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Strike three: Is Iqbal Survé finally unbankable?

South Africa

AMABHUNGANE

Strike three: Is Iqbal Survé finally unbankable?

South African businessman Iqbal Survé. (Photo by Gallo Images/Wessel Oosthuizen)

Nedbank has joined other banks and put Iqbal Survé and his entire Sekunjalo empire on notice. The bank is closing the accounts of 43 different related entities. Among the reasons are ‘odd’ transactions ranging from donations to Carl Niehaus and others, to what was tagged as a R25-million divorce ‘settlement’ paid from funds held by the struggling African News Agency.

Iqbal Survé has suffered yet another existential setback with three of the “big four” banks now refusing to do business with any company tied to him and his Sekunjalo Investment Holdings.

The Sekunjalo companies received notice from Nedbank on 15 November 2021, more than a year after Absa, in late 2020, became the first major South African bank to cut ties, as first revealed here

FNB followed suit in March 2021 but the true extent of Survé’s banking woes have only now become clear due to his failed bid to interdict Nedbank’s account closures – which was dismissed in the Western Cape High Court this week. It was his third defeat after also attempting to challenge Absa and FNB.

According to court papers, Investec started closing Sekunjalo accounts in April 2021. In May, Mercantile Bank as well as Sasfin followed suit. 

Additionally, a total of 28 banks and representative offices of foreign banks have turned down Sekunjalo’s business, making the banking sector’s boycott very nearly universal. 

The first of the Nedbank closures came into effect on Tuesday, while others will kick in between now and May, progressively pulling the rug out from under most of Survé’s private holdings but also his major JSE-listed companies and their subsidiaries.

That includes the JSE-listed African Equity Empowerment Investments, Premier Fishing and Brands – and the jewel in the crown, the cash-flush AYO Technology Solutions, which is still clinging to the remainder of the R4.3-billion irregularly invested in it by the Public Investment Corporation (PIC) in late 2017. At last count this was down to R2.16-billion.

AYO did not have a Nedbank account in its own right although its subsidiaries and parent company which did have Nedbank accounts have lost these. According to court papers AYO has also tried and failed to find new banking facilities since FNB closed its accounts last year. In an affidavit Survé claimed that “AYO is only in business because some of its subsidiaries still have banking facilities which are themselves in danger of being closed”.

Its executives have been intimately involved in unsuccessful negotiations with Nedbank.

Judging by the last published financial statements of Survé’s JSE-listed companies, only Standard Bank still provided significant banking facilities at the end of August 2021. The group had R1.17-billion parked there while large chunks of the AYO cash had been moved out of the banking system and given to asset managers, principally Ninety One Fund Managers and a “boutique” manager, Numus Capital. 

According to an affidavit by Survé, Standard Bank has also put all its Sekunjalo accounts under review and is no longer opening new accounts for entities in the group, possibly presaging a final wave of account closures that would see Sekunjalo painted into a fatal corner in the same way the Gupta empire was between 2016 and 2017.

The group is now attempting to use third-party payment agents but has already discovered the limitations of this approach.

Among the court papers is a letter from Discovery directed at Ayo subsidiary Puleng Technologies demonstrating how this solution may be roundly rejected – and how the bank boycott will have a devastating cascading effect.

It noted: “Discovery, being a registered financial services provider operating within highly regulated parameters, unfortunately cannot accept any of the payment options as these may potentially expose us to legal and regulatory consequences… This letter serves as our notice of early termination of all Agreements, and/or cancellation of Purchase orders as applicable.”

Why Nedbank is dumping Survé 

Like Absa and FNB before it, Nedbank is arguing that the mere association with Survé “poses reputational and association risks”. 

The bank cites the serious ongoing allegations against him in the media, the several ongoing court cases against his companies as well as scathing findings in the report of the Judicial Commission of Inquiry into the Public Investment Corporation, commonly known as the Mpati Commission. 

The Nedbank papers however go far deeper than that. 

For the first time court proceedings have exposed some of the internal workings of Survé’s empire. A multitude of suspicious or unexplained transaction queries were attached to an affidavit by Nedbank Chief Legal Counsel Zanele Mngadi – alongside Sekunjalo responses that Nedbank in some instances labelled “odd” or “unsatisfactory”.

Some involve what at first glance appears to be the use of company funds for personal affairs, while others involved politically exposed persons receiving “loans” or “donations”.

One particularly suspicious transaction was the transfer of R25-million from the African News Agency (ANA) to Survé’s personal account, which Sekunjalo initially said was to fund Survé’s divorce settlement in August 2016.

