Hundreds of Ithala Bank’s employees face uncertainty over their salary payments after the Pietermaritzburg High Court postponed a matter that was going to determine whether their salaries would be paid to an unknown date despite being an urgent application.
The case was due to be heard on January 28 but was postponed due to the non-availability of Judge Muzikawakhelwana Ncube, who was assigned to hear it.
Ithala, which is the subsidiary of the KwaZulu-Natal Economic Development and Environmental Affairs (DTEA), had on January 17 approached the court on an urgent basis to interdict Prudential Authority (PA)’s appointed Repayment Administration (RA) Johan Kruger from interfering with its operations.
The interference included the freezing of the bank’s transactions, which prevented the payment of salaries, depositors from accessing their money, and payment of the bank’s service providers.
Describing the situation faced by those who are affected by the RA’s action, DTEA spokesperson Sinenhlanhla Mthembu said: “You know how much this has affected the livelihood of the people.”
She declined to comment further on the matter that is before the court.
Lawyers for the DTEA, which is among the respondents in the matters, could not be reached for comment as Mthembu did not respond to a request for their contact details.
Another matter brought by the PA to the same court to provisionally liquidate the bank did not sit on Thursday as it was expected.
It was understood that the court had on January 29 removed the matter from “the Unopposed Motion Roll”.
This reporter saw a letter, that PA’s legal representatives Werksmans Attorneys wrote to KwaZulu-Natal Judge President Poyo Diwati on January 29, revealing that the liquidation matter could not sit on Thursday “as it is not ripe for hearing”.
The letter stated it was because DTEA attorneys had filed their answering affidavit “outside of the prescribed time periods in the notice of motion, on Monday, 27 January 2025”.
Werksmans did not respond to questions emailed to it while Ithala’s Tebogo Malatji referred the questions to DTEA.
“In addition to these parties indicating that the matter is not ripe for hearing, the PA is still to file its replying affidavit as a result of the respondent’s non-compliance with the truncated timeframes set out in the PA’s notice of motion.
“For this reason, we are instructed to remove the matter from the roll,” read the letter.
Judge Diwati requested that the Ithala’s urgent application and liquidation matters be heard together.
According to the letter, parties involved in the matters held a virtual case management meeting on Wednesday.
“We propose further that the two applications be heard together before the same Judge.
“Alternatively, that a full court be convened for the hearing of both applications given the public importance of the matter and the complexity of the issues raised,” read Werksmans’s letter.
The outcome of the case management meeting remained unknown.
It was expected that supporters and leaders of various political parties, unions, and traditional leaders would gather outside the court in a show of support for Ithala and rejection of PA’s action.
Legal expert Advocate Vusi Khumalo has cast doubts on Ithala’s chance of escaping liquidation as it has been operating without a banking license for “donkey years” therefore placing depositors’ money at risk.
“Ithala is at the stage where it is not even registered to take cash, which means that the Prudential Authority, which has authority to regulate deposits, is acting in a public interest,” he said.
Khumalo said the fact that the National Treasury was working on finding other banks to take over deposits that are currently held by Ithala, meant that the national government was not willing to assist the bank.
“You are running a risk if you continue to deposit with somebody who is not registered to receive deposits,” he said.
He said the postponements at the high court were “clearly more of a cosmetic arrangement”.
“So that, in my view, people won’t be perceived as if they did nothing when Ithala needed their support because in the main, it is now only KwaZulu-Natal (supporting Ithala).”
The South African Social Security Agency (Sassa) recently announced that the National Treasury was negotiating that 65 000 grant beneficiaries be transferred to banks associated with the Banking Association of South Africa (BASA).
“The National Treasury informed Sassa that in the interim, out of all the banks that were approached by BASA, First National Bank (FNB) offered emergency assistance to open accounts to facilitate payment for Sassa clients, who are currently banking at Ithala,” read the Sassa statement released on January 28.
Khumalo said this meant that the National Treasury had folded its hands “because they know what is at stake”.
“You cannot have somebody who is not licensed running a bank and receiving cash from depositors.
“For donkey years, the bank has been operating on an indulgence.
“They would approach ministers because it is politics and they would be allowed, but on the other hand, Ithala was not cleaning its house to ensure they got a license,” he said.