Deputy President Thabo Mbeki cited reports in British papers - including the Independent on Sunday - and named Judge Willem Heath to investigate for the Justice Department.
The decision to investigate the financial institutions follows the receipt of a secret report earlier this year into links between the central bank and Absa. The report was prepared by an international panel of financial experts including two former Bank of England officials.
It suggests the government could reclaim up to R6bn (pounds 750m) from Absa and its shareholders, including the insurance company Sanlam and the Rembrandt Group, say informed sources.
The report also examines whether individual executives gained personally as a result of the soft loans. These were made as part of a "lifeboat" operation to bail out Absa. But investigators suggest that Absa was not in need of special assistance at the time it received the loans.
South African newspapers have already quoted an unnamed "eminent South African advocate" as having said in the report: "The so-called loan [to Absa/Bankorp] is demonstrably a sham. The transaction falls outside the Reserve Board's competence and contains every element of common law fraud."
Judge Heath already heads an investigation into misappropriation of state assets which reports directly to President Mandela. This was set up in 1996 and has already made a presentation to the Justice Department on the 1990 "lifeline" extended by the Reserve Bank to save Bankorp.
Under the terms of the inquiry, President Mandela must issue a formal proclamation for each new area of investigation. This is expected on 17 April. Judge Heath has indicated he expects to make a preliminary report within three weeks of the proclamation.
Reserve Bank governor Chris Stals said full details of the Bankorp deal had already been given to an earlier inquiry. "In the meanwhile we are happy that the inquiry gives us the chance to make everything open." Absa director Bert Griesel said the bank welcomed the inquiry and would co- operate fully.Reuse content