Nedbank CEO Mike Brown said that he was invited to Luthuli House to explain to the ANC the process of closing accounts.
ANC invites Nedbank for meeting
Brown said on April 20- his stand-in PA- received a request from Enoch Godongwana to meet with the ANC. he confirmed that he had been invited to Luthuli House before – once having given inputs on the impact of the nationalisaation of mines on the economy and the financial system.
Brown said the meeting was held on the same day, and that Gwede Mantashe and Jesse Duarte were in attendance. He is not sure if Godongwana was there.
Upon arrival he learnt that the topic was for the ANC to get a better understanding of why a bank would close a client’s account.
Brown said he “thought deeply beforehand” as to whether he should or should not attend the meeting.
Two matters were raised- the closure of Gupta accounts, and Brown said he made it clear he could not discuss the specifics given client confidentiality. Secondly there were enquiries about the powers of banks to close accounts generally in terms of legislation, the impact on investor confidence and if banks colluded to close bank accounts.
“It was very important that I address the second narrative of the closure of accounts in general. I thought it was important for the safety and soundness of the financial system in general and Nedbank.”
Brown said he did not receive an agenda for the meeting beforehand.
Nedbank flags reputational risk
Nedbank CEO Mike Brown speaks of the reputational risk flagged by the bank being asscociated with Gupta-linked entities.
In February 2016, Brown said he asked the chief risk officer to escalate the review of the accounts of the Gupta family and its associated entities, as there were escalating negative media reports about the family. This could escalate the reputational risk of the bank, he explained.
Further, a media report in March 2016 indicating that deputy finance minister Mcebisi Jonas was offered finance minister Nhlanhla Nene’s position was viewed by the bank as a “an extremely serious allegation”.
By April 2016 when KPMG- the auditor and Sasfin- the JSE sponsor, terminated their relationship with Gupta-associated entities, Brown said this implied that they were privy to information that Nedbank was not aware of.
Nedbank subsequently appointed a subcommittee to review the relationship between the Gupta family and the bank.
Following FNB and Absa’s decision to cut ties with the Guptas, the subcommittee on April 6 concluded to give notice to the Guptas of the termination of their accounts with Nedbank.
representatives of Nedbank had then informed the Gupta-associated entities of their intention on April 7.
Nedbank to appear before State Capture Inquiry
Nedbank will present evidence before the State Capture inquiry on Wednesday morning.
Judge Raymond Zondo on Tuesday heard from both FNB and Absa. Both banks revealed that unlike Standard Bank, they refused to meet with Cabinet ministers to discuss the closure of Gupta-related accounts.
All of the banks have told the commission so far that there appeared to be a reputational risk associated with the Guptas, which is why the accounts were closed.
Nedbank has also indicated in previous media reports that the continued relationship with Gupta-controlled companies would pose significant reputational risks.
Bloomberg previously reported that former Mineral Resources Minister Mosebenzi had urged Nedbank to reconsider, at the time.
The hearing is scheduled to start at 09:30.