THE country’s major banks have possibly discussed and agreed to shut down the bank accounts of the Sekunjalo Group of companies (Sekunjalo), as part of unscrupulous collusion amongst them.
This is according to Sekunjalo and its executive chairman, Dr Iqbal Survé, who presented their case against the banks before the Competition Tribunal in Pretoria on Monday.
At least 35 companies owned by Sekunjalo filed complaints against almost all major banks, after they closed their banking facilities over the past few months. The banks cited alleged reputational risk. The respondents include Nedbank, Standard Bank, First Rand Bank, Absa Bank, Mercantile Bank, Sasfin Bank, Investec Bank and Bidvest Bank.
Sekunjalo wants the tribunal to make a prima facie finding on the banks’ collective boycott of its subsidiaries. It also wants the regulatory body to conduct a substantive investigation into the existence of such suspicion.
Advocate Vuyani Ngalwana SC, for Sekunjalo, told the commissioners that there was a strong possibility that the banks had not acted independently of each other, an argument rejected by the banks. The banks in question collectively control 90% of the market share in the banking sector.
He argued that the connectivity of the big banks, through their membership of the Banking Association of South Africa (Basa), should never be ignored as it “is the crucial binding glue for the applicants’ case”.
“By virtue of their membership of Basa and sitting together in strategic committees of Basa, including risk management committees, each bank had the ability to know how the other banks are behaving in order to monitor whether or not they are adopting a common policy of unbanking the applicant,” said Ngalwana.
He further maintained that the chief executives of Standard Bank, Absa, FNB and Nedbank sit on various Basa committees, including risk committees, as members of the powerful banking association’s board of directors.
Ngalwana said the banks’ decision to close Sekunjalo’s accounts had relied heavily on untested media reports about the Public Investment Corporation’s (PIC) investment in AYO Technology Solutions, a subsidiary of Sekunjalo.
The negative media reports, which claimed that the PIC had irregularly invested R4.3 billion in the technology company, had led to President Cyril Ramaphosa appointing former Supreme Court of Appeal president, Justice Lex Mpati, to lead a commission of inquiry to the PIC/AYO investment.
However, the PIC report found no evidence of corruption and irregularities involving Sekunjalo. It recommended further investigations by law enforcement agencies.
Ngalwana further argued that the banks’ decision had rendered Sekunjalo and its subsidiaries unbankable. It also placed the companies, which collectively employ 14 000 people, at risk of being unable to continue doing business and paying the salaries of its workforce.
He said the banks had sustained their action against Sekunjalo and related companies over time since November 2020, when Absa started the account closure campaign.
Ngalwana said the banks had no basis for taking the decision since the “applicants have not been found guilty of corruption, money laundering or unlawful activities”.
“The Mpati recommended further investigation by the PIC and other regulatory bodies,” he added.
Ngalwana told the tribunal that Sekunjalo and Dr Survé were victims of propaganda emanating from sections of the media, which ignored the facts and version of their intended targets.
“You repeat the story incessantly on the same terms, then the banks pick up the story and not care whether or not the story is true, then they shut down the bank accounts on the basis of those stories,” said Ngalwana.
The Sekunjalo lawyer further argued that the banks’ decision had rendered the holding company and its subsidiaries unbankable. This is because smaller banks cannot be an alternative as they do not provide corporate services.
“We have approached numerous banks. Many of those banks do not provide corporate banking authorities to large entities and listed entities like AEEI (African Equity Empowerment Investment LTD), AYO and fishing companies. So every time you approach the lesser banks, outside the 90% market share, they would either say ‘we don’t provide banking services of the kind that are required by large corporations and yet others would say, when the smaller companies related to Sekunjalo approach them, we only provide services to listed companies. That is why we are saying there is no alternative because almost the entire, if not the entire, establishment has either shut its doors or is in the process of shutting its doors,” Ngalwana insisted.
Sekunjalo and Dr Survé turned to the tribunal seeking interim relief to prevent Nedbank and others from going ahead with the termination of its companies’ accounts.
The banks rejected Sekunjalo’s accusations. Nedbank’s legal representative, Advocate Alfred Cockrell (SC), dismissed Ngalwana’s argument and urged the tribunal not to grant the interim order. Cockrell denied that Nedbank’s decision to terminate Sekunjalo’s banking facilities was influenced by propaganda. He said Sekunjalo’s application failed to prove Nedbank’s interest in engaging in anti-competitive behaviour.