Banks deny colluding to shut the Sekunjalo Group's bank accounts
Cape Town - The appeal case by three banks disputing a ground-breaking decision handed down by the Competition Tribunal in September last year, which prevented them from closing the Sekunjalo Group's bank accounts, got under way at the Competition Appeal Court yesterday.
The three banks – Mercantile Bank, Access Bank and Standard Bank – have challenged, among other things, the Tribunal’s view that there was sufficient prima facie evidence to warrant its decision to grant interim protection to Sekunjalo.
This protection was granted based on Sekunjalo’s case and argument that cited the banks had been acting in concert and anti-competitive behaviour.
Several banks had closed the accounts of entities in the Sekunjalo stable, citing fear of reputational damage, based on the negative media articles about the Mpati Commission of Inquiry’s report on impropriety at the Public Investment Corporation (PIC).
The 2020 report had implicated Sekunjalo subsidiary company AYO Technology Solutions Limited. The PIC and AYO reached a settlement in the Western Cape High Court last week.
All three banks argued that the Tribunal’s decision affected their right and ability to enforce the contractual terms that govern the subsistence and management of accounts lodged with them, where the accounts in question may cause the bank significant reputational risk.
Senior counsel for Standard Bank, Steven Budlender, argued before judges Norman Manoim, Dunstan Mlambo and Brian Spilg that it was unclear how the Tribunal had reached its decision.
For Mercantile Bank, advocate Greta Engelbrecht SC argued for a separation of the banks in the matter and said that Sekunjalo “blurred the lines” in asking for all the banks to be tarred with the same brush.
“Each case has its own merits. The destiny of one challenge does not depend on the destiny of others.”
She said that Mercantile was a “fringe player” as it has less than 1% of the market share. She said the order against Mercantile ordered it to keep open an account that had not even been closed. She said Mercantile had not closed any accounts and only banked Health Systems Technologies and had declined to on-board others.
Access Bank’s lawyer Arnold Subel SC argued that there had been no evidence that the bank had acted to exclude Sekunjalo.
Responding on behalf of Sekunjalo, senior counsel Vuyani Ngalwana argued that the application for review and appeal by Standard Bank and the other two banks should be refused, as they were inviting the court to interfere with the Tribunal’s findings.
Ngalwana said: “These findings include specifically one that the banks acted in concert.”
On the issue that all three banks cited “reputational risk” if they continued to bank Sekunkjalo, Ngalwana said there was no potential for irreparable harm and that they were pleading the issue of “reputational risk” without any attempt at demonstrating such harm or potential for it.
In September, the Competition Tribunal stated that the banks failed to prove the veracity of the offences allegedly committed by Sekunjalo, which resulted in the closure of their bank accounts.
In the ruling, the Tribunal said that the argument advanced by the banks based on “reputational risk”, or their reliance on the John Bredenkamp case or regulatory framework, was simply misplaced and mentioned that none of the pieces of legislation they invoked supported their position.
Major banks in South Africa have previously used the Bredenkamp case to end banking relationships with clients citing reputational risk.
Bredenkamp was an influential business tycoon suspected of being involved in illicit business activities including tobacco trading, arms trafficking, oil distribution, and diamond extraction.
The appeal continues today (Friday).
mwangi.githahu@inl.co.za