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Wednesday, 9 September 2009

Capital destroyed by ABSA FirstRand and African Bank CAs

EXISTING real value unknowingly and unintentionally DESTROYED in three SA banks´ Retained Profits during their last financial year because their Boards of Directors refused to maintain - AT NO EXTRA COST - the real values of these banks´ EXISTING equity in units of constant purchasing power as it was freely in their power to do since the IASB authorized them to do that 20 years ago when it approved the Framework, Par. 104 (a) which states:

"Financial capital maintenance can be measured in either nominal monetary units or in units of constant purchasing power."

African Bank Group R 299 million


Chartered Accountants on the Board of Directors during last financial year:
David Woollam CA(SA)
David Gibbon CA(SA)
Brian Steele BCom, CA(SA), MBA

Independent Auditors during last financial year:
Deloitte & Touche
Partner: G M Pinnock CA(SA)

ABSA R 3 388 million

Chartered Accountants on the Board of Directors during last financial year::
Group Chief Executive: S F Booysen DCom (Acc), CA(SA)
D C Arnold CA(SA), FCMA, AMP
S A Fakie BCom CA(SA)
B P Connellan CA(SA)
J H Shindehutte Bcom (Hons), CA(SA), HDip Tax
Y Z Cuba BCom (Stats), BCom (Hons) (Acc), CA(SA)

Independent Auditors during last financial year:
PricewaterhouseCoopers Inc.
Director: T Winterboer CA(SA)
Ernst & Young Inc.
Director: E van Rooyen CA(SA)

FirstRand Group R 4 158 million

Chartered Accountants on the Board of Directors during last financial year:
L L Dippenaar MCom, CA(SA)
D M Falck CA(SA)
P M Goss BEcon (Hons), BAccSc (Hons), CA(SA)
S E Nxasana BCom, Bcompt (Hons), CA(SA)
A T Nzimande BCom, CA(SA)
R K Store CA(SA)

Independent auditors during last financial year:

PricewaterhouseCoopers Inc.
Director: F Tonelli CA(SA)


The above Board of Directors are unknowingly and unintentionally DESTROYING at least the same EXISTING amounts during the current financial year. They will carry on unknowingly (?) and unintentionally (?) DESTROYING these banks´ EXISTING real values in their EXISTING Retained Profits as long as they refuse to maintain these banks´ EXISTING Shareholders´ equity in units of constant purchasing power as they have been authorized to do by the IASB in 1989 and which is compliant with International Financial Reporting Standards.

The above applies to all SA banks and companies.

The above is valid when the above Boards of Directors refuse to measure financial capital maintenance in units of constant purchasin power during an indefinite period of time during indefinite low inflation.

The above amounts are the real values these Boards of Directors will maintain in these banks forever each and every year - ceteris paribus - as long as these banks break even as soon as they simply select to value all constant items in the banks in unit of constant purchasing power. It was authorized by the IASB 20 years ago and is compliant with IFRS. These Boards of Directors still refuse point blank to do it. They will rather stubbornly carry on destroying the banks´ capital.

Strange but true.

Kindest regards,

Nicolaas Smith