There have been many instances in the media where the banks have been accused of applying discriminatory measures against black entrepreneurs seeking finance, says the writer. Picture: Phando Jikelo/African News Agency (ANA) Archives
By Zelna Jansen
The Sekunjalo Group and Others v Absa and Others case will be heard next week in the High Court of Cape Town, sitting as the Equality Court. The case involves a petition for unfair discrimination by the banks levelled against Sekunjalo and companies linked to it.
The Equality Court is established by the Promotion of Equality and Prevention of Unfair Discrimination Act, 2000 or the Equality Act (No 4 of 2000). The act is the comprehensive South African anti-discrimination law.
It prohibits unfair discrimination by government, individuals and private organisations. It also forbids hate speech and harassment. In its application, Sekunjalo claims that the banks acted unfairly, irrationally and arbitrarily in closing its bank accounts.
The banks also proceeded to close the bank accounts of entities that Sekunjalo had invested in directly or indirectly. An action such as this will lead to other businesses refusing to work or do business with Sekunjalo in the fear that banks would also close their bank accounts.
Reputational risk is one of the reasons cited by the banks. This was based on negative media reports and inferences towards Sekunjalo in the Mpati Commission of Inquiry into Impropriety in the Public Investment Corporation.
In its papers, Sekunjalo highlighted that the Mpati commission made only inferences. However, there are no adverse findings against it. On these grounds, Sekunjalo claims that the actions against it are based on unfair discrimination based on race.
On the issue of reputational risks, a company’s brand is an intangible property and, depending on the brand, it can be valued at a considerable amount. It is the perception of its customers and potential customers. It will be the deciding factor as to whether a customer stays or whether a potential customer uses the banks’ service.
Particularly in a time when state capture, fraud and corruption are constantly highlighted and whether banks were complicit in this. Also, South African law is based on the Roman-Dutch law, particularly as it relates to security over property.
The court will therefore give considerable weight towards the factor of reputation and brand. The question the Equality Court will have to rule on is whether the banks acted unfairly and arbitrarily against Sekunjalo.
Were the actions of closing bank accounts an overly harsh punitive measure in response to media reports and inferences in a report? Should the banks not have waited for a more definitive outcome, such as a prosecution? Lastly, are the actions of the bank based on racial discrimination? A further question it may address is whether the actions by the banks impeded Sekunjalo’s right to trade.
South Africa has a brilliant Constitution that is above all other laws in the country, and will be used in formulating answers to questions of economic transformation and whether businesses owned by previously disadvantaged groups should be supported and assisted differently and whether actions against it should be carried with more caution.
There have been many instances in the media where the banks have been accused of applying discriminatory measures against black entrepreneurs seeking finance. It is claimed that the banking system is not for assisting and supporting up-and-coming black entrepreneurs, and therefore, hindering the policies of transforming the economy, and maintaining the status quo. If found to be true, it is alarming, as South Africa is one of the most unequal countries in the world.
The labour market is heavily racialised and gender-biased. The bottom 60% of households depend more on social grants and less on incomes from the labour market. It is therefore important to take note of the comment made by the Equality Court in hearing arguments.
It noted that transformative justice had a role to play in the banking sector. The Constitution, in several sections, refers to redressing inequalities brought about by the previous apartheid regime. Perhaps the time has come for South Africa to prioritise a system of law based on equitable justice.
Equitable jurisdiction can be defined as a system of justice designed to supplement the common law by acting in a reasonable and fair manner which results in a just outcome. The reasoning behind this form of justice is that inequalities exist because of exploitation and opportunity hoarding.
This keeps the previously disadvantaged individuals bound to one tract, and those that have, continue to reap the benefits of the social resources. People’s position on the social mobility ladder is largely fixed as a result, and this perpetuates inter-generational cycles of poverty.
A jurisdiction based on equitable justice will be aware of the hardships faced by previously disadvantaged individuals and assist in whatever means is necessary to move away from inequity. It will also be cautious as to how it acts against such businesses.
Particularly in the light that South Africa must redress past inequalities that stems from the previous apartheid regime. In its papers, Sekunjalo emphasised that it is one of the pioneers of change in the economy.
Closing its bank accounts without sufficient reasons poses a threat of snuffing out its business. Foresight and caution should have been the first recourse of the banks and not to arbitrarily close their bank accounts.
* Jansen is a lawyer and CEO of Zelna Jansen Consultancy