The South African Reserve Bank (SARB) has been dealt a sharp judicial rebuke after the High Court in Pretoria ordered it to release R200 million it had been holding from Ibex, Steinhoff’s successor.
In a ruling delivered on 23 April, Judge Sulet Potterill suggested that the SARB’s case had more smoke than fire. “Not a single fact as to why the blocking order was issued, why it is lawful, and why it should not be set aside,” she wrote.
The R200m at the heart of the dispute forms part of R9 billion raised mainly from the sale of 500 million Pepkor shares – that Ibex hoped to use to settle foreign debts. Although the SARB initially gave the green light to transfer the money offshore in April 2024, it abruptly reversed its position just months later, forcing Ibex to take the matter to court.
Ibex took over all Steinhoff’s assets and liabilities when the disgraced retailer was wound up in 2023. Since then, the group has been in a protracted tug-of-war with the central bank over its efforts to repay offshore creditors. And although the bulk of the Pepkor proceeds was eventually unblocked as part of a court-approved settlement last September, the remaining R200m plus interest remained frozen.
Read: SARB unfreezes R9bn: a win for Ibex Holdings in settling foreign debts
Then things got even messier.
The SARB launched a self-review application, asking the court to declare its own April approval unlawful. Ibex, on the other hand, wasn’t letting go: it wanted the remaining R200m released and assurances that the SARB would not slam the door shut on future payments.
This latest ruling tips the scales in Ibex’s favour – at least for now.
But even Judge Potterill seemed to anticipate a return bout. In her judgment, she pointed to the SARB’s courtroom posture: “The attitude of the SARB was displayed by a remark from the SARB’s counsel in open court that if the SARB did not set up enough facts, then the court dismissed their version on a lack of facts, not on the merits, and they will just come back to court.”
In other words, don’t expect this to be the final word.
Background to the Ibex vs SARB court case
Ibex has spent the past seven years trying to contain the damage caused by Steinhoff’s 2017 accounting scandal. This has involved complex global restructuring efforts, including settling with creditors as part of a Dutch court-approved process known as the WHOA Restructuring Plan.
To implement this plan, Ibex sought the SARB’s approval to expatriate funds abroad. These requests, processed through authorised dealers FirstRand and Standard Bank, were submitted under what became known as the 0443 application.
The SARB approved five payments in April 2024 under this application. Four of the major approved payments were:
- Payment 1: €212.5m for a loan note issued by Newco2A.
- Payment 2: €122m for a loan note issued by RSA Holdco.
- Payment 3: Up to €473.8m for a section 155 settlement note, including €65.9m receivable from Titan.
- Payment 4: €1.63bn as a dividend to RSA Holdco (amount subject to variation based on the Pepkor share price, operating costs, and exchange rates).
Following the SARB’s approval, Ibex raised R9bn by selling 500 million shares in Pepkor Holdings, its primary South African asset. It then instructed the two banks to make the approved payments. However, both banks refused to proceed, citing further requests from the SARB, including clarifications about fund sources and the Pepkor share sale. Despite Ibex providing the requested information, the SARB subsequently issued blocking orders on several Ibex accounts, freezing more than R3.6bn in funds.
In response, Ibex approached the court on an urgent basis to challenge the legality of the SARB’s actions and have the blocking orders lifted. A partial settlement was reached in September 2024, allowing some payments to proceed and some blocked funds to be released. However, disputes remained, particularly over Payment 4 and the SARB’s internal authority to approve the original transactions.
The SARB also filed a counterclaim, arguing that its official, Johan Kruger, had lacked the authority to approve the payments.
Lack of authority
In her judgment, Judge Potterill dealt first with whether Kruger had the authority to approve Payment 4. This was crucial because it was the only defence raised in the main case and the key issue in the SARB’s counterclaim, since payments 1 to 3 had become moot.
