Details of how a doctor fell prey to fraudsters, who withdrew and squandered within days more than R1.6 million from the fraudulent Nedbank bank account in which the money was paid - part of a purchase price towards a house - emerged in court as the bank steadfast refuses to refund him.
Dr Mohammed Nalla turned to the Gauteng High Court, Johannesburg, to demand the money back from Nedbank. He initially paid R2.8m into the account, but part of the money was later paid back to him by the bank.
Nalla claimed that he had lost more than R1.6m - all because Nedbank apparently failed to put checks and balances in place when they opened the fraudulent bank account for the account holder, who is said to be part of the scam.
The fraud was discovered three days later and reported to Nedbank. The bank said it then froze the account and “promptly” paid the R1.165 756 which was still in the account, back to Nalla “to mitigate his losses”.
However, the details of the account provided to court showed that the account was still active for about two days after Nedbank was said to be alerted about the fraud and before Nalla was reimbursed for what was left in the account.
According to evidence, Nalla paid R2.8m on June 11, 2020 into the fraudulent account, which belonged to a Ms Shabalala. Nedbank admitted that Shabalala received this amount in her Nedbank Pay as You Use account the following day.
The bank was told about the fraud on June 15, 2020. Yet according to the account history, vast amounts were withdrawn two days later and a smaller amount on the third day.
Advocate Nazeer Cassim SC, appearing for Nalla, argued that on Nedbank's own version, it had a duty of care from the time of the notification of the fraud and payments made after June 15 were wrongful and negligent.
Nalla, meanwhile, explained that he had no idea the money was paid into a fraudulent bank account. He received an email that he had to pay the money into the trust account of a law firm for a property he had bought. As he expected this correspondence, he paid the money believing that all was in order.
He never dreamt that it would be a Pay as You Use account held by one Tshabalala.
His case is that there was no genuine verification by Nedbank of Tshabalala when the account was opened - no home address, no pay slips or other documents required under FICA.
While Nalla is demanding that Nedbank pay him back the slightly more than R1.635m which the fraudsters have spent, the bank denies any liability. It said it did fulfil its duty of reasonable care when it opened the account on May 27, 2020 and it verified her identity details as a prospective client.
According to the bank, Tshabalala presented her original ID document to them which was certified. The bank said the FICA Act does not require a client of the bank to produce proof of address for an application for a Pay as You Use account. It, however, did establish that she is a labourer at Pick n Pay, the bank said.
It also said in its defence that at the time the bank had received the report regarding the fraud, R1.165m had been processed from Tshabalala’s account and paid to Nalla and no further withdrawals or transfers were permitted from the fraudulent account.
In his argument to court yesterday, advocate Cassim said Nedbank did not present any evidence to counter Nalla’s complaint that there was no verification of a genuine account and that the account should not have been opened at all.
Cassim said Nalla’s evidence was direct - had Nedbank done basic enquiries as to the legitimacy of the account holder, then no account would have been opened. “Without the account he would not have lost the monies he in fact lost,” Cassim said.
He further argued that FICA requires Nedbank to establish and verify the identity of a client.
Cassim also pointed out that electronic transfers (EFT) usually reflect in the other account after two days, as testified by one of the bank’s employees. But in this case it was less than 24 hours.
He maintained that Nedbank was negligent and that it did not adhere to FICA and that the bank was thus liable to pay Nalla his money back.
Judgment was reserved.