Durban - Banks will have to think twice about taking unilateral action against clients in the wake of what could be a precedent-setting judgment.
The Sekunjalo Group of Companies (Sekunjalo) last week won an interim order in the Equality Court preventing Nedbank from closing its bank accounts.
The court ordered that pending the final determination of Sekunjalo’s main Equality Court application, any of its accounts that had already been closed at the time of the hearing of the application, should be reopened.
Western Cape High Court Judge Mokgoatji Dolamo said he was satisfied that Sekunjalo had established a prima facie case that it had been unfairly discriminated against.
Legal experts said the judgment could compel banks to give people an opportunity to explain themselves before sanctioning them.
Lawyer and expert Zelna Jansen said the lack of consistency in how banks treated their customers was highlighted in the judgment.
“It showed that if the banks cannot show that they treated everyone the same, then it can be perceived that there was discrimination. Banks have to start thinking beyond profit and RomanDutch Law.” Jansen said there needed to be more transformative justice when it came to banking transgressions.
“We have just emerged from the worst of the Covid-19 pandemic and so many people have lost their jobs. Is attaching a person’s property the right thing to do in this climate?”
Mpumelelo Zikalala of Zikalala Attorneys said banks needed to set out clear criteria on what they regarded as reputational risk and what type of transgressions required the strongest sanction.
“Banks must have clear criteria and must be consistent. If there was irregular conduct by those who dealt with the Guptas, how were they sanctioned, compared to those where there was irregular conduct linked to Steinhoff?”
Zikalala said there must be equality and people must be given an opportunity to explain themselves.
Zikalala said he had hoped that the judgment would go the way that it did.
“This is just the start, and there is a need to look at discrimination in bank loans and home loans and the huge difference in the way people are treated.”
Political analyst Professor Sipho Seepe said he viewed the judgment as being precedent-setting as the court was dissatisfied with how banks “treat others and the poor”.
“Often, the poor are the most affected by unilateral bank decisions. There is also hypocrisy as white capital transgressions are overlooked. The argument against Sekunjalo was that their accounts were to be closed over reputational risk, but when white-owned businesses transgressed,these issues were overlooked,” said Seepe.
He said banks also scrutinised the accounts of those with links to politicians, but this was not done consistently.
“Cyril Ramaphosa has been politically exposed but you don’t see people rushing to close the accounts of people linked with him. They did this to Jacob Zuma because banks see Zuma and his supporters as people disrupting apartheid economic logic.”
In his ruling, Judge Dolamo found that: “Nedbank admitted to a differential treatment between Sekunjalo Group and the retained companies, albeit for non-discriminatory reasons.”
In its application, Sekunjalo argued that Nedbank, and the other major banks, terminated the bank accounts of members of the Sekunjalo Group, and had been selective in the action taken against companies that were “white-dominant businesses”.
Sekunjalo argued in court that companies such as the Steinhoff Group, EOH Limited, and the Tongaat Hulett Group had all been found guilty of fraud and other offences without their banking accounts or facilities having been terminated, yet black-owned Sekunjalo, whose actions were far less egregious, faced punitive action.
The judge said: “In Nedbank’s view the retained companies no longer posed a reputational risk since their transformation. This, however, does not explain why these companies were not treated the same as the Sekunjalo Group even before their transformation this, notwithstanding the fact that they were subjected to the same, if not more public scrutiny which carried with it reputational risk.”
Sekunjalo’s lawyers argued that the yardstick used by Nedbank in assessing the reputational risk that is posed to it by the Sekunjalo Group, differed markedly from the one it uses in respect of the white companies.
They said Nedbank’s reliance on inaccurate and false media reports as the basis for terminating and denying Sekunjalo banking facilities, constituted harassment and unfair discrimination, in contravention of the Promotion of Equality and Prevention of Unfair Discrimination Act, and was unconstitutional.