Business News

Banks accused of colluding to close Sekunjalo’s accounts

The Sekunjalo Group, a diversified investment company led by Dr Iqbal Survé, has alleged that several major banks in South Africa have engaged in anti-competitive behaviour and collusion to close its bank accounts. The group has sought interim relief from the Competition Tribunal to prevent the banks from terminating its banking services.

The Competition Tribunal’s order

The Competition Tribunal, a statutory body that adjudicates on competition matters, granted an interim order on September 16, 2022, that prohibited Mercantile Bank, Access Bank and Standard Bank from closing the accounts of Sekunjalo and its subsidiaries. The order also required the banks to provide the group with reasonable notice before taking any action to terminate its accounts.

The order was based on the prima facie evidence presented by Sekunjalo that the banks had acted in concert and violated the Competition Act. Sekunjalo argued that the banks had no valid grounds to close its accounts, other than relying on negative media reports stemming from the Mpati Commission of Inquiry’s report on impropriety at the Public Investment Corporation (PIC).

Banks accused of colluding to close Sekunjalo’s accounts

The PIC, a state-owned entity that manages public funds, had invested in some of Sekunjalo’s companies, such as Independent Media and AYO Technology Solutions. The Mpati Commission found that the PIC had made irregular and questionable investments in these companies, and recommended further investigations by law enforcement agencies.

However, Sekunjalo has disputed the findings of the commission and challenged them in court. The group has also accused the PIC of trying to sabotage its businesses and tarnish its reputation.

The banks’ appeal and response

The three banks appealed against the Competition Tribunal’s order at the Competition Appeal Court, arguing that Sekunjalo’s case was not a competition matter and that they had acted independently and lawfully in closing its accounts. The banks claimed that they had exercised their contractual rights and obligations to protect their reputational risk and comply with regulatory requirements.

The Competition Appeal Court heard the appeals on April 2 and 3, 2023, and reserved judgment. The court also extended the interim order until it delivered its verdict.

However, on October 5, 2023, FNB, another bank that had not been part of the original order, notified Sekunjalo that it would close its accounts within 30 days. Sekunjalo then approached the Competition Tribunal again to seek an extension of the interim order to include FNB.

The hearing revealed that the banks had coordinated their defence strategies and shared legal counsel. Advocate Greta Engelbrecht SC, who represented Mercantile Bank, also spoke on behalf of all the other banks involved. This raised suspicions of collusion among the banks, which Sekunjalo said was evident from their sequential closure of its accounts.

The implications and reactions

The case has raised concerns about the fairness and transparency of South Africa’s banking sector, as well as the threat to media freedom and democratic principles. Sekunjalo owns Independent Media, one of the largest media groups in the country, which publishes several newspapers and online platforms.

Sekunjalo has argued that the banks have been selective and discriminatory in targeting its companies, while ignoring other companies that have been implicated in corruption and fraud scandals. The group has also filed a complaint with the Equality Court against some of the banks for violating its constitutional rights.

Several politicians and civil society groups have expressed their support for Sekunjalo and condemned the banks’ actions. Sibusiso Mncwabe of the African Transformation Movement questioned the criteria used by banks to close specific accounts without law enforcement involvement. Julius Malema, leader of the EFF, hinted at mobilising public action against Standard Bank for closing Independent Media’s accounts. The National Freedom Party called for transparency and accountability from the banks.

The case is still pending before the Competition Appeal Court, which is expected to deliver its judgment soon.

Leave a Reply

Your email address will not be published. Required fields are marked *