‘Minister threatened us’
NEDBANK: BEING REMINDED BY ZWANE ABOUT LICENCE ‘WAS A PRESSURE’
‘Our decision was based on reputational and business risk associated with Guptas.’
ehind Nedbank Group’s decision to close the Gupta-linked business accounts was reputational and business risk – an explanation the controversial family refused to accept, the bank’s chief executive, Mike Brown, said yesterday.
Testifying before the Commission of Inquiry into State Capture, Brown said their decision – similar to that undertaken by Absa, Standard Bank and FirstRand – was informed by negative public perception of the Gupta entities, a matter which was widely covered in the media.
Nedbank had to constitute a subcommittee, reporting to an executive committee, to deliberate on the effect the negative publicity would have on the bank.
The executive committee reviewed the business relationship the bank had with the Guptas before coming to the decision on April 6, 2016.
The decision to close the accounts, including Sahara Computers, Oakbay Investments, VR Laser Services and Confident Concept, was communicated to the client, the Guptas, the following day. The family was given 30 days to respond.
This saw the ANC, represented by then secretary-general Gwede Mantashe, deputy secretary-general Jessie Duarte, head of economics Enoch Godongwana, and government’s inter-ministerial committee chair Mosebenzi Zwane, inviting Brown and his management team to a meeting. Zwane is also former minister of mineral resources.
While the April 2016 Luthuli House meeting sought to understand “why banks closed the accounts”, Zwane saw this as something which affected investor confidence in the country, also leading to thousands of job losses in Gupta-owned entities.
“I found this strange and reminded Mr Zwane that we weren’t here to discuss client-specific matters,” Brown said. “Our decision was based on reputational and business risk associated with Gupta accounts.
“We had nothing to do with job losses or executive resignations.”
With indirect reference to Absa and FirstRand, Zwane argued that he found it “surprising” for some banks not to honour government meetings, while government granted banks licence to operate.
Brown said: “I found this thought to be strange because banks receive licences from the Reserve Bank. My impression was that this was a threat.
“My other impression was that they wanted Nedbank to step up and become the primary transac- tional banker for the Guptas. Being reminded on how we got [our] licence was a pressure.”
Brown said banks adhered to a legislative framework in closing client bank accounts.
Banks, said Brown, were “not in the business of closing bank accounts” but “based on risk exposure, we give clients reasonable notice period to talk to the bank and deliver documentations”.
“If persuaded, we are in a position to overturn the decision,” he explained.
“Reputational risk refers to how we are perceived by stakeholders, who include clients.
“This is extremely important because it is about the trust our customers have on us.” Reputational risk could have material and terminal impact on the bank.
The commission is today expected to hear an application by former public enterprises minister Lynne Brown for leave to cross-examine former deputy finance minister Mcebisi Jonas. –