Behind Survé’s conspiracy theories
In his attempt to regain access to the banking system, the media owner has cast his net of allegations ever wider. But, plot or not, the de facto boycott threatening the Sekunjalo Group raises questions about the power of the banks
The temporary order Survé is hoping for – the reinstatement of his banking facilities – is a stretch, but such an order would give Sekunjalo breathing space...
Iqbal Survé professes to believe the following: a conspiracy to “unbank” and “strangle” his Sekunjalo group of companies is being driven by the Public Investment Corporation (PIC) with the active connivance of the SA Reserve Bank (SARB), the Prudential Authority (PA), South Africa’s banking regulator – as well as the JSE.
And by the hostile, white-owned media such as Daily Maverick and Media24, which are dead set on sinking Survé’s competing Independent Media.
And, of course, by amaBhungane.
The banks are just the weapons in a wider plot to destroy him and everything he has built, because he is black – and because his media provide an “alternative” to the rest of us, who are clearly embedded with the Ramaphosa administration. He, technically the largest publisher of newspapers in the country, is the underdog.
This is the shaky foundation of Survé’s application to the Competition Tribunal, which seeks an interim order to halt and reverse the nearly universal banking boycott against all his companies. The respondents are Absa, FirstRand, Nedbank, Standard Bank, Mercantile Bank (now part of Capitec), Investec, Sasfin Bank, Bidvest Bank and Access Bank.
The application was heard last week and the tribunal has reserved judgment.
The banks have indulged in some cynical defences. A constant refrain has been that Survé can pick and choose between “70” other banks in South Africa. They are all aware that most of those “banks” are just representative offices of foreign banks or tiny niche outfits that simply cannot bank the Sekunjalo Group.
The bank “boycott” is effective: their exit represents an imminent threat to the functioning of Survé’s companies. Only Standard Bank still officially retains him as a client, but is “reviewing” the relationship.
Survé has partially succeeded in persuading the Equality Court to temporarily interdict Nedbank from closing some of his remaining accounts.
Still, in the long run, he faces a forced fire sale of subsidiaries or business rescue, which would get Survé out and maybe safeguard the businesses and their employees.
Survé has repeated ad nauseum the banks’ own slightly perfunctory assurances to him that they are not accusing him of having done anything illegal. But it is easy to understand the banks’ point of view. Records show Survé has made himself a very undesirable client: his companies’ baroque financial arrangements demand deep and unrewarding engagement if the banks are to meet their Know Your Client and anti-money-laundering assessment and reporting obligations.
The position taken by the banks is that the banking relationship is a contractual one: they are entitled to terminate a relationship in accordance with the contractual terms – usually one month’s notice – and they are not required to provide an explanation, though, in Survé’s case, they have done so at length.
Survé has tried to suggest the banks acted in concert – as part of a media-fuelled campaign to shut him down. The banks have argued that they all operate under the same rules and similar risk regimes, so it is not surprising they independently came to the same conclusion about him as a client.
A case to answer?
Survé has argued persuasively that no business can operate without access to the banking system – and that there are real questions to be asked about how banking discretion operates and whether competition law could or should do anything about it.
The temporary order Survé is hoping for – the reinstatement of his banking facilities – is a stretch, but such an order would give Sekunjalo breathing space until a complaint laid at the Competition Commission in December is either rejected or referred back to the tribunal for proper prosecution.
In an affidavit filed at the tribunal, the commission asked that a number of Survé’s legal arguments be left undecided because they are worthy of serious consideration outside the rushed interim proceedings. These include concepts developed in US and European competition law such as “group boycotts” and “collective dominance”, which have so far not been incorporated into SA law.
But is it a competition case?
In framing his battle against the banks as a competition complaint, Survé has struggled to find a “theory of harm”. It is clear who gets hurt, but not at all clear who benefits or why the banks have any incentive to destroy Sekunjalo, which is a large paying customer.
However devastating the cumulative actions of the banks may be, that does not mean they constitute a transgression in competition law. The banks argue that their independent addressing of reputational risks all lead to the same outcome because they all operate in the same regulatory environment.
Although none of Survé’s companies compete with the banks, Survé argues that the banks’ actions reduce competition in the markets in which Sekunjalo companies operate by inevitably shuttering these businesses. To achieve this, he argues, the banks have colluded and abused their dominance in contravention of the Competition Act.
The question why they would do this looms large over the technical arguments and in the digs exchanged in the court papers filed by Survé and the banks.
Survé, in an affidavit on behalf of himself and 35 companies in the Sekunjalo Group, disputed that it matters: “It is not a requirement of the Competition Act that the applicants must show that the respondents stand to benefit from their prohibited conduct. It is sufficient to show that competition is harmed by the conduct of the respondents. In this case, competition harm is manifest.”
This has not stopped him from theorising about why the banks have allegedly launched a coordinated campaign to destroy Sekunjalo.
Conspiracy 1: the PIC
The PIC in many ways summoned Survé’s conglomerate into being with repeated investments totalling several billion rands.
The state-owned asset manager funded his takeover of Independent Media in 2013. It was the main subscriber in shares when Survé listed Premier Fishing & Brands in 2017.
Then it made a highly irregular investment of R4.3-billion in Ayo Technology Solutions later in the same year. It was by all accounts set to give Survé billions more in 2018 when he tried, but failed, to list Sagarmatha Technologies.
The relationship has since soured. The PIC is now trying to liquidate the company through which Survé took control of Independent after it defaulted on loan repayments. The PIC is also trying to recover the billions it stuck in Ayo, which would effectively smash Survé’s piggybank.
