STATE CAPTURE INQUIRY| Absa: We would have been in big trouble if we discussed clients' accounts with the ANC and ministers

Mosebenzi Zwane,
Image: Freddy Mavunda

Absa Bank’s decision to close Gupta accounts in 2015 was based on concerns of financial crimes — and any attempts by the ANC and two cabinet ministers to interfere in that decision could have had devastating consequences for both the bank and South Africa.

Any meetings with outside parties to interfere in private client relationships would have resulted in the bank being exposed to sanctions from national and international financial regulatory authorities.

Testifying at the Zondo Commission of Inquiry into state capture‚ Absa’s former chief compliance officer‚ Yasmin Masithela‚ revealed that the bank had refused to meet with former minister Mosebenzi Zwane’s inter-ministerial committee – which “investigated” the closure of Gupta family bank accounts – because “we did not understand why the committee would be interested in private bank accounts”.

“We did not deem the committee to be an appropriate committee. We did not under the constitution of the committee‚” she said.

Absa was the first major South African bank to cut ties with the Guptas‚ after conducting an annual Politically Exposed Persons risk assessment on the family’s Oakbay businesses‚ which were banking with Absa. That assessment – which revealed “evidence of large‚ unexplained transfer of funds”‚ was launched in November 2014‚ and Absa indicated that it would close Oakbay’s accounts in late 2015.

After multiple other banks followed suit‚ Absa was asked to attend meetings with Zwane’s IMC and the ANC. Absa repeatedly declined the IMC’s meeting requests‚ Masithela said‚ because it had refused to provide the bank with details about what the meeting was actually about.

Nor did ABSA believe that the IMC had any legal right to interfere in a bank’s relationship with its clients.

“There is no legislation in this country‚ or international legislation‚ that allows the executive to interfere in private client relationships‚” Masithela testified.

“We also felt that.. any decision that resulted in Absa Bank allowing interference of its decision-making in financial crime matters would have been bought to the attention of the Financial Action Task Force who‚ at the time‚ were evaluating whether South Africa had some financial crime controls to ensure that we can combat money-laundering…”

As a subsidiary of Barclays‚ she said‚ Absa could have been reported to multiple international banking and law enforcement authorities – should they have allowed interference in their relationship with private clients. “We were deeply concerned.. it would have meant that Absa would allow their risk management processes not to be followed and allow deviations‚ which would then result in a decision that falls outside of our risk framework to retain and keep clients in the banking system that we would not ordinarily keep. It would have exposed us to sanction because it would have been a clear deviation.”

Masithela had earlier testified that then ANC secretary-general Gwede Mantashe had invited Absa CEO Maria Ramos to a meeting with the party’s national executive committee – where allegations of collusion between banks was raised.

At that meeting were Mantashe‚ attorney Krish Naidoo‚ Enoch Godongwana and Jessie Duarte. Masithela said Ramos made it clear that if they were there to discuss any issues related to specific ABSA clients‚ “it would be a very short meeting”.

She said Mantashe then reiterated that the meeting “was not to discuss client information” but rather to discuss a recent Appeal Court ruling that gave banks the power to close client accounts‚ without having to seek explanations from them on suspicious transactions or financial conduct.

He further said he wanted to understand the implications of account closures “on other companies or businesses”.

The bulk of the meeting‚ Masithela said‚ was spent discussing alleged collusion by the banks.

“We were quite clear that we have our own risk management systems. We do not discuss any client with any other party‚ including other banks.”

The inquiry continues on Wednesday.

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