Under the Currency and Exchanges Act, no foreign exchange transaction may occur without National Treasury’s permission. The Minister of Finance may delegate these powers. On 29 March 2023, the minister delegated several powers to certain officials at the SARB’s Financial Surveillance Department (FinSurv), including designated signatories.
FinSurv has internal signing limits, outlined in a confidential document. It states that:
- Transactions over R10bn must be submitted to the Deputy Governor (DG).
- Transactions over R15bn must go to the Governor’s Executive Committee (GEC).
Kruger had an M1 designation, meaning he could not approve applications over R10bn without escalation.
The SARB stated that Kruger unilaterally amended the 0433 application to include four payments and approved it without proper authority. Payment 4 alone exceeded his R10bn limit and should have been sent to the GEC, but he did not do so.
In reply, the SARB said Kruger’s approval had no legal effect because it did not follow internal protocol. It added that Kruger, who is currently suspended and under investigation, could not submit an affidavit. The GEC never approved the 0433 application, so there was no valid authorisation.
The SARB also argued that even if senior management had known about Kruger’s actions, this would not validate the decision, which needed proper authorisation at the GEC level.
Ibex, in response, said the SARB failed to provide enough proof that Kruger lacked authority. It pointed out that the SARB did not identify who handled the 0443 application or explain what steps Kruger took. There were no affidavits from Kruger, the relevant Divisional Head (who remained unidentified in court proceedings), or the GEC. Ibex also questioned why, if the 0443 was unauthorised, no one at the SARB flagged it sooner.
Ibex further argued that the SARB had a duty to provide the full record of the decision-making process, particularly because it was challenging its own decision. Instead, the SARB shifted its position several times on whether the documents it filed constituted the full “record”.
Finally, Ibex contended that the decision to grant approval was valid until set aside by a court, and the SARB’s self-review lacked the transparency required by law.
Judge finds SARB failed to prove Ibex approval was unlawful
In her judgment, Judge Potterill ruled that the SARB bore the burden of proving the approval was invalid, but failed to provide key facts or supporting affidavits to back up its claims. Notably, the court received no confirmation from senior SARB officials or the relevant approving committee to show the application had bypassed proper procedures.
The SARB claimed that the official who granted the permission, Kruger, did not have the authority to approve transactions exceeding R10bn and should have escalated the application to a higher level. However, Judge Potterill found the SARB’s own internal documents contradicted this. Although escalation to the GEC was required for oversight, the GEC did not have final approval powers – making the SARB’s argument legally inconsistent.
The judge criticised the SARB for failing to clearly outline how the application was processed or to explain who should have handled it. She also noted that the signed approval form resembled others Ibex had received from the SARB – suggesting the 0443 approval was issued by someone with proper authority.
In the end, the court accepted Ibex’s version of events and dismissed the SARB’s claim as “bald and uncreditworthy”.
Judge Potterill ruled that the SARB had not proved the approval was issued without authority, and thus the 0443 approval remains valid.
Decision to block the funds was ‘not supported by evidence or law’
The judge found that the SARB did not explain why the blocking order was necessary, lawful or rational, despite being required to do so under the Promotion of Administrative Justice Act (PAJA).
Although acknowledging the SARB’s important role in preventing capital flight and protecting the economy, Judge Potterill said the SARB had overstepped without offering any substantiating facts.
“An organ of state is not above the law,” she said, adding that courts decide matters based only on the evidence presented.
Judge Potterill described the bank’s approach as dismissive and lacking the candour expected from a state institution. “Their silence is inexcusable,” she said, concluding that the SARB had failed to meet the heightened standard required of it in litigation.
Because the decision to block the funds was not supported by evidence or law, it was set aside under PAJA.
The court ruled that the four payments authorised under the 0433 approval can go ahead without further SARB approval. The SARB was instructed not to interfere with these payments or issue any further blocking or attachment orders related to them.
FirstRand Bank and Standard Bank have been given the go-ahead to process the payments.
The SARB and four other respondents were also ordered to pay the legal costs of the application, including the costs of two senior counsel.
Read the full judgment here.
