ABSA TO SEEK HIGH COURT REVIEW OF PUBLIC PROTECTORS REPORT

After consultation with its legal team, Absa has decided to approach the High Court in order to have the
report of the Public Protector that was released on Monday 19 June 2017 reviewed and set aside. This is
due to the numerous misrepresentations and factual inaccuracies which are used as the basis for its
findings, and what we submit are the report's clearly irrational and unreasonable legal conclusions.

Absa respects constitutional institutions and has to date done everything possible to cooperate with the
Office of the Public Protector during the course of this investigation. However the report leaves Absa
with no choice but to seek recourse in the courts as provided for by the Constitution when an affected
party disagrees with the findings of the Public Protector.

The office of the Public Protector appears to have either effectively ignored or misunderstood Absas
detailed submissions, which were made to it on two occasions. A copy of our February 2017 submission
has been released to the public.

We also note that the Public Protectors remedial actions include a directive to Parliament to amend the
Constitution in order to change the mandate of the South African Reserve Bank. We are advised that the
Public Protector Act does not empower the Public Protector to direct that constitutional amendments
be made. Her recommended amendments pose a very serious risk to the financial system and they
cannot be allowed to stand.

It is noteworthy that the reports findings and remedial actions in relation to Absa are mainly premised
on the conclusions of the Davis Panel of Experts, which delivered a comprehensive report on the same
matter in February 2002. The Public Protector also uses the statement of the Heath Special Investigating
Unit as a further basis for her conclusions on Absa.

In the case of the Davis Panel, the Public Protectors final report misrepresents or misconstrues its
findings. While it concluded that the manner in which the assistance was provided to Bankorp was
unlawful (ultra vires), the Davis Panel unequivocally found that Absa is not liable to pay because it paid
fair value for Bankorp.

The Davis Panel Report reads as follows:

The Reserve Banks assistance conferred benefits on Sanlams policy holders, its pension fund
beneficiaries and on the minority shareholders of Bankorp. That is contrary to public perception
published in the media, and contrary to the conclusions of the Heath Special Investigative Unit. Those
perceptions and conclusions have incorrectly asserted that major benefits were received by the
shareholders of Absa.

It goes on to say:
The Panel is of the view that Absa paid for the continued assistance of Bankorp by the Reserve Bank and
could not be regarded as beneficiaries of Reserve Bank assistance package. Absa paid fair value for
Bankorp. Due to the complex nature of the impact that the various packages might have had on the
value of capital invested in Bankorp, it is difficult for the Panel to assess with accuracy, the extent of the
benefits derived by Bankorp shareholders.

Evidence supports the conclusion that Sanlam, the major Bankorp shareholder was aware that it would
have received no value, or less value, for its shareholding absent Reserve Bank assistance.

While the Public Protectors final report accepts large parts of the Davis Panel Report as a basis for its
findings and remedial actions, the report fails to explain why the rest of the Davis Panels findings on
Absa are not accepted. In this respect, the Public Protectors report appears irrational. The Public
Protectors final report not only omits the rest of the Davis Panels finding, it also does not explain how
it comes to the diametrically opposite conclusion that Absas shareholders unduly benefited, rather than
Sanlams policy holders and pension fund beneficiaries which is what the Davis Panel found.

It is also noteworthy that in the provisional report that was leaked in January 2017, the office of the
Public Protector had relied on the alleged testimony of former SA Reserve Bank Governor Dr Chris Stals.
In that report, it was claimed that Dr Stals had testified that the Bankorp/Absa loan was at an interest
rate of 16% instead of 1%, and that he had produced a contract to support this. Dr Stals strongly refuted
the claim in the media shortly thereafter.

The alleged testimony of Dr Stals and the document he was said to have produced are conspicuously
absent from the final report. In the final report this basis is abandoned and instead it selectively relies on
a report that in any case found that Absa is not liable.

Ahead of our submissions to the Public Protector, we requested access to documents in her possession
that had a material impact on our position. That request was unjustifiably refused. The Public
Protectors reports assertion that its findings are not in dispute, when Absa was never given insight into,
let alone the opportunity to dispute what is supposedly contained in those documents, is therefore
contested.

In any event the information upon which the report bases its findings is not new. It was at the disposal
of the Public Protectors office before the findings in the provisional report were made. It appears that
this information was not regarded as relevant at the time.

The misconceptions and inaccuracies in the report are profound and damaging to Absas reputation. We
have instructed our lawyers to immediately prepare an application to the High Court to have the
report's findings and its remedial actions (including the remedial action concerning the intervention of
the Special Investigative Unit and the amendment of the Constitution) reviewed and set aside.
We firmly maintain our position - supported by uncontroverted evidence that Absa met all its
obligations to the SA Reserve Bank in full by October 1995.

Ends

Media Inquiries: Formatted: Line spacing: Multiple 1.15 li

Phumza Macanda

Absa Group Media Relations Manager

0828993293