See the full correspondence below: 

The court records show that on 28 July 2021, Nedbank addressed a letter to the news service, which was launched in 2015 to replace the defunct South African Press Agency. From the outset ANA’s main asset was the astounding R357-million cash paid by the China Africa Development Fund for a mere 5% shareholding in the fledgling company.

“R25 Million was paid by Africa News Agency to Dr Surve’s personal account as a payment towards his divorce settlement. Why did Africa News Agency fund this settlement?” Nedbank enquired.

Survé’s sister (and Sekunjalo executive) Aziza Amod replied:

“Dr Surve was concerned that some of the requested information in the letter is private and confidential. He indicated that he would send you an email separately about this confidential information.”

The same day Survé wrote to Nedbank that his sister had gotten it wrong and that the payment into his personal account was actually “in lieu of an intercompany loan between ANA and Sekunjalo Investment Holdings”.

“For the record Aziza indicated at no stage did she mention a divorce settlement,” Survé added.

That was untrue. An email Aziza sent to Nedbank on 15 April in response to Nedbank’s initial query clearly labels the transaction, “Dr Ml Surve: settlement agreement spouse”.

“If this was truly an intercompany loan, why was it paid into Dr Surve’s personal account?

“Furthermore, no intercompany loan agreements were furnished to Nedbank in support of the explanation provided,” said Mngadi in her affidavit.

This was a repeated complaint – a multitude of supposed intercompany loans with no backing documents.

In June 2017, ANA gave Sekunjalo a R20-million loan, Amod told Mngadi by email.

In August 2018, ANA paid R41,3-million to Premier Fishing. The first time Nedbank queried this the response was that it was a “payment to PF for share allocation in Private Equity Fund”.

The second time it was queried the answer changed to: “This payment was transferred in error to PFSA. Upon enquiry to ANA, ANA informed PFSA that the payment was meant for AEEI. PFSA on the same day transferred the funds to AEEI.”

Even on this version ANA money was seemingly being invested with another part of the Survé empire.

On Survé’s version these intercompany transfers were above-board transactions in the normal course of business, driven mainly by centralised treasury and other services performed for different parts of the Sekunjalo group.

Big and small

Some of the transactions flagged by Nedbank were not very large but politically sensitive.

Transactions from one of Sekunjalo’s accounts included two payments totaling R30,000 to former ANC spokesperson Carl Niehaus. When questioned Amod replied: “Mr Niehaus has requested loans on numerous occasions for help to deal with financial distress and family matters. This was most likely a loan/donation to assist him.”

Niehaus’s longstanding money troubles are a matter of public record. 

There were a number of similar small payments to other individuals which Amod vaguely referred to as loans “or” donations.

In April 2018, Survé’s 3 Laws Capital, flush with AYO cash, made a R200,000 payment labelled as “TMJ Pettersson loan” – referencing former energy minister Tina Joemat-Pettersson whose middle name is Monica.

Joemat-Pettersson told amaBhungane it was a formal loan backed by a written agreement which she has repaid. The loan was a financial bridge during the gap in her employment as an MP between 2017 and 2019, she said.

Among other payments cited by Nedbank are five totalling R125,000 made to former ANC and COPE MP Phillip Dexter in 2013. When queried about these Sekunjalo claimed they were loans for Dexter’s postgraduate studies.

Dexter however denies this. 

“There was never any loan. They hired me as a consultant and I did work for them for a short period of about six months,” he told amaBhungane.

“I confirm that I was contracted by Sekunjalo to do certain communications work for them but I did not complete the contract due to a difference of values that emerged as the nature of the work was detailed to me.”

Judge for yourself – or maybe not

It appears from the court papers that Survé shot himself in the foot during the negotiations with Nedbank to keep the accounts open by first trumpeting a new independent forensic appraisal of his companies – but then burying it.

He has repeatedly railed against the Mpati Commission where former executives gave damning testimony against him and Sekunjalo companies funded by the PIC. The final report by Judge Lex Mpati was released in March 2020 and was scathing about the “malfeasance” of Survé’s group. Absa, FNB and Nedbank all cited this commission when closing accounts.

In the papers Survé reveals that Sekunjalo appointed retired judge Willem Heath to “provide an impartial and independent factual findings report in relation to the Mpati Commission and the Sekunjalo Group”.

In a personal letter dated 12 November, Survé promised Nedbank CEO Mike Brown full transparency.

“We have… informed the judge that whatever the outcome of the report, firstly we will abide by the outcome and recommendations and secondly make the report available to the boards of directors of the companies affected. We also intend to make the report available to all of our advisers and our bankers.”

Nedbank wrote back, saying that while it welcomed such a report this was “not meant to be interpreted to mean that Nedbank would consider same prior to closing the respective bank accounts”.

