By Lehlohonolo Lehana.
The Prudential Authority (PA) has launched an application for leave to appeal the 9 May court ruling on Ithala SOC Limited (Ithala).
The Pietermaritzburg High Court last week allowed Ithala to fully resume its operations.
Ithala was expected to resume its core operations yesterday, excluding deposit-taking, following a ruling by the the same court that set aside the PA’s decision to freeze its accounts.
Repayment administrator Johan Kruger is also set to challenge the judgment through an appeal.
The regulatory body, tasked with overseeing South African banks, initiated provisional liquidation proceedings against Ithala earlier this year, prompting the freezing of the state-owned bank’s accounts.
“It is important to note that the RA has, in any event, complied with the court’s prior order not to take control of Ithala’s non-deposit-taking operations.
“However, the RA has been unable to isolate depositor funds from other funds as Ithala has never maintained a separation between its deposit-taking activities and its other business operations,” the RA’s statement reads.
The Prudential Authority further clarified that the court’s judgment pertains only to Kruger’s role and does not affect the broader liquidation application, which remains pending before the same court.
“The PA awaits the finalisation of the liquidation application.”
The authority emphasised that its primary responsibility is to protect the interests of Ithala’s depositors.
In this context, while the PA understands the frustration and difficulty this situation may cause for depositors, the freezing of accounts remains a necessary and prudent step to safeguard the depositors’ remaining funds.
“This measure aims to ensure a fair and lawful distribution process of depositor funds while awaiting the outcome of the liquidation application.”
The judgment was welcomed by KwaZulu-Natal MEC for Economic Development, Tourism, and Environmental Affairs, Reverend Musa Zondi, who said: “This judgment upholds the rule of law and affirms our commitment to preserving institutions that exist to serve the people of KwaZulu-Natal. Ithala remains a vital development finance institution, and we will continue to safeguard its integrity and mandate.”
He added that the KZN government would continue consulting with legal counsel to understand the implications of the ruling and any further appeals.
KwaZulu-Natal Finance MEC Francois Rodgers also welcomed the decision and reaffirmed support for Ithala. Rodgers, who attended the hearing, said: “We have always contended that Kruger has never acted in the best interests of Ithala and its retail depositors. It should be remembered that this is the second time that Judge Muzi Ncube has affirmed that Kruger has overstepped in his powers. Unfortunately, we are concerned that some of the damage caused by his actions may prove impossible to reverse.”