PEP sues SA bank for closing account…

Arms deal man sues Absa over closure of accounts.

Politically connected businessman Fana Hlongwane, whose bank accounts were closed after he underwent review as a politically exposed person in 2013, is suing Absa for R7m on the grounds that the closure of his accounts was unlawful and that the bank had violated his constitutional rights.

Hlongwane, who was a key intermediary between foreign arms dealers and the government in the arms deal of 1999, came under scrutiny by the bank when he was named in documents presented to the Seriti commission of inquiry.

His court action comes in the midst of political opposition – not least from President Jacob Zuma – to tighter regulation by the banks of politically exposed people as spelled out in the Financial Intelligence Centre Amendment Bill. Zuma has declined to sign it into law.

The case comes in the wake of intense lobbying of SA’s big four banks by the Gupta business family and their supporters in the ANC and the Cabinet after the family’s accounts were closed a year ago on suspicion of money laundering.

However, the Gupta family has never challenged the closure of its accounts in court, despite being advised to do so by several banking executives in response to its complaints.

In his application, filed last month in the High Court in Pretoria, Hlongwane says while he acknowledges the banks’ right to close accounts where criminal activity is suspected, this must be done in good faith and in line with the Constitution and the principle of ubuntu.

In closing his accounts and those of six of his companies, Hlongwane says

“Absa acted in bad faith, unreasonably, with an improper motive and/or in abuse of his rights”.

The six companies include Ngwane Aerospace and Ngwane Defence, which were involved in the arms deal.

Hlongwane’s request to the court is that the accounts be reopened and each of the plaintiffs – the six companies and himself – be awarded R1m.

Hlongwane’s affidavit argues that Absa had no valid commercial reason for closing the accounts; that it falsely contended that it was unable to serve the needs of the companies; and that it failed to take into account that business had been conducted without any breaches of the law for nine years.

While Absa “purported to close the accounts on the basis of an alleged political exposure review “”the decision was based on or informed by Absa’s “perception of [Hlongwane’s] political affiliation and profile”, the affidavit says.

“Absa failed to afford the plaintiffs an opportunity of making meaningful representations regarding the closure … when a contracting party in its position, acting in good faith and reasonably, would have done so.”

In 2016 the Seriti Commission found nothing untoward with the arms deal. However, while the findings were accepted by Zuma, the commission lacks wider credibility outside of government and the ANC.

Hlongwane’s application follows an earlier one last year in which he applied to the high court to obtain the records used in Absa’s decision under the Promotion of Access to Information Act.

That application was denied by Judge Nomonde Mngqibisa-Thusi, who said in her judgment:

“I am of the view that [Absa’s] bona fides in deciding to close the applicants’ accounts cannot be questioned.”

Mngqibisa-Thusi said

Absa was entitled, in terms of their contractual relationship, to terminate on reasonable notice.

It had “no obligation” to retain clients whose monitoring in terms of money laundering measures would be more onerous compared with the benefit in retaining them, she said.

Hlongwane had failed to show which of his rights he sought to protect as required by the act, she said.

This indicated that the plaintiffs