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Zwane’s alleged interference in Gupta bank dispute unlawful - judgment

Aug 18 2017 12:47
Matthew le Cordeur

Cape Town – The alleged interference in the dispute between the Guptas and South Africa’s top four banks by Cabinet’s inter-ministerial committee (IMC) headed by Mineral Resources Minister Mosebenzi Zwane was unlawful, the North Gauteng High Court ruled on Friday.

While the North Gauteng High Court dismissed Gordhan’s case seeking a declaratory relief against Gupta-owned firms, the judgment did clarify the legal position of ministers with regards to intervening or interfering in private bank-client disputes.

“Perhaps the only issue that could have been of concern to the minister and to the banks, regarding possible uncertainty on the legal question the minister sought answered in the application, relates to the alleged establishment of the inter-ministerial committee (IMC) comprising of the Minister of Labour (Mildred Oliphant) and the Minister of Mineral Resources (Zwane) and its attempts to, contrary to the law, interfere in the dispute between the banks and the Oakbay Group,” Judge Aubrey Ledwaba  said in the court’s ruling.

The court not only said the alleged interference was unlawful, but cast doubt on the legitimacy of the IMC. In his heads of argument, Gordhan’s counsel had referred to this committee as the “purported appointment of an inter-ministerial committee”.

When Zwane released a subsequently retracted statement on the IMC’s findings, he said that “although the minister of finance was a member of the constituted IMC, he did not participate in its meetings”. Zwane was reprimanded for releasing the findings, as it had not received Cabinet approval.

Gordhan’s counsel said clarity on the matter could assist the finance sector, Cabinet and bankers’ clients to act within the law. Referring to the release of the statement, they said: “The president subsequently repudiated the minister of mineral resources’ public statements on this committee’s intended modus operandi.”

The court obliged, ruling: “There is no statute that empowers a member of the national executive such as the minister, to intervene in a private bank-client dispute. Neither does the Constitution confer such powers.”

Standard Bank, Nedbank and FNB all referred to the IMC in their court papers. Standard Bank argued that Gordhan’s declaratory order should be vertically extended to include the Cabinet ministers from intervening in banking matters, but this application was denied.

Nedbank said in court papers that Zwane urged them to reconsider its decision to sever ties with Gupta-owned companies that include Oakbay, the New Age newspaper and ANN7, Bloomberg reported in December 2016.

Standard Bank Advocate Vincent Maleka told the court on March 29 there were a number of ministers “who on record have called upon Standard Bank to account” with regards to the blacklisting. “The bank has recorded meetings with the inter-ministerial committee.”  

Zwane's release of a Cabinet determination (which was later retracted) recommended starting a banking inquiry after the ICM met with Standard Bank and other banks over the Guptas' closed bank accounts.  

“Evidence presented to the IMC indicated that all of the actions taken by the banks and financial institutions were as a result of innuendo and potentially reckless media statements, and as a South African company, Oakbay had very little recourse to the law," said Zwane.

IMC's meeting with Nedbank

Nedbank CEO Mike Brown said in his affidavit that he agreed to meet Zwane in May as the minister had been appointed to head an IMC that also included Gordhan and Oliphant to probe why the banks stopped doing business with the Guptas, Bloomberg reported.

Brown revealed that Communications Minister Faith Muthambi and Mzwanele Manyi "were part of the interministerial committee delegation he met with to discuss the closure of Gupta bank accounts", according to Business Day.

"Manyi, who is running a campaign in support of the Guptas, is said to have attended in his capacity as an adviser to Muthambi," the paper said. "Their participation in the meeting with Nedbank adds to questions around the standing of the committee."

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