Despite the PIC seeming to proceed with these legal steps somewhat reluctantly, Survé appears convinced it is out to get him by other means. “It is quite possible that the PIC may have lobbied the banks to close the bank accounts of the applicants. The PIC is a substantial shareholder in most of the banks,” he said in his affidavit.
During the hearing of the matter, Sekunjalo’s counsel Advocate Vuyani Ngalwana backtracked slightly in response to a question from the tribunal’s chair Mondo Mazwai: “No, chair, we are not saying the PIC controls the banks, we are saying … that an agreement to engage in prohibited horizontal conduct is presumed if the firms involved have a substantial shareholder in common. We don’t take it any further than that.”
He then went further anyway: “We are saying that the banks, because they have this substantial shareholder in common, they have an interest in the success of the PIC’s litigation against Ayo. And so they will do everything in their power to ensure that anything that goes against the PIC is thwarted.”
Ayo is, to a large extent, the reason Survé is in his current situation after journalists and the Mpati Commission revealed massive irregularities with the PIC investment in Ayo.
The PIC does own minority stakes of between 6% and 14% in all the banks, or at least the JSE-listed ones. It’s not clear if that counts as “substantial” and, as at least one bank has pointed out, the PIC has no representatives on any bank’s board and Survé has produced no evidence to back up his allegations.
Conspiracy 2: the regulator
According to Survé’s affidavits, even the SARB and its Prudential Authority (PA) are party to the conspiracy to destroy Sekunjalo.
Here, he makes some of the most serious allegations in his court papers, including those recently filed at the Equality Court.
In his Equality Court affidavit, he claims that “highly placed sources within Absa Bank and FNB have said that the Prudential Authority or the Reserve Bank has signalled to all of them [banks] to shut down the Sekunjalo group companies’ accounts.”
In his tribunal papers, he cites the same allegations. “The Commission should be given an opportunity to investigate the veracity of the allegations that compliance officers of the respondent banks have worked closely with the Prudential Authority to unbank Sekunjalo. This has been widely reported to us and our company executives…”
In a response to amaBhungane questions, the regulator said: “The PA denies the allegation, which is without any basis or evidence.”
Citing a 16 November 2021 letter PA chief executive Kuben Naidoo had written to Survé, the PA told amaBhungane: “Mr Kuben Naidoo’s letter … stated that the PA had not discussed Sekunjalo Group’s accounts with any bank or banker or other third party. However, should Mr Survé have any such evidence he was welcome to share it with Mr Naidoo.”
Conspiracy 3: racist banks
Anti-competitive conduct normally aims to raise prices or exclude competitors but Survé says that, “in this instance, the purpose of the coordinated conduct by the respondent is to remove the participation of firms that are owned by historically disadvantaged persons”.
Ngalwana also expanded on the banks’ alleged “common policy”, which is to “remove black companies from the economy that are in competition with the banks’ customers in predominantly white-owned spaces”.
The #racistbanksmustfall campaign that has sprung up appears heavily invested in Sekunjalo’s fate. The movement, according to its paraphernalia, is concerned with how poor black people and aspiring black businesspeople are blackballed by banks.
Survé is a strange champion for this cause. As a very rich man, with his personal wealth in 2007 declared to be R1.26-billion, Survé was, until recently, very well served by the banks he is now battling in court. His mortgages and personal credit facilities totalling well over R100-million are detailed in court papers and his companies’ multimillion facilities with various banks are detailed in their financial statements.
Still, the fact that Sekunjalo is black is itself now the argument for authorities to shield it.
“I am … advised that the conduct of the respondents engages constitutional values of equality and freedom. A refusal to provide banking and payment services to a black owned and black controlled firm is one of the worst infringements of this equality and freedom,” Survé says in his papers.
His argument is that “white” companies that have done worse things than what he is alleged to have done still have accounts with the banks boycotting him. His primary examples are Steinhoff, Tongaat Hulett and EOH – all of which had executives carry out grotesque accounting fraud leading to billions of rands in value destruction when discovered.
The banks’ position is that all those companies fired their executives and underwent large investigations to clean up the rot.
Conspiracy 4: #Stratcom
Survé makes much of the fact that many of the banks relied on media reports when pleading reputational damage, including amaBhungane reports. This dovetails with Survé’s long war of words with his perceived mortal enemies: us and rival media in general.
Full disclosure: Survé is suing the author of this article jointly with our publishing partner Daily Maverick for R3-million. The summons cites two articles from more than a year earlier, but is vague about what we got wrong.
Survé has not demonstrated any significant error in our coverage and it has also long been Sekunjalo’s policy to ignore our queries.
In his affidavits Survé also resurrects a theory of his that hedge funds and asset managers worked with journalists to short the shares of Ayo – suggesting this was the “real” reason the shares became nearly worthless.
Gupta precedent
The question remains as to whether the banks’ actions are justified. The only comparable precedent to what Survé is going through is the unbanking of the Gupta family in 2016.
Banking the disreputable can invite censure from international correspondent banks as well as local and international authorities, which is part of the case the banks are making. The competition authorities are being asked to possibly force banks to transgress regulations in what is rightly the most regulated industry of all.
But what about other clients?
The banks are fundamentally relying on the assertion that, whether or not Survé is guilty of anything, they have an inalienable right not to do business with him. It is, after all, in the contract he and everyone else for that matter signed when they opened bank accounts.
But the issue could be more complicated than that. Commission legal counsel Luke Rennie told the tribunal that “the exercise of contractual rights can, and often does, in appropriate circumstances, give rise to competition concerns… For example, if the exercise of contractual rights is a function of market power or the relevant terms of the contract are a manifestation of market power.”
That seems like a point worth taking up. If only Survé could stick to arguments like these.