ConCourt turns down Sekunjalo appeal application against Nedbank

The Constitutional Court has unanimously turned down leave to appeal against a Supreme Court of Appeal finding which authorised Nedbank to close the accounts of the Sekunjalo group, bringing closer to an end a long tussle over the right of banks to close the accounts of people they consider a risk to the bank’s reputation. 

The finding is a major setback to the Sekunjalo group, which controls listed technology company Ayo Technology Solutions, since several other banks have already indicated they intend closing the group’s accounts, but were waiting for the outcome of this judgment. 

Absa, FNB, Investec and Mercantile Bank all started the process of closing the accounts in 2020, and, reportedly, a total of 28 banks and representative offices of foreign banks have turned down Sekunjalo’s business, making the banking sector’s boycott very nearly universal. The case brings to an end the urgent application aspect of the case, but substantive cases are still pending in the Equality Court and the SCA. However, it does mean that in the interim, banks can legally go ahead and  close the accounts if they deem it prudent.

The finding is also a blow to Sekunjalo group head Dr Iqbal Survé, whose trust controls the group, and consequently Ayo, in which the Public Investment Corporation invested R4.3-billion when it listed in 2017. 

The company now has a market capitalisation of about R163-million, roughly equivalent to the amount of cash the company holds after the PIC’s investment has been gradually whittled away in losses and generous dividend payments.  

Sekunjalo applied for leave to appeal, after the Supreme Court of Appeal (SCA) overturned a finding by the Equality Court, which granted an application for an interim order against Nedbank preventing the bank from closing several accounts. 

The Equality Court supported Sekunjalo’s claim that it had suffered racial discrimination, since the banks involved had not closed the accounts of “white” or “white-dominated” companies accused of wrongdoing, like Steinhoff, EOH and Tongaat.

The SCA reversed this ruling, saying that these companies did not pose the same reputational risk as the respondents. This was because, “unlike the respondents, they had all been restructured following the adverse findings against them; they had acknowledged their past wrongdoing; those implicated had been dismissed or resigned; new management was in place and other remedial actions had been undertaken”. 

The respondents had also sought to downplay the seriousness of the Mpati Commission’s adverse findings and comments directed at the Sekunjalo group and its founder, Survé, at the Equality Court, the court found.

Furthermore, in dismissing the application with costs, acting Supreme Court judge Raylene Keightley said there were fundamental inadequacies in the respondents’ case. 

The respondents – the Sekunjalo group – applied the racial designation of “white” or “white-dominated” to Steinhoff, EOH and Tongaat “without any underlying factual basis to support that designation”, the court found.

The Sekunjalo group responded angrily to this finding at the time, saying it was “dumbfounded” by the ruling and questioned the race of judges in the case, saying it was “highly unusual” that a panel of five white judges should come to this decision in this “landmark case” about how South Africa’s banks treat customers differently according to their racial classification.

Read more in Daily Maverick:  Sekunjalo plans to sue Government for R75 billion

Yesterday, nine Constitutional Court judges issued a brief order saying: “The Constitutional Court has considered the application for leave to appeal. It has concluded that the application should be dismissed with costs as it bears no reasonable prospects of success.”

In response, Sekunjalo said "the Concourt decision violates the essential principles of equality and our right to trade. In the case of our media business, the closure of banking accounts is also an attack on media freedom. Sekunjalo will now request the Concourt to revisit their decision". The company's full response is available here. 

Nedbank declined to comment. DM

* Story updated.