What Banking Officials Told South African Corruption Inquiry

(Bloomberg) -- Officials from four of South Africa’s largest banks told an inquiry into the looting of taxpayer funds that they faced intense political pressure to continue providing services to businesses that belonged to a family close to former President Jacob Zuma.

Standard Bank Group Ltd., FirstRand Ltd., Absa Group Ltd. and Nedbank Group Ltd. shut the accounts of companies controlled by the Guptas in 2016, citing laws against dealing with clients suspected of being party to suspicious transactions. Senior ruling-party and government officials then summoned the lenders’ executives to explain their actions. The businesses of the three Gupta brothers, who’ve left the country, have ceased operations, while the governing African National Congress forced Zuma to quit in February.

The judicial probe was ordered by Thuli Madonsela, the nation’s former anti-graft ombudsman, in 2016 after her own investigation indicated that the Guptas used their close relationship with Zuma to exercise undue influence over state contracts, appointments and decisions. They all deny wrongdoing.

Here are some of the main points to emerge from the bank officials’ testimony:

Ian Sinton, Standard Bank’s former group general counsel

  • Mosebenzi Zwane, who served as Zuma’s mineral resources minister, told Sinton and Standard Bank Chief Executive Officer Sim Tshabalala that the government was concerned the bank’s actions could result in job losses and warned that as a member of the ANC, he could get the law changed to make account closures illegal.
  • A cabinet minister suggested to the lender it prioritize the needs of the Gupta companies’ 7,500 employees over its obligation to comply with the law.
  • The ANC’s then-secretary-general, Gwede Mantashe, now the nation’s mines minister, his deputy, Jessie Duarte, and Enoch Godongwana, the ANC’s head of economic transformation, also voiced concerns about job losses and questioned if the account closures couldn’t be reversed.
  • The party officials asked Standard Bank if it was serving the interests of “white monopoly capital” and frustrating black businesses.

Yasmin Masithela, Absa’s head of compliance

  • Absa was also invited to a meeting with Mantashe, Duarte and Godongwana. Its chief executive officer, Maria Ramos, agreed to attend but refused to discuss any details about the bank’s clients.
  • Absa denied allegations that it colluded with other banks, saying it didn’t discuss information about any of its clients with any third party.
  • The lender declined two invitations from a cabinet committee, headed by Zwane, to provide clarity on media reports about the account closures because it didn’t receive an adequate response to its request for information on the nature and status of the meetings and the attendees.

Johan Burger, FirstRand’s former chief executive officer

  • Godongwana asked Burger for a meeting, but never responded to a request for information on the agenda. The encounter was later canceled. Burger said it was the first time in his 32 years as a banker that he’d received requests from a political party requesting information about a bank-client relationship.
  • Burger said he declined a request to meet members of a group led by Zwane because he couldn’t get details on what would be discussed or who would attend.

Mike Brown, Nedbank’s chief executive officer

  • The lender received a meeting request from the ANC’s Godongwana at the party’s Luthuli House headquarters in Johannesburg. The purpose of the meeting was for the ANC to get a better understanding of why banks generally close accounts, he said, adding this was the first time he’d been summoned by politicians to talk about the closure of clients’ accounts
  • Brown attended the meeting with the group led by Zwane, who assured the CEO that then-Finance Minister Pravin Gordhan was aware of the gathering. Brown expected Gordhan to be present, given the nature of the meeting.

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