Where’s the accountability for Ithala?

Today National Treasury announced it is bailing out the failed Ithala state-owned company (SOC) with R2.2 billion (see here).

Ithala SOC Ltd is an entity wholly owned by the Ithala Development Finance Corporation Ltd (Ithala DFC) which, in turn, is an SOC wholly owned by the KwaZulu-Natal provincial government, managed through the KZN MEC and Department of Economic Development, Tourism and Environmental Affairs.

Ithala SOC has been the subject of ongoing investigations and in January 2025, the South African Reserve Bank’s Prudential Authority applied for Ithala’s liquidation (see here and here).

It is worth noting the Prudential Authority’s comments that Ithala SOC has never been a registered bank and does not meet the registration requirements of the Banks Act, yet it was allowed to operate as a bank under exemption notices on condition that it obtained a banking licence. “Regrettably, Ithala consistently and repeatedly violated the conditions of the exemption notices and ultimately failed to ensure that it was registered as a bank in the extended time period it was given to do so,” said the Prudential Authority, the regulatory body that oversees banking matters and reports to the Reserve Bank.

Since December 2023, Ithala has been operating as a bank illegally.

The Prudential Authority statements note that Treasury undertook to provide a guarantee, to assist with the repayment of debt owed by Ithala to depositors.

This is not included in the national government’s list of contingent liabilities in Budget 2025 of 21 May 2025 (see table 11, here). Nor does the bail-out of Ithala Bank appear to have been included in the Medium-Term Budget Policy Statement (MTBPS) of 12 November 2025 and was not included in the MTBPS Financial Risk Statement (see here).

Today’s statement by the Treasury seems to indicate that support has moved from a guarantee to an actual bailout.

“The National Treasury, following consultations with the KwaZulu-Natal Provincial Government, will make up to R2.2 billion available to enable the repayment of depositors of Ithala SOC Limited (‘Ithala’). The payout process will start on 8 December 2025. Depositors will first need to be verified to ensure payments go to the correct recipients. Once verified, payments will be processed within approximately two days,” says the Treasury statement.

While OUTA understands government’s role in the repayment of Ithala depositors, following the inept oversight conduct of both the provincial and national authorities on this matter, the ultimate question is: why do we not hear of consequence management and accountability for this mess?

Ithala SOC had a board. Ithala DFC was the owner of this subsidiary and it, too, has a board. Neither entity appears to have submitted annual financial statements for 2024/25. The KZN MEC was also supposed to provide oversight. The KZN provincial government as a whole – particularly the provincial cabinet and the provincial legislature – should also have been paying attention. Where was their oversight?

The change from a guarantee to a promise to “make up to R2.2 billion available” and the failure to include this in formal Budget or MTBPS documents indicates a last-minute scramble by National Treasury to fix another significant bank collapse debacle.

OUTA is of the view that ideally all of this R2.2 billion required to settle depositors’ claims should be funded from the KZN provincial government’s equitable share and, furthermore, this should not be cut from essential services, but from non-essential services.

OUTA’s 2017 warning

In June 2017, OUTA raised alarm at dubious conduct by Ithala DFC (the parent SOC), which had handed over a “loan” of R50 million to a company owned by the late Ben Ngubane and his wife Sheila Ngubane, who never repaid it. Ngubane passed away in July 2021, and was in the news for the wrong reasons during his tenure as a board member of the SABC and Eskom.

OUTA laid a criminal complaint about this matter in 2017 (see here). True to form, the SAPS failed to pursue the matter, which speaks volumes about how far back and how deep the ANC political patronage machinery has been operating, as is now coming to the fore at the Madlanga Commission.