Pretoria - South African commercial banks were reminded yesterday that a banking licence was not there for the asking (or the taking), but for a select few, and that it must come with responsibility and accountability to the public.
This was part of an argument by advocate Vuyani Ngalwana SC, who represented the Sekunjalo Group of Companies, which had applied for an interdict at the Equality Court to prevent Nedbank from closing its banking facilities.
Ngalwana pointed out that the all-powerful commercial banks enjoyed a monopoly and added that Nedbank had demonstrated arrogance of power.
“A banking licence is not there merely for the asking”, he said, but available for a select few and should come with responsibility and accountability. “We submit that by its conduct, Nedbank neither exudes responsibility nor accountability. In fact, it demonstrates arrogance of power,” he said.
Ngalwana cited one of the requirements of the Bank Act of 1990, Section 13 that dealt with the granting or refusal of the application or authorisation. “A licence is granted only if the establishment of the bank is in the public interest,” he said.
He argued that Nedbank wanted to limit the case to a case between itself and the applicants at the risk of excluding the public interest.
He suggested the Equality Court should look at public policy considerations when it finally decides on the matter.
Ngalwana tore into Nedbank’s argument, saying it relied on “legal sophistry” which “would appear to ignore the substance of the applicants’ case”.
For example, that the mainstay of Nedbank’s argument “seems rooted in a technical basis”, such as private contracts, which legally suggested that the bank was entitled to terminate accounts based on reasonable notice.
He pointed out that the applicants (Sekunjalo) had asked the court to preserve the status quo and not determine the rights of the parties, which were to be pleaded in the main case before the Equality Court – at a date yet to be set down.
“In other words, the question before this court is not whether Nedbank has the right to close accounts without a just cause. That is the question for determination in the main case along with other related questions,” Ngalwana said.
He took a dig at Nedbank for failing to close the banking accounts of white companies such as EOH Limited, Tongaat Hulett Limited, and Steinhoff, that despite being found guilty of fraud, retained their banking privileges.
Nedbank’s legal representative, advocate Alfred Cockrell, SC, said there was no truth in the fact that the bank was discriminating against Sekunjalo based on race, as charged by Ngalwana.
Cockrell said the reason for differential treatment to that of the aforementioned three companies was that those companies “rehabilitated” themselves and no longer posed a reputational risk.
In addressing concerns around the so-called “reputational risk”, Ngalwana set out how Nedbank’s decision to terminate the banking accounts relied on untested negative media reports, the Mpati Commission report, association with Dr Iqbal Survé and the Sekunjalo Group related entities, litigations involving Sekunjalo-linked companies, as well as certain transactional analyses by Nedbank, among other factors.
“The applicants say that Nedbank relies on false and untested media reports to trigger the closing of the accounts. Nedbank does not deny this; it says it does not know whether the allegations are true,” he said.
The assessment of reputational risk by Nedbank was not based on any wrongdoing on the part of Sekunjalo and related companies, he said.
He then debunked Nedbank’s claim that the Mpati Commission report made findings against Sekunjalo.
According to Ngalwana, the report made an “observation”, in relation to the Sekunjalo Group and not a finding as characterised by Nedbank, since no investigation has been undertaken to determine whether there is any finding to be made.
To suggest that there has been such a finding of wrongdoing against Sekunjalo “is like putting the cart before the horse”, Ngalwana said.
Nedbank, he said, had denied having accused Sekunjalo and Survé of money-laundering and corruption.
“The Mpati report could not culminate in Sekunjalo or any of its entities being held liable, because the Mpati Commission recommended that an investigation be conducted in order to determine if any law have been broken by either PIC or by the Sekunjalo Group,” Ngalwana said.
The matter of systemic racism and discrimination by Nedbank and South Africa’s all-powerful banking fraternity, which has moved to close the Sekunjalo Group of Companies’ (Sekunjalo) accounts, dominated nearly six hours of submissions in the Equality Court yesterday.
Systemic and structural racism are forms of racism that are pervasively and deeply embedded in systems, laws, written or unwritten policies, and entrenched practices and beliefs that produce, condone, and perpetuate widespread unfair treatment and oppression of people of colour, with adverse health consequences.
Examples include residential segregation, unfair lending practices and other barriers to home ownership and accumulating wealth, schools’ dependence on local property taxes, environmental injustice, biased policing and sentencing of men and boys of colour, and voter suppression policies.
Justice M Dolamo, who heard the matter in the Equality Court, Western Cape Division, has reserved judgment.