By Corrie Kruger
THE SOUTH African banking sector is regulated by various entities – such as the SA Reserve Bank, the Financial Services Board, the National Credit Regulator, the JSE, the Financial Intelligence Centre, the SA Revenue Service, the National Treasury and the Department of Labour – which have enormous controls, paperwork en masse, and checks and balances designed to safeguard our money, which is administered by these banks.
So, one wants to ensure that who one banks with, whether it be an individual or a company, has the right measures in place from the get-go.
According to the Nedbank Financial Statements: “Nedbank Group does sound business according to key non-negotiables. These include sound governance practices, transparency, and accountability.
“The board of directors discharges its responsibilities within a clearly defined governance framework, which informs the robust mechanisms of our governance best practices and provides clear direction for decision-making in the group.
“Through this framework the board of directors, without abdicating its responsibilities, delegates and discharges its governance responsibilities to specific board committees.” Seems a safe bet, right? In terms of good banking practices, accountability and responsibility flow down the chain although the buck stops at the top.
Therefore, it would be interesting to see whether Nedbank’s directors will step up to the mark, given that there have been many mentions (53 times) and many of them sceptical dealings in relation to state capture in the Zondo Commission Report Part One, recently handed to President Cyril Ramaphosa.
The report makes the inference that Nedbank appears to be one of the banks that seems to have enabled or is actively part of state capture.
Large transactions, such as the ones referred to in the Zondo Report, are typically dealt with at board level and through the credit committee.
Therefore, it follows there would have had to have been some form of acknowledgement of the deals that the bank’s employees were involved in.
For example, in reference to Nedbank’s association with the BNP bid and SAA Airbus swop transaction: “On 18 March 2016, Nedbank submitted its bid as a transaction adviser. Mr Mngadi featured as part of the Nedbank transaction team in the bid.
“Mr Mahlangu testified that he was not aware at the time that Mr Mngadi was employed by Nedbank. He also stated that he was not aware that Nedbank was also bidding for the same award or that Mr Mngadi was on that very bidding team.” It is also noted in the Zondo Report that Masotsha Mngadi was (Dudu) Myeni’s “person”.
The report also states: “They reveal that Ms Nhantsi had saved Mr Mngadi’s details as ‘Masotsha Mngadi SAA/ Nedbank’.”
Phumeza Nhantsi confirmed that she saved his details in that way about two days after starting work at SAA. She stated that she had always been aware that Mngadi was associated with Nedbank.
Nhantsi, SAA’s newly appointed chief financial officer at the time, was asked whether she was concerned that Mngadi worked at Nedbank – a competitor bidder in the process – but seemed to be a representative of BNP, another bidder. Nhantsi said she remembered asking him, but could not recall his answer. She did not probe it further. Nhantsi admitted that it appeared to be irregular that he was part of both companies.
Indeed, she said she found it strange at the time because, when SAA had a meeting with Nedbank, Mr Mngadi was there as its representative, but she knew he was also acting for BNP.
It will be interesting in the light of an urgent need of transparency and accountability to hear from the board what internal steps have been taken to establish and uncover further potential wrongdoing, as was suggested at the Zondo Commission.
It goes without saying that they must account to their shareholders, although allegations of wrongdoing have not spooked the market and their share price holds firm.
Given that Old Mutual and the Public Investment Corporation are two of the main shareholders in Nedbank, could they themselves have been aware and, therefore, prepared for the report’s outcomes? We wait to see how many heads will roll, if any …
This will also be very much dependent on whether the regulators and authorities act on the recommendations in the Zondo Commission Report.
* Editor’s Note: In a PSG webinar yesterday, Professor Bonang Mohale, Chancellor of the University of the Free State and previous chairperson of Business Leadership SA (BLSA), stated that Bain and Nedbank should not be in BLSA until they had cleared their reputation.
Corrie Kruger is an independent analyst.
*The views expressed here are not necessarily those of IOL or of title sites.
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