Banks tell how government threatened banking licences after closing Gupta accounts

All four of South Africa’s full service banks have provided testimony to the commission of inquiry into state capture, answering questions on the mass black-listing of Gupta accounts as the scandal broke in 2016.

Standard Bank, Nedbank, FNB and Absa all shut down accounts linked to Gupta businesses in 2016, after several questionable transactions were highlighted in the breaking state capture scandal.

The banks, at the time, did not divulge the exact reasoning behind the closures, citing only reputational damage and concerns over being party to suspicious activity.

Following the closures, government officials hastily set up a cabinet committee and summoned the banks to explain the closures – while ANC officials also summoned the banks to Luthuli House to explain themselves.

The cabinet committee was led by Mosebenzi Zwane, who was mineral resources minister under the Zuma administration, himself heavily implicated in the state capture saga due to his ties to the family.

The ANC members seeking answers from the bank included then-secretary-general, Gwede Mantashe, his deputy, Jessie Duarte, and Enoch Godongwana, the ANC’s head of economic transformation.

Both meetings were under the guise of concern over job losses – but testimony from the banks made it clear that the intent was to find out why the banks had closed Gupta accounts, and even pressure them to reverse the decisions.

The banks were accused of colluding, and were given veiled threats around their banking licences.

Standard Bank

Starting with testimony from Standard Bank on Monday (17 September), it was revealed that Zwane directly threatened to change the country’s laws to make it illegal to close bank accounts.

Ian Sinton, Standard Bank’s former group general counsel, said that cabinet ministers also suggested that the bank prioritise the needs of the Gupta companies’ employees over its obligation to comply with the law.

In a meeting with the ANC, the officials questioned whether the account closures could be reversed.

It was also implied that Standard Bank was serving “white monopoly capital”, when the bank was asked if it was taking orders from Stellenbosch.

According to Sinton, the bank was shocked by the level of interference from government and a political party like the ANC in bank-client affairs.

Absa and FNB

Absa bank and FNB were invited to meetings with the ANC and with Zwane and the other cabinet ministers, but refused to attend.

For Absa, the bank said outright that it would not discuss any details about its banking clients, and denied the allegations of collusion being put forward by the politicians.

As was the case with FNB, the meetings were rejected because the committees would not give detailed information on what the meetings would entail.

Former FNB CEO Johan Burger said that it had never happened in his 32 years as a banker that government had interfered and requested data about a bank-client relationship.

He said the bank would have accepted the invitation to attend the meetings only on condition that the minister of finance and relevant authorities were present.

Nedbank

On Wednesday (19 September), Nedbank CEO Mike Brown gave his testimony, saying that he attended a meeting with Zwane and several others, which was held under the pretense of government being concerned about job losses as a result of the closures.

While Brown made it clear that the bank would not discuss the closure of Gupta accounts specifically, he said that it was clear that the meeting was set up to focus on the family’s closed accounts.

In the meeting, Brown said, Zwane made several veiled statements that appeared to target South African banks, and also appeared to be privy to private information regarding the Guptas’ banking accounts.

For instance, Zwane said he knew that none of the Gupta companies had primary accounts with Nedbank. He went on to ask whether Nedbank would be willing to ‘help save jobs’ by taking on the accounts of the Gupta companies, following the resignation of implicated directors.

At the close of the meeting, Brown said that Zwane stated that ‘it was funny’ that some banks refused to meet with government on the matter, even though it was government who gave them their banking licences.

Brown said the statement was factually inaccurate, as banking licences are given by the Reserve Bank, which is independent of government. He also rejected the notion that collusion had taken place.

Read: The CIA warned South Africa about the Guptas in 2009: report