The point became academic because when Heath produced an interim report, Sekunjalo promptly buried it.

“The Sekunjalo Group is now in receipt of the interim report and in considering the report, have decided to invoke principle of privilege,” Survé wrote to Brown in a new letter dated 5 January.

In her answering affidavit Nedbank Chief Legal Counsel Zanele Mngadi called this decision “odd”.

Plan B and Plan C

Survé’s latest court application was intended to buy time for two new attacks on the banks to come to fruition.

The beleaguered media mogul is simultaneously taking his fightback campaign to the Competition Commission and the Equality Court. 

At the commission his companies will argue that Nedbank and another eight banks “colluded in an attempt to force the Sekunjalo Group of companies to stop trading by not only terminating their existing banking facilities but also by denying them access to any banking facilities completely”.

In the crosshairs are Absa, FNB, Nedbank, Standard Bank, Mercantile, Sasfin, Investec, Bidvest and Access Bank.

Pending the commission’s investigation, Sekunjalo has approached the Competition Tribunal for an interdict to halt and reverse the account closures. This application is set to be heard on 7 and 8 March.

At the Equality Court Survé will argue that banks are racist for closing his companies’ accounts but not those of “white” groups like Steinhoff, Tongaat Hulett and EOH, where there have been massive accounting fraud scandals.

All those companies, however, have been placed under new management.

Nedbank invoked client confidentiality when asked about these specific companies but told amaBhungane that “with reference to public information… each of these entities has taken remedial action and if they do hold accounts with Nedbank, they would have been subject to the same Nedbank processes as any other clients”.

“Decisions to terminate banking relationships with clients are neither arbitrary nor discriminatory… Race in not a consideration in any way in these decision processes.” 

The racism attack has been a mainstay of Survé’s public campaign against his detractors, a campaign largely executed through the newspapers owned by his Independent Media.

In a statement carried by Independent Online on Wednesday, Survé said: “Sekunjalo is being targeted in a proxy battle for control of the media. Banks are being used to close Sekunjalo Group accounts to destabilise the Group, with what we believe to be the aim as being the complete destruction of Independent Media.” 

Judge Matthew Francis ruled that the Equality Court and the Competition Tribunal had exclusive jurisdiction on the matters referred to them by the Survé applicants, to the exclusion of the High Court. 

However, he did not dismiss Survé’s claims of victimisation out of hand. 

Sekunjalo had requested that the banks accede to moving the tribunal hearing forward to before this week’s account closures, but the banks had refused.

The judge viewed this as a “cynical” move. 

“Nedbank, somewhat ironically, appears to have engaged precisely in the type of behaviour complained of by the applicants – the collective power of the banks appears to have been employed to stall the appropriate forum from timeously considering an application that is obviously of great importance to all the parties concerned.”

The 43 different Survé entities will see their Nedbank accounts closed on different dates: seven this week, two more next week, 24 on 15 March and 10 on 9 May.

In its letters to the Sekunjalo companies, Nedbank explained that “any funds held in credit in the accounts would be transferred to a Nedbank suspense account, where no interest will be earned and will be held there until such time that (the applicant) provides (Nedbank) with specific instructions to transfer or withdraw the funds”.

With the Nedbank accounts being closed and other banks seemingly poised to follow suit, Survé’s empire is racing against time. DM

The amaBhungane Centre for Investigative Journalism is an independent non-profit organisation. We co-publish our investigations, which are free to access, to news sites like Daily Maverick. For more, visit us on www.amaB.org.

Update: This story was updated since it was first published to clarify that AYO Technology Solutions does not have a Nedbank account but that Nedbank only gave notice of termination to AYO’s subsidiaries and AYO’s parent company which did in fact bank with Nedbank. We apologise if it was implied that AYO, as apposed to parts of the AYO group, received a notice from Nedbank.

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  • We have an oversupply of regulators whose job it is to protect us from people like Surve and businesses like Sekunjalo. Is the CIPC looking into what appear to be multiple instances of breaches of the duties imposed on a director of companies? Is the entity responsible for enforcing the National Credit Act satisfied that the relevant companies in the Sekunjalo group who seemingly are lending money to all and sundry are licensed to do so? What is the JSE actually doing anything to protect investors against the listed entities in this group? Is the FSCA satisfied that NinetyOne Investment Managers complied with FICA when it accepted money from Surve and/or his companies? And wouldn’t it be nice to know that SARS is doing a little digging too?

  • Does anyone know whether this guy is in the timeshare game? I’m trying to exit from one and I’m getting threatened with ITC listing if I don’t shell out R21k for another years’ subs, even though I have R30k in “savings”. It sounds like him.

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