The escalating woes at Absa as Pityana removed as lead independent director

One can scarcely imagine the awkwardness at Absa Towers in the Joburg CBD when Sipho Pityana arrives for a board meeting.

In essence, he has accused the bank’s former CEO Maria Ramos of kiboshing his chances of becoming chair at Absa by passing on information she happened upon concerning sexual harassment claims against Pityana while he was chair at AngloGold Ashanti (AGA).

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Ramos was newly ensconced at AGA and Pityana had a reasonable expectation of picking up the Absa chair position.

Only Pityana says he was never given a chance to contest the sexual harrassment claims, which he denies, nor to call witnesses who would corroborate his version of events.

Here’s the problem: the bid and the ask in this case are unbridgeable.

The alleged victim says it happened, Pityana says it didn’t. If it didn’t, his career and reputation could be ruined over false allegations. If true, Pityana is gaming the system and mocking the alleged victim. We shall likely never know.

AGA initiated an investigation, led by a senior advocate, which was “independent, fair and thorough, and we are confident in its conclusions,” said AGA in a statement to Moneyweb.

As AGA has not been cited as a respondent in this case, we will likely not get to see the contents of that investigation.

“AngloGold’s Board emphatically rejects the allegations being made by Mr. Pityana against Ms. Ramos and AngloGold Ashanti, which are baseless. The matter of Absa’s Chairmanship is one between Mr. Pityana and the Board of that company,” reads the statement.

The awkwardness

Here’s the awkwardness: Pityana has cited Absa Bank, the bank where he serves as an independent director (though as of last Friday no longer lead independent director), as a respondent in his case primarily directed against the Prudential Authority of the South African Reserve Bank (Sarb), claiming it went outside the law in adopting an informal process when it came to considering his nomination for chair of Absa.

Pityana didn’t get the position of chair, which went instead to Sello Moloko, who replaces Wendy Lucas-Bull at the end of March next year.

The reason he didn’t get the post, as laid out in his court application, is that the Prudential Authority, which must oversee high level banking appointments such as this, adopted an informal process in violation of Section 60 of the Banks Act, which deals with these types of appointments. It apparently accepted evidence from Ramos without giving Pityana any chance of rebuttal or objection.

Pityana was appointed director of Absa in May 2019 and was appointed lead independent director in June 2020. Though removed as lead independent director as of last Friday, he remains on as a director on the Absa board.

He previously served as director of AGA since 2007, and from 2014 to December 2020 he assumed the role of AGA chair.

Succession search

In 2020, Absa started hunting around for a replacement for Absa chair Lucas-Bull, who is coming up for nine years as an independent director, the maximum allowable by the Reserve Bank.

A succession committee started the interviews and concluded that Pityana was the candidate best suited for the role.

A search firm was appointed by Absa to assist with the succession, and part of the job included reference checks, which in turn involved interviewing Ramos, who had then assumed the chair at AGA, and Rhidwaan Gasant, lead independent director on the AGA board. All questions about Pityana’s suitability for the role of Absa chair were directed to Ramos.

Allegations

The Absa board gave the appointment the all-clear, when suddenly there was a hitch: the Prudential Authority’s CEO Kuben Naidoo, an old colleague of Ramos from National Treasury days, had apparently received information from Ramos about the sexual harassment allegations.

Those allegations came from a senior manager at AngloGold Ashanti and were investigated by Advocate Heidi Barnes SC, who produced a report that came to an unfavourable conclusion for Pityana.

That report came out on November 30, 2020, and Pityana’s attorneys responded four days later, pointing out what they saw as flaws in the report, including the failure to interview bodyguards who were with Pityana at the time of the alleged sexual incident and would [they said] have been able to rebut the claims against him.

Despite his objections, Pityana’s court papers say Barnes went ahead anyway and issued her final report on December 9, 2020, rejecting his representations and confirming her original findings that “my alleged utterances and actions – telling the complainant that I was in love with her, holding her hand in the car and asking if I could park my car and come up to her room” – had in her view occurred and constituted sexual harassment.

