Weaponisation of financial power: How bank closures threaten constitutional rights and democracy in South Africa

The recent decision by the Constitutional Court of South Africa to dismiss Sekunjalo Group’s appeal against Nedbank's closure of its bank accounts marks a new low in the history of South Africa’s democracy.

The ruling reflects a dangerous global trend in which financial institutions are increasingly used as political and ideological control tools, undermining fundamental democratic principles and freedoms. This outcome should be condemned as a clear manifestation of unchecked corporate power that threatens not only individual rights but also the foundation of economic democracy.

The Court's Decision and Its Constitutional Implications

The Constitutional Court dismissed Sekunjalo’s appeal, supporting the actions of Nedbank and other major banks that closed the group's accounts, citing "reputational risks." This decision has profound constitutional implications. It permits financial institutions to sever ties with clients based on vague and subjective criteria, bypassing transparency and due process and effectively sidelining entities that do not conform to prevailing economic or political interests.

1. Violation of the Right to Equality (Section 9 of the Constitution)

The “right to equality” under Section 9 of the South African Constitution ensures that everyone is equal before the law and deserves equal protection and benefits. The closure of Sekunjalo's accounts, justified by nebulous claims of "reputational risk," permits banks to act in potentially discriminatory ways without concrete evidence. Sekunjalo, led by a Black entrepreneur, has argued that these closures may be rooted in deeper systemic biases that disproportionately target entities challenging established power structures. By endorsing the banks' actions, the court's ruling undermines the principle of equal protection under the law.

2. Undermining the Right to Freedom of Trade (Section 22 of the Constitution)

Section 22 guarantees citizens the right to freely choose their trade, occupation, or profession. However, the closure of Sekunjalo's accounts severely restricts its ability to operate economically. Banks are essential for any business’s daily functioning, and by upholding the closures, the court has allowed private entities to interfere in economic activities arbitrarily. This not only violates the constitutional right to trade but also sets a dangerous precedent that could allow banks to shut down any business they find undesirable, regardless of the lack of proven wrongdoing.

3. Contravention of the Right to Just Administrative Action (Section 33 of the Constitution)

Section 33 ensures that everyone has the right to administrative actions that are lawful, reasonable, and procedurally fair. The closure of Sekunjalo's accounts, based on the vague justification of "reputational risk," fails to meet these standards of fairness and transparency. The court’s decision to dismiss the appeal without requiring the banks to provide specific, substantiated reasons for their actions breaches the constitutional guarantee of fair administrative action and due process, setting a precedent for arbitrary and discriminatory actions by private financial institutions.

4. Right to Access Information (Section 32 of the Constitution)

Section 32 provides the right to access any information held by another party required to exercise or protect any rights. Sekunjalo should have access to clear information about why its accounts were closed. However, banks have offered vague reasons, preventing the group from effectively challenging the decision. This lack of transparency not only violates the right to access information but also hampers Sekunjalo's ability to seek justice and protect its rights through the legal system.

A Broader Global Trend: The Weaponisation of Financial Access

The Sekunjalo case is not an isolated incident; it is part of a disturbing global trend where financial institutions are increasingly weaponised to consolidate a neoliberal hegemony, suppress dissenting voices, and maintain the status quo. Research reveals similar examples can be seen worldwide:

HSBC closed accounts of Muslim charities in the UK in 2014, citing concerns over terrorist financing without providing clear evidence, which many saw as a discriminatory act targeting specific communities.

Deutsche Bank closed thousands of Russian accounts in 2015, amidst geopolitical tensions and sanctions, justifying the move on the grounds of compliance and money laundering concerns.

Banks worldwide have shut down accounts of cryptocurrency businesses, activists, and NGOs, citing regulatory compliance but often targeting entities that challenge established economic interests.

Liberal Fascism and Financial Exclusion

This global pattern reflects what some leftist commentators describe as "liberal fascism," where liberal democratic states and their private sector allies use ostensibly lawful means to suppress dissenting views while maintaining the appearance of democratic governance. In Canada, during the 2022 truckers' protest, the government invoked emergency powers to freeze the bank accounts of organisers and supporters without court orders, stifling the protest by cutting off its financial lifeblood. This is a clear example of how financial exclusion is used as a tool for political repression, cloaked in the language of risk management or public safety.

Targeting Dissent and Media Freedom in South Africa

In South Africa, the closure of Sekunjalo's accounts is particularly concerning given the group's ownership of ‘Independent Media’, a platform that challenges dominant liberal narratives. Cutting off Sekunjalo’s financial access means banks effectively undermine the independence of one of the few media voices critical of mainstream discourse, pushing the country towards a media landscape dominated by those aligned with liberal hegemony. This action threatens media plurality and freedom of expression, which are essential to any democratic society.

From a constitutional perspective, the court's ruling is problematic. It allows financial institutions, which are unelected and unaccountable to the public, to make decisions that profoundly impact economic life, potentially for politically motivated, discriminatory, or arbitrary reasons. The ruling also raises concerns about the creeping influence of neoliberal ideological and economic doctrines over democratic principles, undermining public trust in the judicial system's ability to protect fundamental rights. 

A Dystopian Disciplinarian State: The Future We Face

As I reflect on these developments, I cannot help but feel a deep disgust at the trajectory of local and global governance. We are witnessing the birth of a dystopian disciplinarian state, where financial institutions are not just tools of economic management but enforcers of ideological conformity. Michel Foucault warned us about the rise of disciplinary societies, where power is exercised not just through overt coercion but through subtle surveillance and control embedded in everyday institutions. The closures of accounts and the freezing of financial assets are the "capillaries" through which a new form of fascism flows—a liberal fascism that pretends to uphold democracy while quietly strangling it.

If we allow this trend to continue, South Africans can expect a future where banks decide who can live or die economically, where dissent is further criminalised, and where our constitutional rights are eroded in the name of stability and order. This is not just about one company; it is about the future of our democracy and our freedom. 

The Sekunjalo case signals the urgent need for greater transparency and accountability in how financial institutions exercise their power. South Africans should recognise the potential repercussions of this ruling, not just for Sekunjalo but for any entity or individual who might challenge prevailing interests in the future. Rather than buying into mainstream media narratives that support powerful corporate entities, the public should critically assess the situation and support Sekunjalo's fight for justice. 

This is not just a battle for one company; it is a battle for the right of all citizens to participate freely in economic and political life without undue interference from powerful corporate actors. It is a call to resist the creeping authoritarianism of liberalism that uses economic power to suppress dissent, recognising that today’s target could be tomorrow’s ordinary citizen. If South Africa’s constitutional democracy is to mean anything, it must stand firm against this encroachment by corporate powers — before it is too late.