Playing bank-bank with other people’s money

Abstract

The article below is an extract from his book titled “Public Interest Warriors” to be published soon. By March 2007 total banking deposits held by individual South Africans ran into almost R269bn which is equal to 15% of South Africa's GDP. Masterbond and several other companies during that time chose to sidestep, among others, the Banks Act and the Companies Act. The result was that investors were left unprotected. The two key ingredients for disaster were by 1980 evident on TEA's balance sheet - a highly geared balance sheet and short term funding. Supreme did business as an insolvent company for at least two years. The directors knew about it but kept the fact away from investors. Likewise they showed very little respect for the law, their responsibilities in terms of the Companies Act and regulatory authorities.