“I have always denied and still maintain my denial that these utterances and actions occurred. I also deny that we were in the car together,” reads Pityana’s affidavit.

This is an unbridgeable dispute of fact. AGA is standing behind Barnes and her conclusions.

Yet none of this will feature in the court action now underway.

Problematic

This is where it gets problematic.

The Absa board had appointed Peter Harris, a senior attorney at Harris Nupen Molebatsi Inc, to review the documents in the sexual harassment investigation and decide whether the Barnes report findings were reasonable.

Harris found that the report did not take into account all the relevant evidence, and was flawed to the extent it did not obtain corroborating evidence from independent sources, such as the aforementioned bodyguards.

With these reports in hand, the Absa board maintained its confidence in Pityana’s suitability for the role of chair. That decision was supported by 10 out of 13 directors (not the full board support that previously existed).

These same reports made their way to the Prudential Authority, and on August 2, 2021, Lucas-Bull received a call from Naidoo informing her that the majority of governors at the Prudential Authority would object to Pityana’s appointment.

No reasons were given by the Authority, but rather than jeopardise the bank’s relationship with the Reserve Bank, Absa decided not to challenge Sarb about its decision.

Pityana’s attorneys fired off a letter to Naidoo asking why the authority had compromised his rights under Section 60 of the Banks Act (dealing with the appointment of bank directors and senior officials) by denying him the right to respond to objections to his nomination.

Naidoo replied that as the authority had not received any formal nomination (of Pityana as Absa chair), it had accordingly not made a decision for which reasons were required.

Pityana is asking the court to decide whether, by adopting an informal process not covered by law, the authority had overstepped the bounds of its powers, which are strictly curtailed by Section 60 of the Banks Act.

The Banks Act makes it clear that the appointment of a CEO, director or executive officer of a bank must be approved by the authority, but that any objection can be disputed by the bank or the nominee.

If the authority was running a parallel and unlawful process here, then Pityana wants the court to tell it so.

Pityana speaks to Moneyweb

“I don’t mind if someone more suitable was selected as chair at Absa, but what I do object to is this back door process where I am denied positions based on flawed and false information that I have not been given a chance to respond to,” Pityana told Moneyweb.

“The allegations that have been made against me are untrue and extremely damaging to my reputation and I had a reasonable expectation of being appointed to the Absa chair, since this was the finding of the Succession Committee and the Absa board.

“You cannot have an authority running on rumours and innuendo.”

Pityana claims in his court papers that Ramos disseminated false information about the reasons for his resignation from the AGA board – coming as it did immediately before the release of the Barnes report. She allegedly claimed Pityana left AGA to avoid any adverse reaction arising from the report, whereas Pityana, in his court papers, provides an entirely different view of a board at odds with itself in certain key areas as the reason for his departure.

Absa’s stance

Absa issued the following statement: “We confirm that Absa Group Limited and Absa Bank Limited have been cited in proceedings instituted by Mr Sipho Pityana in which he seeks a declaratory order against the Prudential Authority. Absa is cited as an interested party, but no relief is sought against it.

“Absa has conducted a robust Chairman succession process, which started in October 2020. During this process which involved an extensive search, Absa considered both internal and external candidates who applied for the position of Chairman of the Absa boards. After the completion of this process the Absa Boards resolved to nominate Mr Sello Moloko for the position and submitted his nomination as Independent non-executive director and Chair to the Prudential Authority for approval. The Prudential Authority approved Mr Moloko’s nomination and Absa has made the appropriate announcements in this regard.”

On Friday, Absa issued a brief Sens statement saying the Absa Group and Absa boards had resolved that Pityana “will cease to be lead independent director of Absa Group and Absa Bank, chairman of the Remuneration Committee (RemCo) and, as a consequence, member of the Directors’ Affairs Committee (DAC), with immediate effect”.

“The Boards will appoint a new Lead Independent Director and chairman of the RemCo and advise shareholders in due course,” it said.

The Prudential Authority has indicated its intention to oppose the ‘declarator’ (that it was running an informal and unlawful process in blocking his nomination) sought by Pityana.

Listen to Ryk van Niekerk’s interview with Pityana (or read the transcript here):