OVERVIEW: Absa, FNB testify they refused to meet govt ministers over Gupta account closures | Fin24
 
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OVERVIEW: Absa, FNB testify they refused to meet govt ministers over Gupta account closures

2018-09-18 11:23

On the second day of hearings into how, when and why banks closed their Gupta-related accounts, FNB and Absa both said they refused to meet Cabinet ministers who wanted to discuss client relationships.

Deputy Chief Justice Raymond Zondo
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Last Updated at 05:00
18 Sep 14:44
Proceedings have adjourned for the day. On Wednesday, Nedbank will be giving evidence starting at 09:30. 

18 Sep 14:38

Masithela says Absa declined the meeting, saying it did not understand why it was happening. 

The bank received a further invite, but again declined to attend. 

She said the bank made it clear that it could not discuss private clients.

Masithela is now asked by the evidence leader what the effect would have been if there had been a successful outside interference in its banking relationship with the Guptas. 

"It would have meant that Absa would've allowed the risk management processes not to be followed," she says. 

"It would have exposed us to sanction, because it would have been a clear deviation. There is no legislation ... that allows the executive to interfere in private client relationships."

She said interference would have been reportable to the SA Reserve Bank, the Financial Conduct Authority in the UK, and the Department of Justice in the US (given that Absa was, at the time, a subsidiary of Barclays)

She says executive interference would have been outside the regulatory framework, both locally and internationally. 

"We certainly did not understand why the committee would have been interested in client bank accounts," she says. 


18 Sep 14:30

Absa also received an invitation from an inter-ministerial committee (IMC) of Cabinet to gain clarity on "current media reports". It appears to be similar to a letter sent to FNB. 

The invitation was received on April 22, 2016, from an advocate advising then Minister of Mineral Resources Mosebenzi Zwane. 

The meeting was scheduled for Monday 25 April, 2016. 

Masithela says Absa asked for more information in order to prepare, and who would be attending from the state's side. 

In response, Absa received a letter to say that the content of the meeting would be relayed to Cabinet, and that the IMC has been properly constituted by Cabinet. 


18 Sep 14:23
Absa CEO Maria Ramos met ANC Secretary-General Gwede Mantashe at a Business Leadership function. He asked her to a meeting at ANC headquarters at Luthuli House to discuss account closures; she attended a day or so later.  She refused to discuss confidential client information.

18 Sep 14:22

18 Sep 14:22

18 Sep 14:21

Absa's Masithela tells the inquiry that - just like other banks - it was invited to a meeting with top ANC officials to discuss the Gupta-related bank closures. 


18 Sep 14:09

Absa’s Yasmin Masithela says that in November 2014 a review committee took the decision to stop doing business with Oakbay and other Gupta-linked companies. 

She says that, as Absa wasn't Oakbay's primary (or dual) bank account, it was having difficultly monitoring and understanding transactions. 

"There was also evidence of large unexplained transfers of funds between the Oakybay companies and related parties at other banks". 

Meanwhile the cost of monitoring the accounts had risen, while adverse media was creating reputational risk. 


18 Sep 14:01

The afternoon session has started. Absa will now be talking about why it closed the Gupta accounts. 

Watch the live stream via the SABC on YouTube 


18 Sep 13:44

Lunchtime wrap of this morning's testimony

Former FirstRand Group CEO, Johan Burger, gave evidence to the State Capture Inquiry on Tuesday morning about how and why the bank closed Gupta-linked accounts.

FNB is part of the FirstRand group. This follows testimony from Standard Bank on Monday. 

Burger told the commission the decision was taken to stop doing business with Gupta-linked companies due to concerns over reputational and business risks. 

'A financial institution will not survive if its reputation and trust is not absolutely intact," he said.

The moment risk around the Gupta-linked companies became too high, the bank thought it appropriate to exit those relationships. 

He said after the decision was made to close the accounts the bank received an invite from the ANC's Enoch Godongwana to attend a meeting with the Secretary General of the ANC at Luthuli House. 

The meeting did not take place, however. "[The call was] unexpected, I would not expect to get a call from a political party," says Burger.  

He said FNB was also contacted by an inter-ministerial committee (IMC) of Cabinet for a discussion. The proposed date for the meeting was Monday April, 25, 2016. 

Burger said he wrote to the secretary of the committee asking for details about who would be present at the meeting, what would be discussed so that the FNB team could prepare. 

In response, he says, the secretary of the committee replied to say she did not a mandate to answer the questions. FNB then declined the meeting.

There was subsequently some back and forth about a new meeting but nothing came of this. 


18 Sep 13:10
The inquiry has adjourned for lunch. It will recommence at 14:00, with Absa giving evidence about how and why it decided to end its relationship with Gupta-linked account holders. 

18 Sep 13:03

Masithela, like her colleagues at Standard Bank and FNB, starts with an overview of legislation governing banks. She notes that at the time it closed the Gupta-linked accounts the bank was part of Barclays Africa. 

It has since separated from Barclays. 

Read more about the separation below 


18 Sep 12:57

FirstRand's former CEO Johan Burger has finished testifying. The inquiry will continue with the testimony of Yasmin Masithela of Absa. 

