South Africa

Days of Zondo

Nedbank chief spills the beans on Gupta-based meeting with Zwane

File Photo: Nedbank CEO Mike Brown (Photo by Gallo Images/Financial Mail/Russell Roberts)

Mosebenzi Zwane had one mission in mind when he met Nedbank Group CEO, Mike Brown: How about you take over the Gupta accounts – the ones that none of the other major banks want? That little carrot, however lucrative potentially, was dangled amid veiled threats that it should be understood that “government” issues banking licenses.

Testimony by Nedbank Group CEO, Mike Brown before the State Capture Inquiry on Wednesday morning again showed just how tight the controversial former mining minister was with the Guptas and their businesses interests during his his tenure and how willing he was to bend the rules or the country’s laws to come to their aid.

Brown was giving evidence about an inter-ministerial committee (IMC) meeting he and his team attended with Zwane in 2016.

I left the meeting with the impression that the IMC was focused on two key issues: To determine if there was collusion by the banks and then, to determine if Nedbank would have the appetite to become the Guptas’ primary banker.”

The State Capture inquiry is also tasked with examining whether any member of the Executive, including Cabinet ministers and deputies, had unlawfully, corruptly or improperly tried to intervene in the decision of four major banks to shut the Guptas’ bank accounts.

Zwane has been served with a notice that he is an implicated party, based on Brown’s statement to the Commission, but has yet to communicate whether he intends applying to cross examine witnesses, to testify or to subject himself to interrogation.

Brown sketched the background to the meeting with the IMC committee that was set up by Cabinet to examine the conduct of the banks after the country’s major financial institutions, Standard Bank, Absa, FNB and Nedbank cut ties with the Guptas in early 2016.

Nedbank had issued notices to shut the accounts of Oakbay Investments Pty, Islandsite Investment 180, Confident Concept, Sahara Computers and VR Laser Services.

As in the case of Standard Bank, FNB and Absa, Brown said the invitation to Nedbank came from Zwane’s adviser, Advocate Zarina Kellerman, who had asked for a 30-minute meeting with the IMC. This was so the ministers could gain clarity about media statements about “closure of bank accounts or termination of relationships”.

At that stage Nedbank had not made any such public statement and had only informed the Gupta companies of its decision to terminate them with 30-days notice.

While Zwane was meant to be on this committee with former finance minister Pravin Gordhan, former labour minister Mildred Oliphant and then communications minister, Faith Muthambi, he was in fact the only minister to attend the meeting with Nedbank, Brown said.

Oliphant and Muthambi had sent representatives and Brown told the Commission that he had since established, that Gordhan was not even aware of this meeting and had not delegated Zwane to take charge of the discussion with the bank.

The Commission was told Gordhan would come to testify in person.

Brown said that while he had previously received requests to meet government, mainly National Treasury or the Ministry of Finance, he had until then, never been asked to attend a meeting with ministers.

And, while such meetings with government would generally take place at the Reserve Bank, at Parliament or at the Ministry of Finance, this one was held at Zwane’s office – Brown says he assumed this was purely for logistical reasons.

I regarded the meeting request and purpose as a very strange one as Nedbank had not made any public statement about the closure of the Gupta accounts.”

He assumed it would be a general discussion about account closures.

Just as happened with Absa and Standard Bank, Zwane’s adviser was not able to confirm which ministers would be attending the meeting. Brown and senior colleagues attended this 6 May 2016 meeting out of “respect” and because the bank felt it was important that they contribute to discussions about the general principles applicable to account closures and governing legislation.

The meeting kicked off with Zwane telling them that the IMC needed to give a report-back to Cabinet urgently and expressed his “dissatisfaction” with some banks who had refused to attend as it could undermine government. FNB earlier testified that it refused to attend a meeting that one its executives had been called to.

I felt this was a veiled threat in terms of the powers of the IMC,” Brown says.

While he noticed recording equipment in the room, he was not sure if the meeting was in fact recorded.

Brown says while Zwane had earlier promised to stick to a broader discussion of the topic of account closures, the former minister and some of the others in the meeting kept dropping questions around the triggers for closure of the Gupta accounts.

Zwane, he says, referenced that Nedbank was not the main transactional bank of the Guptas. Brown said had no clue how Zwane knew this but says the former minister then went on to “suggest” whether Nedbank would consider stepping in to provide an “amicable solution” to the Guptas’ banking crisis as they had by then resigned as directors.

This was not an option for the bank because its decision to sever ties with the Gupta companies and associated individuals and entities was informed by the reputational and business risk linked to them.

The reputational risk to the bank could be illustrated through the crises that engulfed global consulting firm, McKinsey & Co and KPMG as well as UK PR firm, Bell Pottinger, following their exposure in the State Capture scandal, Brown said.

He said that while negative publicity plays a role in determining whether to keep a client or not, it is weighed up against the source thereof as well as other factors.

As such, information on social media may be noted with less significance than information about the resignation of a company’s auditors or a statement from the ministry of finance – revealing details of the Mcebisi Jonas bribe offer by the Guptas.

He said the bank’s concerns had not materially changed as a consequence of the resignation of some of the Guptas from the companies they banked.

He said he told Zwane and others at the IMC meeting that there was no collusion with other banks and that Nedbank had started a review of its relationship with the Gupta family, their companies and related entities in February 2016.

Ongoing reviews within individual units of the banking group were ramped up and consolidated due to an escalation in negative media activity.

Brown cited among other things, a March 2016 statement from the ministry of finance which revealed the Guptas R600-million bribe offer to former finance minister, Mcebisi Jonas along with announcements by auditing firm, KPMG, and the Guptas’ JSE sponsor, Sasfin, that the companies had ended their relationship with the Guptas.

These were significant terminations for Nedbank as the auditors in particular, will have been privy to information that Nedbank may not have had.”

The bank’s exco sub-committee, tasked with the Gupta review, later concluded that the reputational business risk to Nedbank would be too great to keep the Gupta accounts.

He said the meeting with Zwane ended when he and his team were thanked for having attended when Zwane remarked that he found it surprising that others did not, considering they get their licences from government.

This, said Brown, was technically inaccurate because banks operate under licence from the Reserve Bank, an independent institution.

This meeting left Brown with the distinct impression that there was only one purpose: To try and secure banking facilities’ for the Guptas.

Another bank, another ANC meeting

Nedbank was the third bank to confirm meeting with ANC officials following a decision to terminate the accounts of the Guptas.

While Brown said he had previously met with ANC officials about banking matters, he had never been to a meeting to discuss the bank’s closure of a particular individual’s account.

His understanding of the purpose of this meeting was that the ANC had wanted to understand the circumstances around account closures in general and more details about a Constitutional Court ruling that confirmed the right of banks to close an account.

I explained that in the SA banking system we compete with all the other banks to grow our business and open as many accounts as we can. Banks are not in the business of closing accounts unilaterally.”

Unlike the meeting he attended with Zwane, Brown said he did not leave the ANC meeting feeling any pressure to re-open the Gupta accounts. DM


Please peer review 3 community comments before your comment can be posted

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options