South Africa’s Constitutional Court has unanimously dismissed an appeal by Sekunjalo Group, a private holding company founded by billionaire and doctor Iqbal Survé bringing an end to a long-running legal battle over the closure of its bank accounts by Nedbank.
Sekunjalo Group had appealed a Supreme Court of Appeal (SCA) ruling that allowed Nedbank to close its accounts. However, the constitutional court upheld SCA’s ruling stating that the appeal had “no reasonable prospects of success.”
This decision deals a major blow to Sekunjalo, and settles the question of whether banks can close the accounts of clients deemed a reputational risk.
Absa, FNB, Investec, and Mercantile Bank had already initiated the process of closing Sekunjalo’s accounts in 2020 but delayed action pending the court’s decision. In total, 28 banks, including several foreign institutions, have refused to do business with the group effectively rendering the group nearly universally boycotted by the banking sector.
The ruling follows the SCA’s earlier reversal of a Western Cape Equality Court decision that had prevented Nedbank from closing Sekunjalo’s accounts. The Equality Court had initially accepted Sekunjalo’s claims of racial discrimination.
Sekunjalo argued it was treated unfairly compared to white-owned companies like Steinhoff, which were accused of corruption but allowed to keep their accounts open.
However, acting SCA Judge Raylene Keightley dismissed this argument, pointing out that Sekunjalo had failed to provide any factual basis for these racial designations or evidence that these companies were similarly situated to Sekunjalo in terms of reputational risk.
Furthermore, the SCA noted that the companies in question had undertaken significant restructuring and leadership changes in response to their scandals.
Nedbank defended its decision to close Sekunjalo’s accounts, citing concerns raised by the Mpati Commission’s findings against Survé and his companies.
The commission investigated the Public Investment Corporation (PIC), which had invested R4.3 billion in Survé-linked AYO Technology Solutions before the shares lost nearly 90% of their value.
Former SCA president Lex Mpati’s inquiry found that the PIC’s investment in Sekunjalo Group companies showed a “marked disregard for PIC policy and standard operating procedures”, and demonstrated “malfeasance”. Mpati recommended a forensic review of PIC’s dealings with Sekunjalo. PIC reportedly launched legal action to recover its investment.
Following the SCA ruling, Sekunjalo expressed disbelief and questioned the race of the judges involved in the case. It had labelled the decision as a “landmark case” about how South African banks treat customers differently based on racial classification.
The group then moved to the constitutional court to challenge the ruling. However yesterday, a panel of nine judges dismissed the case.
“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.” the court order read.
By the time of publication, neither Sekunjalo nor Nedbank had commented on the case or the ruling.
