Publications
Partners
Johannesburg – The North Gauteng High Court's ruling dismissing an application of former finance minister Pravin Gordhan against Gupta-owned Oakbay has confirmed the "sanctity" of bank-client relationships, according to Cas Coovadia, managing director of the Banking Association of South Africa (BASA).
On Friday Judge Aubrey Ledwaba dismissed Gordhan's application, with costs to be carried by the minister of finance. Gordhan wanted the court to rule that he could not interfere with the banks' decisions. He lodged the application in October last year, and the matter was heard in March.
Oakbay had approached the minister to intervene when four major banks - Standard Bank, ABSA, FNB and Nedbank - closed its accounts.
According to a statement issued by BASA, the court’s ruling provided “clarity” on the nature of private bank-client relationships.
The judgment clarified that no member of the National Executive is obliged to intervene in commercial disputes.
"It is not appropriate for a member of the National Executive to draw the judiciary into the exercise of his executive functions as evidenced in this application," the judgment read.
"To grant the minister the declaratory relief would allow the judiciary to stray into the exercise of executive functions where the circumstances do not warrant this involvement."
“The judgment, in our view, confirms the sanctity of client-bank relationships and confirms there should be no interference in that, political or otherwise,” said Coovadia.
“We are also of the view we have a proactive and efficient bank regulator and a Financial Intelligence Centre Office that is diligent in overseeing efforts to combat financial crime,” said Coovadia. These bodies are capable of overseeing the conduct of banks with their clients.
But Coovadia raised concerns about the motives behind Mineral Resources Minister Mosebenzi Zwane and Labour Minister Mildred Oliphant’s attempts to establish an inter-ministerial committee to allegedly interfere in the matter.
The court also ruled that the inter-ministerial committee is unlawful.
ABSA, which had filed supporting papers along with other banks, welcomed the court’s findings that the Cabinet or any minister could not intervene in bank-client relationships. “While the court did not grant a declaratory order, its affirmation in respect of the above is very clear. The court also ruled that banks’ conduct should boost, rather than harm, confidence in the South African banking system,” said a spokesperson.
Finance Minister Malusi Gigaba will not appeal the court's ruling. According to a statement issued by Treasury, the minister will not contest the judgment. “The Minister of Finance accepts and respects today’s High Court judgement on Oakbay and will not appeal it. The Minister will abide by the court judgement,” the statement read.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.
Read Fin24's top stories trending on Twitter: Fin24’s top stories
