Pravin Gordhan. Picture: TREVOR SAMSON
Pravin Gordhan. Picture: TREVOR SAMSON

If nothing else, Finance Minister Pravin Gordhan’s application to the courts for an order that would make it clear that neither he nor any of SA’s financial regulators can intervene in disputes such as the one between the Guptas and the banks should provide us with a thorough education on the rules in question.

The affidavits submitted to the court by the regulators and some of the banks provide a comprehensive overview of the legislation that governs the supervision of SA’s banking system and the combating of money laundering and terror financing, as well as the international institutions and conventions to which SA belongs.

They also provide sometimes painfully and bizarrely amusing moments. In his affidavit, Reserve Bank deputy governor and registrar of banks Kuben Naidoo points to the irony of President Jacob Zuma’s November refusal to sign into law the Financial Intelligence Centre Amendment Bill on the grounds that one of its sections allows for warrantless searches by inspectors.

Ironically, says Naidoo, under the current (unamended) legislation, all searches are warrantless — whereas under the amended legislation, these are allowed only in exceptional circumstances.

Then there is the affidavit by Financial Intelligence Centre (FIC) head Murray Michell, who in addition to supporting Gordhan’s application is also opposing a counter-application by the Guptas and Oakbay who want him to disclose details of the report on alleged suspicious transactions the banks submitted to the FIC.

The Guptas want to see what the FIC has in part because of the minister’s court case, and in even larger part, they have said, so that they can counter the reputational damage. In his affidavit, Michell suggests they need a public relations agency and not a court application, and points out that they are not opposing the legal basis of Gordhan’s application so, therefore, don’t need more information.

The bottom line, though, is that all of this highlights how damaging the fallout from the Guptas’ tussle with the banks and their regulators could be for SA’s financial system, and why it is so important for the matters to be properly aired in court and decisively ruled on.

The sanctity of private contracts between banks and their clients is at the heart of the case and regulators and banks have spelt out in no uncertain terms that the Banks Act does not provide any legal basis for banking supervisors to interfere in the relationships between banks and their clients.

And while the banking regulator monitors the banks’ compliance with the provisions of the FIC Act against money laundering and terror-financing, it is not entitled to see any of the reports on suspicious and unusual transactions that the banks submit to the FIC; nor is the FIC entitled to break confidentiality by sharing them with anyone else. It can simply block transactions and refer suspicious behaviour to SA’s prosecuting authorities.

Any breach of the confidentiality requirements could severely undermine the regulators’ efforts and erode the integrity and credibility of SA’s highly regarded financial system.

And the affidavits submitted by some of the banks and the regulators detail just how outrageously the Guptas have behaved and how little regard they have for the independence and integrity of SA’s regulators. That is why the court case matters — to ensure that no finance minister or financial regulator can interfere in the ways the Guptas want, now or at any time in the future.

SA’s sound and well regulated financial system is one of its most important assets. Gordhan’s case will hopefully serve to entrench that. Perhaps it will also put a rocket under the president and his merry men and remind them they are playing a dangerous game.

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