The arbitrary closure of bank accounts has of recent become a disturbing and worrying trend in South Africa. File Picture
Masibongwe Sihlahla
The arbitrary closure of bank accounts has of recent become a disturbing and worrying trend in South Africa, leaving businesses and individuals alike in a state of financial uncertainty.
The most notable case in the history of South Africa is that of Dr Iqbal Survé, whose company Sekunjalo Group was subjected to the closure of its bank accounts, crippling its operations and putting thousands of jobs at risk.
This was done and admitted by the banks in the absence of any evidence of criminal activity or money laundering.
Despite being cleared of any wrongdoing, the company's accounts were shut down due to political machinations, leaving Dr Survé to fight back against this gross injustice and a violation of not only his but the Constitutional rights of his thousands of employees.
His admirable push-back and determination has not been in vain, as legislation is now in the pipeline to prevent such abuse by banks in the future.
The crackdown on arbitrary bank account closures gained momentum following Chief Justice Zondo's report, which exposed the flaws in the current system.
The National Treasury responded by announcing plans to amend financial sector legislation, ensuring that banks can no longer wield their power arbitrarily.
However, two years have passed since that announcement, and there is still no update on these amendments.
Our oligarchal elite and our corporate elite is doing everything they can to delay this legislation.
The delay has allowed banks to continue closing accounts without justification, citing "reputational risk" as a vague and convenient excuse. This phenomenon has far-reaching consequences, destabilising businesses, threatening job security, and affecting the livelihoods of thousands.
The unchecked weaponisation of "reputational risk" is gradually eroding economic participation and basic financial rights, and cannot continue to be ignored.
The Sekunjalo Group, which contributes billions in taxes and employs thousands, stands as a prime example of the devastating impact of arbitrary bank account closures.
The negative impact on the operations on almost 200 companies under the group highlighted the arbitrary power banks wield, and the lack of accountability in the system.
The Public Investment Corporation (PIC) inquiry, cited as justification for the closure, has been challenged in court, and Judge Heath has found egregious flaws in the report.
Yet, banks have continued to close accounts, disregarding the court's findings as there is no law explicitly preventing them.
The banks are aware of the Constitutional rights of persons they are violating when closing accounts willy-nilly but because any such challenge would take time and a whole lot of money they chose to take their chances and violate our hard won Constitution won by the people like Dr Survé who struggled in the UDF against Apartheid and not by the Apartheid establishment elite.
The phoney and highly subjective and laughable concept of "reputational risk" is at the heart of this crisis.
Its vagueness have allowed banks to evade transparency and accountability, leaving individuals and businesses exposed to financial and economic exclusion and degradation.
The UK provides a striking example of a speedy response to this issue, where authorities enacted immediate protections against arbitrary closure of bank accounts after Nigel Farage's account was closed.
The urgency to finalise legislation cannot be overstated.
Every day of legislative inertia compounds the risk of economic impact, causing businesses to stagnate, jobs to be lost, and investor confidence to erode.
The failure to provide clear, enforceable rules and legislation has allowed banks to act as judge, jury, and executioner over the financial lives of citizens and businesses.
Parliament must now act urgently to protect the economic participation rights of individuals and businesses.
It is crucial to fostering an inclusive financial ecosystem, ensuring fairness and transparency in South Africa's banking sector.
The arbitrary closure of bank accounts is more than a domestic issue; it sends a signal to the global community about the stability and fairness of our financial systems.
Our country need action and not dithering as our economy cannot wait another day of inaction.
* Masibongwe Sihlahla is an Independent Writer, Political Commentator and Social Justice Activist
** The views expressed do not necessarily reflect the views of IOL or Independent Media.
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