KZN Treasury Takes Action to Prevent Ithala’s Liquidation

The KwaZulu-Natal Treasury is gearing up to help Ithala thwart the provisional liquidation application launched against it.

Last week the Repayment Administrator (RA) acting under the auspices of the Prudential Authority (PA) of the South African Reserve Bank (SARB) filed papers in the Pietermaritzburg high court for the financial entity’s provisional liquidation.

The PA — responsible for the prudential regulation of banks and insurance companies within the South African Reserve Bank — said it believed this action was in the best interests of the about 257,000 depositors in Ithala, as the appointed liquidator will be able to use insolvency legislation to recover and distribute their funds to the extent that it is possible.

However the KwaZulu-Natal Treasury says contrary to the claims of the RA, Johannes Kruger, Ithala does not have a solvency and liquidity problem.

It said as of October 31, Ithala’s total assets amounted to R3.25bn while total liabilities amounted to R2.93bn. This means Ithala’s assets exceeded its liabilities by R316m

The Treasury said further arguments on Ithala’s functionality would be demonstrated in the high court when the matter is heard on Tuesday.

KwaZulu-Natal finance MEC Francois Rodgers, said: “It is KwaZulu-Natal Treasury’s contention Johannes Kruger has not acted in the best interests of Ithala’s depositors, workers, suppliers and clients. In fact, the callous action of Mr Kruger has placed at risk countless Sassa beneficiaries and sets out to worsen the concerning high unemployment and poverty rate in the province.

“We are further aggrieved to learn that Mr Kruger does not want the entity to pay the February salaries of Ithala staff members. This demonstrates a lack of care for people’s livelihoods.

“Ithala is a relevant institution in the mission of the government of provincial unity (GPU) to build a capable, ethical and developmental state. The entity offers essential financial and non-financial support to many small and informal businesses that provide jobs particularly in rural and other communities that are not typically supported by commercial financial institutions. The GPU is, therefore, determined to ensure that the entity receives the necessary support for its survival.”