Masithela is currently the Chief Executive of Strategic Services at the bank, and its former Head of Compliance. 

Absa is the third bank to testify, following Standard Bank on Monday and FNB earlier on Tuesday. 

Watch the proceedings live on SABC's YouTube channel below 


18 Sep 12:53

18 Sep 12:50
"I categorically deny any collusion or interaction with any bank regarding our decision to close accounts of the Guptas," says Burger. 


18 Sep 12:45

18 Sep 12:37

18 Sep 12:36

18 Sep 12:31

Burger adds an inter-ministerial committee (IMC) of Cabinet also contacted FNB after the Gupta accounts were closed and "media reports". 

The proposed date for the meeting was Monday April, 25, 2016. 

Standard Bank on Monday testified that it was also contacted by the IMC to explain why the Gupta accounts were closed. 

Burger says he wrote to the secretary of the committee asking for details about who would be present at the meeting, what would be discussed, which media reports would be discussed and more so that the FNB team could prepare.  

He says that, in response, the secretary of the committee replied to say she did not a mandate to answer the questions. 

He says FNB then declined the meeting.

The bank then received another request for a later meeting, but in response said it would and could not debate any client-specific matter with the IMC. It said this would be illegal. 

FNB said it would only meet with the IMC if the Minister of Finance were present at the meeting - as he were part of the IMC. 


18 Sep 12:24

Burger is asked why the meeting did not take place. "I have no idea," he says. That was the last communication between Burger and Godongwana, he says. 

"[The call was] unexpected, I would not expect to get a call from a political party," says Burger.  


18 Sep 12:23

Burger says that, after the bank decided to close the Gupta-linked accounts due to reputational risk, he received an phone call from the ANC's Enoch Godongwana to attend a meeting with the Secretary General of the ANC at Luthuli House. 

"I didn't understand why I got the invitation," he says. 

Burger said Godongwana told him he was setting up meetings with CEOs of banks to talk about the closure of Gupta accounts. 

The former FirstRand boss says he was out of town at the time, and asked Godongwana to supply more information about the meeting - attendees, agenda - etc.. The two exchanged sms's. 

Burger later said Godongwana said the meeting was off. 


18 Sep 12:06

'A financial institution will not survive if its reputation and trust is not absolutely intact," says Burger.

He says the moment risk around the Gupta-linked companies became too high, the bank thought it appropriate to exit those relationships. 

He acknowledges that reputational risk can at times be perceived to be illegal, and not actually illegal or criminal.  


18 Sep 12:05

18 Sep 12:00

Burger says that, after the accounts were closed, the bank received a letter from Nazeem Howa of Oakbay asking for reasons. 

Burger says the bank's lawyers replied to say the accounts were closed due to "associated reputational and business risks". 

"Those were the reasons provided to the client," says Burger. 


18 Sep 11:55

Burger is now asked how bank accounts are closed. 

He says the Gupta-linked account-holders were given formal and proper notice that the accounts would be closed after FNB consulted with its legal team. 

He says that after the bank becomes suspicious about accounts or customers, a stipulated process is followed that concludes with an independent body that gets to decide whether the account must be closed. 



18 Sep 11:47
Burger says some of the accounts that FNB closed include Tegeta, TNA Media, Islandsite and Sahara Computers. 

18 Sep 11:45

As the second day of hearings into banks and Gupta-linked companies gets underway, the EFF has put out a statement saying banks took too long to close the accounts. 

"These banks were very happy to do dirty business with the Guptas until the unceremonious December 2015 removal of Nhlanhla Nene as Finance Minister when South African stocks were severely devalued," said the EFF in a statement. 

"By that time the Zupta Corruption machine was long in action facilitated by the very same banks."


18 Sep 11:40

Former FirstRand Group CEO, Johan Burger, will be first to testify. First National Bank is a division of the FirstRand group. 

Burger recently stepped down from the position of CEO. 

Read about his retirement below 


18 Sep 11:29

In response to testimony heard on Monday, that the ANC met with Standard Bank over its decision to close Gupta-linked accounts, the ANC's former secretary general and now national chairperson Gwede Mantashe said this was not new information, adding the meetings were held so the party could understand the reasoning behind the closing of the accounts.


18 Sep 11:27

18 Sep 11:27

18 Sep 11:24

Absa will be the second bank to testify at the State Capture Inquiry on Tuesday. 

On Monday Standard Bank's former group legal counsel Ian Sinton gave evidence to the inquiry, which is chaired by Deputy Chief Justice Raymond Zondo. 

Sinton said that by early 2016 the bank feared it may run afoul of anti-corruption or anti-money laundering laws if it continued to provide Gupta-linked companies with banking licenses.

On April 6, 2016, it gave Gupta-linked companies two months notice that it would be shutting their accounts. This, according to Sinton, led to the bank being called to ANC headquarters at Luthuli House in Johannesburg, where he and Standard Bank head Sim Tshabalala were asked by top ANC leaders why the accounts were being shut.

Sinton said that the bank also met with Oakbay leadership - who petitioned that the accounts be kept open - and was asked to attend a meeting with an inter-ministerial task-team headed by then Mineral Resources Minister Mosebenzi Zwane. 


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