In a landmark ruling on Friday, the Pretoria High Court determined that the South African Reserve Bank (Sarb) and its Prudential Authority (PA) acted outside the bounds of the law in their objections to Sipho Pityana’s appointment as chair of Absa Bank in 2021.
This ruling marks a significant turn in a case that has highlighted the tension between regulatory authorities and corporate governance in South Africa.
Pityana, who sought a declaratory order asserting the unlawfulness of Sarb’s conduct, argued that their informal interventions breached established legal protocols.
Pityana served legal papers to the PA citing that the authority blocked him from becoming chair of Absa bank by conducting an informal process and consulted with third parties, including former Absa bank CEO Maria Ramos, about whether he was “fit and proper” for the role.
This as the PA had raised concerns after Absa’s succession committee identified Pityana as the sole candidate to succeed Wendy Lucas Bull, who was set to step down in March 2022. Absa instead appointed Sello Moloko as chairperson.
Crucially, these discussions were meant to be separate from the formal procedures outlined in the Banks Act.
Having joined the Absa board in 2019 and elevated to lead independent director by June 2020, Pityana’s career took a controversial turn after his resignation from AngloGold Ashanti in December 2020 amidst sexual harassment allegations, which he firmly denied.
This earlier controversy resurfaced when Absa later dismissed him from its board, contending that his decision to file suit against the PA constituted a breach of his duties as a director.
The Absa Group and Absa Bank Boards removed Pityana as a director of the Boards, with immediate effect, in 2021 following a decision to remove him as lead independent director and chair of the remuneration committee.
Judge Flatela Luleka, in his ruling, underscored that there was no credible evidence to dispute Pityana’s assertion of being on track for the chairperson position at Absa.
“I conclude that [Pityana] was poised to be nominated for the chairperson position of Absa. There does not appear to be any credible evidence before me to gainsay this position,” reads the judgment by Judge Flatela Luleka.
“I am of the view that this matter raises a discrete legal issue of public importance that would affect matters in the future and requires the adjudication of this court, notwithstanding the mootness of the issues between the parties. The relief sought by the applicant is justified.”
Neither the Sarb nor the PA were available for comment on Tuesday, and Pityana’s phone ran unanswered.
Pityana’s legal battle extends beyond this ruling; he is also contesting his removal from the Absa board through separate legal proceedings.
He asserts that the outcome of his current application could set important precedents for governance and the relationship between the PA and banking institutions in South Africa.
The court concluded that this matter was of public importance, and its resolution could significantly influence governance structures in future, rendering the relief sought by Pityana justified despite the ongoing friction between the parties.
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