In a setback for Iqbal Survé’s Sekunjalo group, the supreme court of appeal (SCA) has allowed Nedbank to appeal against an interim interdict that prevented the bank from closing the group’s accounts.
The group, which includes Independent Media and Ayo Technology Solutions, has been litigating on a number of fronts to keep its bank accounts open after the damning findings of the commission of inquiry into the Public Investment Corporation (PIC), chaired by retired SCA president Lex Mpati.
Absa, Investec and FNB all closed their accounts with Sekunjalo subsidiaries after the bad press and “reputational risk” that came with the Mpati report. Other banks were also following suit.
The group has obtained temporary respite via the Competition Tribunal, which in September last year ordered Nedbank, Absa, First Rand, Sasfin and Access Bank to reopen certain bank accounts and interdicted Standard Bank, Mercantile and Bidvest from closing Sekunjalo bank accounts — for six months, or until the Competition Commission completes its investigation into whether the banks had abused their dominance in the market or engaged in “collusive conduct” in breach of the Competition Act. The six-month period was this week extended by another six months.
The group also obtained a significant victory against Nedbank in the equality court of the Western Cape high court in June last year, when judge Mokgoatji Dolamo granted an interim interdict preventing Nedbank from closing its accounts with 43 companies in the group.
Unless set aside on appeal, the interdict would remain in place until the equality court makes a final decision on whether the bank had unfairly discriminated against Sekunjalo as a black-owned company. But Nedbank then petitioned the SCA, saying the equality court case that would finally settle the issue was moving at a “glacial pace” and in the meantime “a cloud of racism now hangs over the head of one of South Africa’s major banks”.
Irreparable harm had already occurred amongst the Sekunjalo entities as direct consequence of not having access to bank accounts.
— Sekunjalo Investments chair Iqbal Survé
Sekunjalo had argued that Nedbank had not terminated its relationship with “white companies” that had also had bad press such as Steinhoff, Tongaat Hullet and EOH, and Dolamo found there was a prima facie case of unfair discrimination. He said “losing banking facilities in this modern era of technology will be catastrophic and may result in job losses”.
He also refused leave to appeal, saying because the interdict he had granted was only an interim one, it was not appealable.
But Nedbank’s attorney, Aslam Moosajee, said in an affidavit to the appeal court that Dolamo had applied the wrong legal test on whether the interim interdict was appealable and that his judgment was wrong in a number of ways.
He said Sekunjalo had not made out a prima facie case of unfair discrimination. One of the reasons this was so, was that it had failed to show that the Sekunjalo companies were similarly situated to Steinhoff, Tongaat Hullet and EOH. “To the extent that Nedbank banks [these] companies, [they] have been restructured and have acknowledged past wrongdoing — something the Sekunjalo Group has declined to do,” said Moosajee.
He said despite lengthy engagement — “over a period of many months” — the Sekunjalo companies failed to adequately explain various transactions when they were queried by Nedbank.
The group had also failed to show that they would suffer irreparable harm — a requirement for an interim interdict — if Nedbank closed their accounts as they had not shown the bank that they had exhausted any possibility of finding another bank to take them on, he said.
In his answering affidavit, Survé defended Dolamo’s judgment, saying the evidence before the judge showed that Nedbank’s engagement with the Sekunjalo companies was not in good faith and the bank had held the “white companies” to “entirely different standard”. He said Nedbank’s claim that its actions were not race-based was merely a “bald allegation”.
He also said the Sekunjalo companies had shown that irreparable harm “had already occurred among the Sekunjalo entities as a direct consequence of not having access to bank accounts” — including job losses and loss of business.
The order of the SCA, made on February 8 by justices Caroline Nicholls and Piet Meyer, means the SCA will entertain an appeal by Nedbank, and will give Nedbank the opportunity to change the interim situation while the Equality Court finally decides on whether there was unfair discrimination.
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