By Bheki Gila
OUR Deputy Chief Justice Raymond Zondo (DCJ) presiding over the Judicial Commission of Inquiry into State Capture established for the purpose of determining whether or not in a specific time period, the state had been captured by non-state actors and where so captured to what degree, has raised in his findings the possibility of a named bank or banks having actively participated in money-laundering activities.
With this finding, the obsequious halo that adorns the image of the banks has arguably been sullied, and the learned law lord has called an abomination on such conduct.
By so doing, the Honourable Deputy Chief Justice has cracked open the vaults of intrigue and shone a light on the chicanery of the high priests of capital.
The harried events spawned by these revelations have been dutifully conspiring towards an uncertain, but explosive finale.
They are setting up for a grand spectacle to behold.
And the metaphoric “fat lady” is about to sing …
The concept of reputational risk may receive sharp focus, whose threshold as it were is the lowering of the bank’s reputation from where it currently is.
If any of the fingered banks by the State Capture commissioners is found culpable by the Reserve Bank, they will contend with an unenviable new low and that is one of money launderer.
Their case would not be made less burdensome if the clients who brought them disrepute in the first place, continue to retain their contracts as esteemed depositors.
Yet, one insouciant character, as inscrutable as it is stoic, may rain on this parade and call the whole thing off.
The Reserve Bank. Aside from the ongoing, planned or scheduled hearings between the implicated banks and the Reserve Bank’s prudential authority, there are in parallel some pending applications to the Equality Court and the Competition Court separately by the Sekunjalo Group of companies.
Their prayer to the adjudicators of the Equality Court in particular is contrived to achieve groundbreaking outcomes for the millions of banked South Africans who constantly are in fear of the bankers’ whims who can unilaterally terminate their accounts at any time and for no reason at all, without fear of account or censure.
This special Court, just like the blind lady of justice, must hold the scales of justice in sturdy balance and set a new equitable standard regulating the contractual relationship between the banks and their customers.
Banking as an economic activity is regulated by a number of agencies. There is the Banking Ombudsman, the Financial Services Conduct Authority, the Financial Intelligence Centre, and our ubiquitous overlord, the Reserve Bank.
Among them, it is their collective understanding as it is ours, that the conduct to be regulated begins and ends with the “depositor”, the client.
The client defines and sustains the heart and soul of retail and commercial banking.
Therefore, all aspects of this legal relationship, except those exempted by the peremptory of fiat must as of necessity, be of interest to the presidium of our superintendents.
The banks, however, have always wriggled and squirmed, attempting in earnest to escape from this oversight. To their collective sigh of relief, in 2010 the Supreme Court of Appeal handed them with the “Bredenkamp” exception, which they had been seeking to do as they please with clients’ contracts without accountability or so it seems.
Notwithstanding the powers allocated to the oversight agencies, none of them severally or acting in concert, took pain to object to this oppressive exception which would forever free the banks from submitting their contractual relationship with the depositor to statutory, equitable and constitutional muster.
It wouldn’t even matter if it meant that the “exception”, would materially attenuate their regulatory responsibilities adversely.
At this rate, there may be no grand finale to the money-laundering hearings.
And no one will be referred to the National Prosecution Authority outside the wrist-slapping gesture of a fine.
Bredenkamp was the getaway, and without offending the fat nor the metaphor, it is unlikely that a lady or anyone else for that matter will be singing.
Portia was a fair judge for the Venice of the 16th Century, and in the parlance of medieval England from whence she came, she was an animated creature of equity.
She contributed to the body of legal philosophy and jurisprudential scholarship in ways only Shakespeare could satirise, the enduring notion inherent in the positivist doctrinaire of strict application of the law are embedded rudiments of equity.
It is fair observation and a fervent hope that the role she played in interpreting the contractual rights of Shylock, would soon fall onto the conscience of our Equality Court.
Sekunjalo may plead at its discretion that it is unjust and inequitable to rely on an unwieldy concept like “reputational risk”, using it as the banks have been wont to do in the majority of reported cases, as force majeure.
Nor is reputational risk synonymous with criminal conduct.
To be sure, reputational risk is what it is, a risk. With the explosion of narratives about individuals and corporations arising from the vortex of the social media universe, everybody is vulnerable to having their reputation impugned, especially by the malice of a faceless lynch mob.
It would be absurd to the extreme that the bank would always act unilaterally to terminate vested rights at the whiff of contention on the righteousness or otherwise, of the character of one of its clients.
And Portia would distinguish Bredenkamp on its unique facts alone.
There was no preceding knowledge of facts by the concerned bank which sufficiently inclined it to conclude that they were faced with reputational risk, and therefore unilaterally resorted to cancellation.
Mastercard simply instructed them to do so. To use this judgement as a basis for general application is therefore uniquely awkward.
It is a negligible percentage of South Africans who will sometime in their lifetime have their banking accounts terminated at the orders of the United States of America.
Lord Denning of the United Kingdom in his coveted series of lectures confirmed that he is a Portia man.
Access to the levers of equity requires a strict and positivist interpretation of the facts, and therefore an equitable application of the law, as Shylock learnt to his chagrin in those hallowed chambers of Venice.
In our lived experience as South Africans, that the law is said to be applied strictly for the protection of institutions of capital, if nought else, notwithstanding the social havoc wreaked by this intellectual dishonesty.
Lord Denning reminds us in his musings, that nothing is as unjust as treating unequal things equally.
Besides, nothing stops the bank from cancelling the contract of anyone else, for as long as the process is fair, determinable, reviewable and can be ascertained by a competent court of record.
But first, the regulator must be informed of this intent whereat he would apply his authority meri motu, without the request of the client.
Any arbitrary leverage that unaccountable banks might have, may tend to permanently disrupt the ordering of lives by the less powerful, as if a banking client relationship is a normal commercial relationship between partners of equal bargaining strength. It isn’t!
And in the circumstances, I support the sentiments of the most revered and iconic Master of the Rolls as he then was.
I too, am a Portia man.
Ambassador Bheki Gila is a Barrister-at-Law.
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