Banks come in for some stick in Zondo’s final report

Banking clients, even dodgy ones, should be afforded the right to be heard before their bank accounts are closed, chief justice Raymond Zondo has recommended in relation to the closure of the Guptas’ bank accounts during the height of the state capture era.

At the same time, Zondo found that former president Jacob Zuma acted illegally, violating the constitution and the Executive Members’ Ethics Act, for his role in trying to coerce the banks into reopening the family’s accounts. He also found that former mining minister Mosebenzi Zwane, who crusaded passionately on behalf of the Guptas over the account closures, violated the executive ethics code.

There is a Supreme Court of Appeal ruling which states that a bank is not obliged to hear a clients’ side of the story before closing their accounts, due to the relationship not being a “contractual one” — but Zondo disagrees.

“In this day and age in SA, it is unacceptable that an institution as powerful as a bank should have no obligation to hear, whether in a discussion or in writing, what a client has to say before the bank may close the account on suspicion that the client may be involved in illegal or corrupt transactions,” Zondo says in his report.

“It is therefore recommended that relevant existing legislation governing banks be amended to introduce this requirement of fairness or, if warranted, a new piece of legislation be enacted which will make this a requirement.” 

As state capture allegations began spilling into the public domain in 2016, the country’s banks moved to close Gupta company bank accounts. The family sought the help of the ANC and their many proxies in the government to reverse the decision.

They argued that the closure was a result of “white monopoly capital” attempting to squeeze out legitimate black business. At the time, the Zuma administration went all-out to help the family — Zwane even fabricated a cabinet decision to establish a commission of inquiry into the banking sector, which sent shock waves through the markets at the time.

The claim that the termination of their accounts was done to advance the agenda of “white monopoly capital” was “entirely unjustified”, Zondo says. “There is absolutely no evidence to support that accusation. The decisions of the banks were taken in the light of their legal obligation when a client appears to be involved in a suspicious transaction that could cause a bank reputational damage.”

In light of the evidence, Zondo says, there was no doubt that Zuma wanted the interministerial committee established by the cabinet to look into the matter to “come to the assistance of his friends, the Guptas”. This would have been improper interference in the relationship between a bank and its clients.

“That conduct on [Zuma’s] part was also a breach of section 96(2)(b) of the constitution. That reads [that] members of the cabinet and deputy ministers may not act in any way that is inconsistent with their office or expose themselves to any situation involving the risk of a conflict between their official responsibilities and private interests.”

Zuma’s conduct was also in breach of section 2 of the Executive Members’ Ethics Act. “When one also has regard to the statements he made in parliament on the matter, it is quite clear that he sought to improperly interfere in the matter of the closing of the banking facilities of the Gupta-owned companies in order to assist his friends.”

Zuma told parliament at the time that the government could not ignore the closure of the family’s bank accounts as it “looked suspicious”.

Zwane, in his role as chair of the interministerial committee, violated the executive ethics code, Zondo found.

“I have concluded that President Zuma and Mr Zwane misused their public power in an attempt to achieve a benefit for the Guptas, not because their case was a deserving one which ought to enjoy the protection of the state but because of the power and the influence the Guptas were able to wield in the SA of those times,” Zondo says.

“This conduct on the part of Mr Zuma and Mr Zwane ought to be deplored and condemned both as a violation of the powers vested in them by the constitution and as a breach of the executive ethics code.”

Zondo doesn’t spare the ANC leaders who met the banks on the family’s behalf either. He says the party tried to put across that it met the banks not to assist the Guptas but to understand the processes and circumstances under which a banker-client relationship would be terminated.

He says his task was not to make findings on the ANC, but its conduct raised questions — namely, why did the leaders ask specifically about politically exposed persons and, importantly, why did they report back to Gupta company Oakbay after their meetings with the banks?

It was also improper for the cabinet, which set up a task team to help the Guptas, to get involved in the closure of the family bank accounts.