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WRAP: #StateCapture inquiry: Mosebenzi Zwane made 'threat' about Nedbank's licence

Sep 19 2018 19:02
Lameez Omarjee

Former Mineral Resources Minister Mosebenzi Zwane tried to pressure Nedbank into keeping the accounts of Gupta-linked entities open, even allegedly threatening that something may happen to the bank’s licence if it did not behave in a certain way, the Commission of Inquiry into State Capture heard on Wednesday.

After Standard Bank, Absa and FirstRand gave evidence before the inquiry earlier in the week, it was the turn of Nedbank CEO Mike Brown to testify around how and why the bank closed the accounts of Gupta-linked companies.

Brown told the commission, chaired by Deputy Chief Justice Raymond Zondo, that in February 2016 the bank had escalated or prioritised the review of the accounts of the Gupta family and its associate entities. This followed negative media reports about the Guptas and their companies, which posed reputational risk. Eventually a subcommittee of the bank gave notice of intention to close the accounts.

Nedbank, like Absa, Standard Bank and FNB, was then invited by ANC chair of the the party's subcommittee of economic transformation Enoch Godongwana to discuss the closure of the accounts.

Brown said he made it clear to the ANC that he could not discuss client-specific information, but agreed to go to the meeting to give a better understanding of the powers of banks to close accounts, and address concerns that the banks had colluded to close the accounts.

"It was very important that I address the second narrative of the closure of accounts in general. I thought it was important for the safety and soundness of the financial system in general and Nedbank," he told the inquiry.

Brown said that he did not feel pressured by the ANC to reopen the Gupta accounts following the meeting. Instead, he was thanked for providing a better understanding.

Nedbank was then asked to meet with the an inter-ministerial committee (IMC) of Cabinet. Earlier in the week representatives of Standard Bank, FNB and Absa testified that they too had been asked to meet with the IMC. 

Brown said that, according to correspondence with the committee secretary Advocate Zarina Kellerman, the IMC consisted of Zwane, Labour Minister Mildred Oliphant, then-Finance Minister Pravin Gordhan and former Communications Minister Faith Muthambi. 

The Nedbank CEO said he had never heard of the IMC and was not sure what it was. He had only previously engaged with government officials from National Treasury which has oversight of financial services.

IMC meeting 

Brown said he decided to go to the meeting not to make any specific references or statements about the Guptas, but as an "engaged corporate citizen and leader in the bank environment" it was important for him to give input on discussions about the ability of banks to close accounts. 

He told the commission he found it "strange" that the meeting was to be held at the Department of Mineral Resources in Pretoria. But because he was informed that the finance minister was one of the members of the IMC, he assumed Gordhan would be in attendance and the DMR was logistically the easiest place to hold the meeting.

Before the meeting Brown requested to know which government officials would be in attendance. Kellerman, in an emailed response to Nedbank queries, said attendance could not be confirmed as the meeting was on an ad hoc basis.

However, Brown said Kellerman assured the meeting would be quorate in terms of its defined mandate.

At the meeting he found that those attending on behalf of the IMC were Zwane and Kellerman, but the minister of labour, the minister of communications and the minister of finance were not there. 

'Particularly strange'

"I was assured by Minister Zwane that minister Gordhan was aware of the meeting, and we should continue given his previous response that the meeting was quorate," Brown said.

But Brown said he later learnt there was a letter from Gordhan where he disputed that he was aware of the meeting. Advocate Kate Hofmeyr clarified to the commission during questioning that this letter was part of an affidavit for the Oakbay case in which Gordhan sought relief form having to intervene in the closure of bank accounts in his capacity as finance minister.

Brown then recalled that Zwane, who chaired the meeting, asked Nedbank to step in as primary transactor for Gupta-linked accounts in an effort to save jobs at entities in the Oakbay group of companies, especially as the Guptas had resigned from their directorships at these companies.

The Guptas and Jacob Zuma's son Duduzane Zuma announced their resignation from companies in the Oakbay stable in early April 2016. 

"I found it particularly strange," Brown said of the request. He said he explained that Nedbank would not reverse its decision as the reputational and business risk would not have changed as a consequence of the resignation of directors.

Brown told the inquiry upon conclusion of the meeting there appeared to be two objectives of the IMC; to determine if there was a collusion in the closure of bank accounts by the major banks, and to determine if Nedbank had appetite to step in and become the primary transactional banker for the Gupta group of companies.

Answering a question from Zondo about whether pressure was placed on Nedbank to reopen accounts, Brown said there were numerous references throughout the meeting about the licencing regime - in effect placing pressure on the bank.

There was a "subtext that something could happen" to Nedbank's banking licence if it did not behave in a particular way, Brown said. 

Brown said Zwane had told him he was surprised the other banks did not want to meet with the IMC considering banks receive their licences from government.

"I found it to be a very strange statement - it felt like a form of a threat," he said. The statement was technically inaccurate as banks get their licence from the Reserve Bank, he said.

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