SOUTHERN AFRICAN BANKS GUILTY OF DOUBLE STANDARDS IN DEALING WITH FRAUDSTERS, MONEY LAUNDERERS AND SCAMMERS
In a recent article published by Bongani Hans an interesting aspect was put to the fore.
As was pointed out a few years ago by Johnny Steinberg regarding the complicity of Southern African banks when they allow transactions originating from money laundering, embezzlement and fraudsters and the like to occur without doing anything about them.
Hans’ article reads as follows:
‘Two of the Country’s major banks have demonstrated double standards by unbanking companies they purport to pose a reputational risk to their operations, as they have failed to act against themselves despite the Zondo State Capture Commission report linking them to serious acts of corruption.
Nedbank and Standard Bank’s reputations took a major blow when Justice Raymond Zondo mentioned them in his comprehensive report as alleged wrongdoers but there is no evidence that they have taken drastic steps against themselves or their officials.
The banks have also received much negative media coverage for their relationship with Gupta-linked Regiments Capital.
When pressed for comment on questions to do with the apparent double standards at play, Nedbank corporate communications head Annaleigh Vallie responded with: “We have no further comment”.
Based on our initial review of the two Zondo Reports, no adverse findings have been made against Nedbank. Nedbank will co-operate with any investigation undertaken as a result of recommendations in the Zondo Commission Report,” said Vallie.
Standard Bank’s Ross Linstrom also did not entertain the question of hypocrisy in his response, except to say the bank continues to co-operate fully with all competent authorities in respect of the work of the Judicial Commission on Inquiry into State Capture.
According to the Zondo report, the two financial institutions are associated with corruption linked to Regiments Capital and former Airports Company South Africa (ACSA) treasurer, Phetolo Ramosebudi, who between 2010 and 2013, issued invoices in the names of entities controlled by him or his brother, to Regiments Capital. These amounted to more than R9.1 million.
Zondo also linked the banks’ questionable behaviour to South African Airways (SAA) and Transnet, which were among the reasons the commission was created in the first place, and included the investigation of the activities of the Gupta family.
Nedbank and Standard Bank have been directly linked to corruption activities and are due to further investigation, for having a questionable business relationship with regiments Capital, which involve ACSA and Transnet as their cash cows.
Yet, the banks have seen fit to unbank companies such as Sekunjalo Investment Holdings (SIH) based on unproven reputational risk due to trial by the media.
In trying to find justification to unbank Sekunjalo, the banks jointly arrived at the consensus that SIH and its related entities posed a significant reputational risk due to negative publicity. The banks’ action is putting hundreds of jobs on the line and threatening the well-being and future of thousands of employees’ dependents.
In legal documents filed at the Equality Court, Sekunjalo and its related group companies, have raised concern about the banks’ internal risk assessment procedure, relying as they do, on “vitriolic and inaccurate media reports published by or at the instance of the complainants’ competitors in the media space” to discriminate against them.
Zondo found that Nedbank was entangled in a conflict of interest and secret deals when it was bidding for the transaction advisory services at SAA.
The commission also found that more than R35 million had been invoices by Regiments Capital to Nedbank for various interest swap deals between Nedbank Capital and ACSA, and then Nedbank recovered the money from ACSA over the life of the interest swap transaction.
The report highlighted that Nedbank’s arrangement with Regiments Capital was an act contrary to its principal’s interests, “by increasing the margin payable by ACSA to Nedbank and, thus, increasing its 50% share of this margin.”
It was found that Nedbank representatives Mario Visnenza and Moss Brickman were among people who should be investigated for the alleged contravening of section 6(b)(ii) of the Prevention and Combating of Corrupt Activities Act 12 of 2004. According to the report, those found to have violated the Act might be guilty of dishonesty, unauthorised actions, bias as well as the abuse of a position of authority.
The report stated that the matter requires further investigation by the appropriate authorities, as the commission hearings ran out of time before listening to Nedbank’s version.
Zondo also found that more than R22 million was invoiced by Regiments Capital to Standard Bank in relation to a R1,75 billion interest swap between Standard Bank and ACSA, and then recovered by Standard Bank from ACSA, over the life of the interest swap transaction.
Financial investigations consultant, Emarand van Zyl, who has been investigating and raising concerns about banks’ misconduct, said if the government could not take action against the banks, no one would, because they do not have an appetite to act against themselves.
“The government is protecting the banks. Where is consumer protection in South Africa? It has collapsed. The government must step in, the banking ombudsman must step in, but they are all sitting there doing nothing,” he said.
Political analyst and legal expert, Mpumelelo Zikalala, said banks were biased towards themselves and certain companies that had been found wanting. He said the Banking Association of South Africa (Basa) should be proactive by disassociating itself from banks that have been implicated in unscrupulous deals.
“What is their stance when it comes to protecting their reputation if one of their members (in Basa) is implicated in wrong conduct? Yes, it may be that at this stage it is still allegations (against the banks), but they also act on the basis of allegations (against their clients),” he said.’