ANC politician Andile Lili has become the latest prominent figure to be rejected by a bank as a potential client due to a pending assault case, with Standard Bank citing “negative media coverage”.
In a letter to Lili over a request to open an account, Standard Bank said: “The Standard Bank of South Africa Limited (“the Bank”) has, after careful consideration, decided not to commence its business relationship with you. It is a matter of public record that you have been the subject of negative media coverage.
“While the Bank does not wish to be drawn into a debate about the veracity of the allegations, the adverse publicity regarding individuals associated with the Bank has the potential to cause a loss of confidence in its integrity as an institution.”
It suggested if he was dissatisfied with the outcome to approach the Ombudsman for Banking Services.
Lili faces charges of allegedly assaulting the principal of Inkanini Primary School in Khayelitsha, where he was the school governing body chairperson.
Judgment in the matter was expected on Tuesday before being postponed to December 5 due to load shedding at the court.
EFF leader Julius Malema and former Eskom chief executive Matshela Koko have also decried the shutting down of their bank accounts.
Speaking to the “Cape Times”, Lili said he was surprised that the bank opted to reject him while a verdict had yet to come.
“I have been banking with Standard Bank for the school. It suggested that I also open a personal bank account with them, which is what I did. To my surprise the bank rejected me, explaining that it was due to media coverage and the DA statement calling for my suspension.
“However, my concern is that I’m still an accused. I have not been found guilty of anything in this matter. There are no witnesses to this lie and many contradicting statements. I have a lodged perjury case against the principal.
“There should be stronger standards to bring about the transformation of the financial services sector to ensure fair treatment of consumers,” said Lili.
Standard Bank did not respond to questions by deadline.
The bank is among 27 others accused of manipulating the rand exchange rate, which the Competition Commission argues had wider implications running into trillions of rand. The bank has reportedly denied the allegations.
UWC Faculty of Law Associate Professor Michel Koekemoer said there must be contractual freedom and in this instance a bank should be able to decide who they contract with, also considering the effect of a reputational risk not only on its business, but also on the larger banking industry where the public has lost faith in a banking institution and start to withdraw funds.
“The correct question to ask is whether there are set standards which would apply to all banks and whether those common standards can cause consistency across the industry.
“This is where the application of the Conduct Standard for Banks may add value and where the regulators should intervene to ensure the fair treatment of customers, also including what should happen when banks decide to onboard clients or when an existing relationship is terminated,” said Koekemoer.
Corporate & Financial Services Law Professor Brighton Mupangavanhu said: “Perhaps the question you might have is whether it is fair to refuse to open an account or to even close an existing client's account on the basis of a situation that makes the bank uncomfortable to conclude a contract with the person or to maintain a bank account with the client. Well, in recent years, South African banks have closed bank accounts for various reasons.
“A famous case that comes to mind is Bredenkamp v Standard Bank, a case decided in 2010 by the Supreme Court of Appeal.
“The court in this case ruled that Standard Bank had a right to close the bank accounts and terminate the bank-customer relationship without cause, because the contract gave the bank the right to close the account after giving the client reasonable notice. The court accepted the bank’s contention that Bredenkamp, the appellant’s bad reputation and listing by the USA as a specially designated national (SDN), created reputational and business risk for the bank and that the bank had a good cause to close the accounts to protect itself.
“In terms of South African banking law, as is clear from the Bredenkamp v Standard Bank case, a bank is entitled to close a client’s bank account on sufficient notice given to the client, otherwise a court of law will set aside the decision to close the account. What is sufficient notice? Well, that is a factual question which depends on the circumstances of each case, and it is also determined by banking practice relevant to each given jurisdiction.”