ISSUES of racism and discrimination by Nedbank and South Africa’s all-powerful banking fraternity, which has moved to systematically close the Sekunjalo Group of Companies’ (Sekunjalo) bank accounts, dominated nearly six hours of submissions in the Western Cape Equality Court hearing on Tuesday.
Hearing the matter was Western Cape High Court Judge Mokgoatji Dolamo, who reserved judgment at the end of proceedings but pledged to produce such as soon as possible.
Sekunjalo’s advocate, Vuyani Ngalwana SC, opened his submissions by saying the case was about transformative jurisprudence and substantive justice, and that Sekunjalo’s case addressed the discrimination it had been subjected to on the basis of race.
Sekunjalo alleges that Nedbank and South Africa’s other major banks, in terminating the bank accounts of members of the Sekunjalo Group, have been “selective” in their action, when compared to any action the banks have levelled against companies that are “white dominant businesses”.
Ngalwana argued that companies such as the Steinhoff Group, EOH Limited and the Tongaat-Hulett Group have all been found guilty of fraud and various other offences, without having their banking accounts or facilities terminated, yet black-owned Sekunjalo, whose actions were far less egregious, were facing punitive action.
Ngalwana said the yardstick used by Nedbank in assessing the reputational risk that is posed to it by the Sekunjalo Group differs markedly from the one it uses in respect of the white companies.
Ngalwana also said Nedbank’s reliance on inaccurate and untested media reports as the basis for terminating and denying Sekunjalo’s banking facilities constitutes harassment and unfair discrimination, which is in contravention of the Promotion of Equality and Prevention of Unfair Discrimination Act 4. It is also unconstitutional.
He said Nedbank had sought neither to prove nor disprove the media allegations against Sekunjalo, nor had it made any reference to corruption or money laundering by the Sekunjalo Group.
The banks, including Nedbank, have also relied on the Mpati Commission report to aid their case of reputational risk, yet Ngalwana pointed out that the Mpati Commission was set up to investigate the Public Investment Corporation (PIC) and not Sekunjalo or its entities.
He also drew the court’s attention to the fact the Mpati Report was published publicly in March 2020, having been submitted to the president in December 2019. The various banks only began their terminating of accounts a year later, in 2021.
Ngalwana said that in Nedbank relying on the contents of the Mpati Report to terminate the banking facilities of some of the entities in the Sekunjalo Group, there was a marked difference in the way these companies had been treated, a fact Nedbank did not even bother to deny.
Meanwhile, Nedbank’s advocate, Alfred Cockrell SC, argued that the case was ultimately about whether Sekunjalo had made a case for interim relief based on the Equality Act. He contended that Sekunjalo had not made out a prima facie case for race-based discrimination.
With regards to comparisons made by advocate Ngalwana of Sekunjalo’s issue with the banks to those of Steinhoff, Tongaat Hulett and EOH, Cockrell maintained that Sekunjalo had not proved their race-based argument.
He said that Nedbank had repeatedly held that the issue between it and Sekunjalo had nothing to do with race but was about reputation, and that Steinhoff, Tongaat Hulett and EOH had rehabilitated themselves and therefore no longer presented reputational risks.
At this point Judge Dolamo took him to task, asking: “When do you act when there is a risk to your reputation? Do you allow the party to sort out their problems or do you act immediately?”
The judge said he was asking the question in the light of answers Nedbank gave Sekunjalo in correspondence regarding why it took the ultimate step to terminate Sekunjalo’s accounts.
He said Nedbank had mentioned several issues, including Sekunjalo’s involvement in litigation and their source of wealth.
“My question is, is it something that hits you when you look at the conduct of the clients account, or do you wait, for example until there are media reports that are adverse to the company, or a commission of inquiry that comes with findings? How do you do it?”
Cockrell gave Nedbank’s reply from the court papers: “Reputational issues arise when a company, which is being banked by Nedbank, is appearing regularly in the media”.
The judge said that Nedbank’s conduct raises questions because it did not appear to act immediately against Sekunjalo, but first engaged them and then seemingly out of the blue decided to close their accounts.
He wanted to know when and how the negative media reports affected Nedbank to the point that they acted. He also wanted to know how the decision was reached in Sekunjalo’s case.
Advocate Ngalwana, for Sekunjalo, also raised the point that Steinhoff, for example, had been in litigation and in the media for a substantial period, yet that had not affected the bank’s reputational risk.