Trade union federations welcome ruling reinstating Ithala's operations
The recent court judgement reinstating some functions of Ithala SOC has been hailed as a victory by labour federations and political parties, renewing faith in the justice system and paving the way for the bank's transformation into a state institution
The Ithala SOC Limited building in Kingsmead, Durban. A recent court ruling has lifted restrictions on its operations.
Image: DOCTOR NGCOBO Independent Newspapers
Labour federations have described the court judgment handed down on Friday that restored some functions of Ithala SOC Limited as a victory that has renewed their faith in the justice system, adding this judgment should mark the first step towards turning Ithala into a fully fledged state bank.
Labour federation Cosatu stated that the judgment has restored their faith in the justice system, while the South African Federation of Trade Unions (Saftu) said the Reserve Bank should not rush to close Ithala. They were reacting after the judgment handed down by Judge Muzi Ncube at the Pietermaritzburg High Court on Friday lifted some of the restrictions on the bank's operations and management.
In March, Ithala approached the court for an order to compel the SA Reserve Bank-appointed Repayment Administrator (RA) Johannes Kruger, to give it access to R863 million in frozen funds to pay staff. Kruger, in turn, sought to overturn a November 2024 court ruling that said he overstepped in his powers when he sought to take control of all operations at Ithala Bank.
In Friday’s ruling, Judge Ncube reaffirmed that Kruger has no right to take over the operational and day-to-day management of Ithala. The judge clarified that Kruger has no authority over the human resources, treasury, marketing, finance, and any other operational functions of Ithala, and that the board is not stripped of its powers despite the appointment of the RA.
He further ordered that transactions on Ithala’s bank accounts must be allowed for salaries and other expenses. The court further said Ithala is entitled to continue conducting its business. This may suggest that account holders may be able to access their accounts; however, this could not be confirmed with Ithala yesterday.
Cosatu leader in KwaZulu-Natal, Edwin Mkhize, said, “This judgment has restored our faith in the judiciary; it told us they can look at matters objectively. We hope that the Repayment Administrator and the Prudential Authority take it to heart and use it to assist Ithala, rather than close it.”
He added, “We have been very concerned about the impact this was having on the workers whose future was now in limbo, and we are worried about the effect this has had on the customers of the bank, which serves the most disadvantaged communities.”
Saftu’s Zwelinzima Vavi welcomed the judgment. “Ithala must be saved. We hope that the Reserve Bank will not be in a rush to liquidate the only remaining black-owned bank in South Africa and will instead work to strengthen the bank, with the ambition of transforming it into a state bank.
“Ithala and Postbank must be combined to form a state bank with a transformation agenda to address the exclusionary practices that are being implemented by the big commercial banks.”
KZN MEC for Finance Francois Rodgers welcomed Friday's ruling. "Ithala serves a niche market of mainly rural residents who are not easily assisted by large commercial banks. “Attempts to systematically shut the entity down are malicious and driven by greed. They demonstrate a total disregard for indigent residents."
KwaZulu-Natal Premier Thami Ntuli said: “This decision (court judgment) will bring great relief to the thousands of Ithala clients, employees, and suppliers who could not be paid by the bank following the instruction of the current administrator to stop all incoming and outgoing payments.
“While noting that the matter is subject to appeal by the administrator, the judgment moves Ithala from the ICU into a possible recovery.” The MEC for Economic Development, Tourism and Environmental Affairs, Musa Zondi, stated that this judgment upholds the rule of law and affirms their commitment to preserving institutions that exist to serve the people of KZN.