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The group is the proprietor of Independent Newspapers and dozens of other companies involved in fishing, property and technology. From Moneyweb.

Sekunjalo claims several banks colluded to close its accounts and that Nedbank, in particular, racially discriminated against it. Image: AdobeStock

It has not been a good week in the courts for Sekunjalo Group and its founder, Iqbal Survé, losing two cases within a day of each other – the first in the Supreme Court of Appeal (SCA) and the second before the Competition Tribunal.

Sekunjalo is the proprietor of Independent Newspapers and dozens of other companies involved in fishing, property and technology, to name a few.

Competition Tribunal loss

On Tuesday, the Competition Tribunal dismissed an application brought by Sekunjalo seeking an extension of the 2022 ruling by the tribunal preventing several banks from shutting its accounts.

The 2022 ruling also required five banks – Nedbank, Absa, FirstRand, Sasfin and Access Bank – to reopen accounts that had already been closed.

The application by Sekunjalo claimed collusive conduct by the banks, but that argument was shot down by the tribunal.

The matter had previously been heard by the Competition Appeal Court (CAC), which ruled that the tribunal had erred in granting an extension in the first place and that the six-month extension (preventing the banks from shutting accounts or forcing them to reopen already closed accounts) had lapsed.

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Sekunjalo has appealed the CAC decision to the Constitutional Court, which has yet to hear the matter. Such an appeal usually suspends the operation and execution of a court order, but the tribunal found it could not go against the CAC’s decision in this case.

The banks argued that their decisions to close Sekunjalo’s accounts were taken unilaterally, without consultation with other banks.

The tribunal ruled that it is bound by the points of law on which the CAC has already pronounced, and departing from this judicial hierarchy would likely result in chaos. It also found no prima facie evidence of a prohibited practice by the banks, concluding: “This is the legal principle in the CAC’s decision to which we are bound since we must follow decisions on points of law of the CAC”.

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In court papers before the tribunal, several banks claimed reputational risk as the reason for shutting down Sekunjalo’s accounts.

This followed the 2020 Mpati Commission of Inquiry’s report into the Public Investment Corporation (PIC), which found the PIC had disregarded its policies and procedures in making investments in Sekunjalo subsidiaries. The report recommended a forensic review of all PIC transactions with Sekunjalo.

Another loss in the SCA

On Monday, the SCA overturned an earlier Equality Court ruling that Nedbank’s decision to close Sekunjalo’s accounts was based on unfair racial discrimination. The SCA says Sekunjalo and 43 other respondent entities “did not allege the facts necessary to make out a prima facie case [of racial discrimination].”

The ruling has far-reaching implications for those accused of racial discrimination. In this case, the SCA says the Equality Court inexplicably reversed the onus of proof when it ruled that Nedbank had not proved its conduct was not based on the prohibited ground of race.

The language is rather tortured, but the principle is simple: accused of racial discrimination, it is up to the accuser to provide the evidence, not the accused to clear its name when a prima facie case has not been established.

Sekunjalo argued it had been treated differently to other Nedbank customers because of race and questioned why the bank had decided not to terminate its relationship with scandal-plagued companies like Steinhoff, EOH and Tongaat.

Nedbank argued that these companies did not pose the same reputational risk as Sekunjalo, as they had all acknowledged their past wrongdoing, remedial actions had been put in place, and those implicated had been dismissed or resigned.

“In contrast, [Nedbank’s] interaction with the respondents demonstrated that they had sought to downplay the seriousness of the [Mpati] Commission’s adverse findings and comments directed at the Sekunjalo Group and Dr Survé. Further, a number of Nedbank’s queries regarding account transactions had not been adequately explained,” reads the SCA ruling.

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The accusation of racial discrimination against Nedbank relied on inference, which was insufficient to establish a prima facie case.

To make its case, Sekunjalo had to prove that EOH, Steinhoff, and Tongaat were ‘white’ while it was ‘black’ and that they were similar in all other respects. The reason for the differential treatment was the race of the companies.

“Without this, a plausible inference could not be drawn that it [Sekunjalo] was the victim of unfair racial discrimination by Nedbank,” says the SCA ruling.

Sekunjalo ‘dumbfounded’

In response to the SCA ruling, Sekunjalo said it was dumbfounded over the ruling, leaving it no option but to appeal to the good sense of the Constitutional Court.

“In what is a landmark case to prove discrimination in how South Africa’s banks treat customers differently according to their racial classification, this sensitive case was judged by a panel of five white judges at the SCA. Not to impugn the integrity of these judges, but it is highly unusual and especially so given that every other case at the SCA on the day that this matter was heard had been presided over by a bench fully representative of South Africa. Why not this matter?”

Sekunjalo further says the SCA judges did not apply their minds to the group’s contention that EOH, Tongaat Hulett and Steinhoff were ‘white companies’ and, on this basis, treated differently by Nedbank.

It goes on to argue that, unlike EOH, Tongaat and Steinhoff, Sekunjalo is not accused of any financial misconduct, nor had it been tried and found guilty of such.

“Nedbank, in writing, confirmed that Sekunjalo had not been found to have done anything wrong. Thus, there is no need for Sekunjalo to take any corrective action. This was also ignored by the SCA,” it says in reply to the SCA ruling.

“We once again make the point that banks are targeting Sekunjalo to eradicate black businesses from taking their rightful place in the economy, to maintain the status quo where white-owned and managed companies continue to dominate the capital markets and economy of this country,” the group adds.