoo then made the board aware of a sexual harassment allegation against Pityana, which the latter said had been brought to Naidoo’s attention by Ramos. The allegation dates back to 2020 when both Pityana and Ramos served on the board of AngloGold Ashanti. At the time, the two were on opposite sides of a divide over various strategic issues, including the offshore listing of the company.
The sexual harassment allegation was investigated by a senior counsel appointed by AngloGold Ashanti and resulted in an adverse finding against Pityana. He then resigned as chair and later from the board and was succeeded as chair by Ramos.
In his affidavit, Pityana states that this was because of the divisions in the board. He had learnt through Lucas-Bull that Naidoo had been told by Ramos that he resigned to avoid an adverse decision against him by AngloGold Ashanti.
The AngloGold Ashanti report was reviewed by an independent lawyer on behalf of Absa. The review pointed out serious problems with the report, including that crucial evidence had been disregarded.
On Monday, Pityana said: “I am seeking a declaratory order on the grounds that the PA has, through an ‘informal process’, conducted deliberations about me that involved external parties — in particular, my successor as chairman of AngloGold Ashanti, Ms Maria Ramos, about a false and untrue allegation of sexual harassment that was made against me in 2020, and which Ms Ramos raised with the head of the PA, Mr Kuben Naidoo, when my name was put forward by Absa.”
The central bank said on Monday that it has acted within its mandate and would challenge the allegations in court. “It is the responsibility of the regulated entity to nominate members of the board and it is ultimately responsible for the appointment of directors of the board as well as executive officers. The Prudential Authority has the mandate to assess the fitness and propriety of proposed appointments of directors and executive officers, and has the right and responsibility to object to an appointment based on competence or integrity of the proposed candidate,” it said.
“As a matter of policy we do not discuss matters related to any regulated entity in public, and the confidentiality of the entity and relevant individuals are respected in accordance with confidentiality requirements,” it said.
Ramos did not respond to a request for comment. Lucas-Bull said she was unable to respond immediately and would do so on Tuesday.
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