The bank was previously accused of wrongdoing and mismanagement by whistleblower Iqbal Muhammad Khan
(Johannesburg, March 30, 2023) – Following recommendations from the South African Reserve Bank (SARB) Prudential Authority, South African Finance Minister Enoch Godongwana placed Habib Overseas Bank under curatorship with immediate effect on 26 March 2023, the Platform to Protect Whistleblowers (PPLAAF) said today.
PricewaterhouseCoopers (PwC) has been appointed the Bank’s curator to deal with governance, compliance and operational failures.
The SARB “duly considered the continuing failure of the bank’s Board of Directors and management to deal effectively with the weaknesses in controls and its poor regulatory compliance, as well as the growing risks over its ability to meet future obligations,” it said in a statement. The Reserve Bank added that “various investigations and reviews” found that Habib Overseas Bank was flouting financial sector regulations.
This curatorship follows the disclosures made by PPLAAF-supported whistleblower Iqbal Muhammad Khan who was Head of Internal Audit at Habib Bank. Iqbal Khan brought to light money laundering and unfair banking practices and continuously reported them to his supervisors. Subsequently, Iqbal Khan faced humiliation, harassment and threats of dismissal, particularly from his managing director, Manzar Kazmi.
“Iqbal Khan paid a heavy price due to his integrity and honesty”, said PPLAAF Southern Africa director Pusetso Morapedi. “It is inconceivable that he had to sacrifice his 25 years old banking career while his claims are all but proven.”
In 2017, Vardospan, a company linked to Gupta associate Salim Essa, a South African businessman who is wanted for his connections to State Capture, tried to buy a controlling stake in Habib Bank for around ZAR 450 million (approximately USD 24,8 million). Although South Africa’s Competition Commission gave Vardospan’s urgent bid the go-ahead, it was halted and ultimately failed.
Following the bid to buy Habib Bank, Iqbal Khan shared information with the buyer about these irregularities. Within the bank, the failed attempt to buy the controlling stake in Habib was blamed on Iqbal Khan who later approached the SARB in 2018. The SARB sent a neutral audit team to conduct an investigation that found Habib Bank had committed criminal offences.
Furthermore, in 2022, amaBhungane Centre for Investigative Journalism released a report that found Habib Bank appeared to have been used by a money-laundering syndicate to secretly send funds overseas.
While Habib Bank is closed, PwC will “assume the powers of the board and management and will make decisions regarding the bank’s continued gaining of loans and sound banking activities generally” SARB said. PwC is further required to “recover and take possession of all the assets of Habib Overseas Bank” in the interest of depositors.
In its statement, the SARB assured depositors that “there is no immediate concern” and that “their funds will remain safe within the bank.”
PPLAAF provided Iqbal Khan with legal defence and negotiated a settlement with the bank.
PPLAAF is a non-governmental organisation established in 2017 to protect whistleblowers, as well as to advocate and engage in strategic litigation on their behalf when their revelations deal with the general interests of African citizens.
For more information on PPLAAF, please visit:
PPLAAF’s website: https://pplaaf.org
Facebook: https://www.facebook.com/PPLAAF/
Twitter: @pplaaf
Email: Info@pplaaf.org
