17 June 2024 | 09:37 AM

Absa does a Gupta on Iqbal Survé

Key Takeaways

  • Absa has cut all ties with companies directly or indirectly controlled by Iqbal Survé’s Sekunjalo Investment Holdings.
  • The bank says keeping Sekunjalo companies as clients presents “intolerable reputational, commercial, and legal risks”.
  • The decision was kept secret for seven months – until a chance remark in Parliament two weeks ago.

Everything media mogul Iqbal Survé touches is anathema to one of South Africa’s big four banks – the same bank that led the charge in cutting off the Gupta family from the banking system in 2016.

AmaBhungane has established that on 27 August last year Absa sent letters to every client directly or indirectly controlled by Survé’s Sekunjalo Investment Holdings, giving 60 days’ notice of termination of services.

In subsequent court proceedings late last year, Absa general counsel Marthinus Janse van Rensburg insisted that “[Absa’s] continued association with customers in the Sekunjalo Group posed intolerable reputational, commercial, and legal risks.”

The companies cut off from their banking facilities include Survé’s main JSE-listed vehicle African Equity Empowerment Investments (AEEI), its separately listed subsidiaries Ayo Technology Solutions and Premier Fishing & Brands, and all subsidiaries of the three companies. Sekunjalo-controlled Independent Media appears unaffected as it banks elsewhere.

The Sekunjalo empire has been almost completely silent about the development despite the obligation on JSE-listed companies to publicly report all “price sensitive” information.

The only public announcement to date was made not on a JSE platform, but in passing when Ayo executives made a presentation to Parliament’s standing committee on finance on 17 March to bemoan the way the company has, they say, been undermined by an orchestrated media campaign and the pending court case brought by the Public Investment Corporation (PIC).

The PIC wants to reclaim R4.3-billion its previous chief executive Dan Matjila irregularly invested in Ayo in December 2017.

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Survé sat in on the session in Parliament despite having no formal role at Ayo except as the indirect controlling shareholder.

During the presentation, Ayo chair Wallace Mgoqi revealed that, apart from losing business opportunities and having its share price collapse, Ayo had “lost banking facilities”.

“Which business in the world can operate without banking facilities, honorable chairperson and honorable members,” Mgoqi asked the committee.

To court

AmaBhungane began making inquiries after this revelation.

Questions were directed to Ayo via the Sekunjalo group’s public relations firm but the company “declined to comment”, save to state that “any businesses critical developments have been alerted to the market via the appropriate channels as required of it by the various regulations”.

Further questions put to Ayo, AEEI and Premier Fishing were met with silence.

AmaBhungane has established that the most low-key part of the Sekunjalo empire, Premier Fishing, approached the Western Cape high court last year, attempting to interdict Absa.

Court papers show that, after unproductive negotiations to cancel the bank’s service termination, or at least extend the notice period, Premier went to court on 21 October, claiming Absa’s decision was discriminatory and unconstitutional.

Absa filed an answering affidavit on 5 November and Premier withdrew its case four days later.

Absa’s answering affidavit, deposed to by Janse van Rensburg, cited three main bases for the bank kicking Sekunjalo to the curb.

Casting the net

Absa’s actions affect 24 companies, most of them small subsidiaries of AEEI or Ayo. One of the more noteworthy ones is Loot Online, Survé’s online retail company.

The other major asset in the Sekunjalo Investment Holdings stable, Independent Media, is unaffected by Absa’s actions. Sekunjalo controls Independent through Sekunjalo Independent Media and this company banks with Standard Bank, according to its most recent set of publicly available financial statements.

The PIC is seeking the liquidation of this company in a separate court action. Sekunjalo Independent Media was renamed in December to Independent Consortium, removing ‘Sekunjalo’ from the name. Sekunjalo Investment Holdings itself was also not banked by Absa.

First, there had been a deluge of negative media reportage including many investigative exposés, especially about the controversial Ayo.

“Towards the end of 2018, Absa started investigating the Absa customers implicated in the adverse media reports,” he said.

Janse van Rensburg also cited evidence before and the findings of the Mpati commission of inquiry into allegations of impropriety at the PIC. These were particularly scathing about Survé and his relationship with Dan Matjila, the former chief executive of the PIC.

Janse van Rensburg also referred to the way other notable service providers had dropped Sekunjalo companies. These included the Sekunjalo group’s JSE sponsors PSG Capital, their lawyers Webber Wentzel and their auditors BDO.

The bank’s case was however that it had a straightforward contractual right to unilaterally cancel a banking relationship without the need to back up the decision with these kinds of justifications.

“The Sekunjalo Group and Dr Survé have for at least the past two years been the subject of serious allegations of disreputable and unlawful conduct that featured extensively in the public domain,” said Janse van Rensburg.

“It is crucial to note that Absa takes no position on the truth of the allegations against the Sekunjalo Group. It need not do so.

“Whether the applicants and/or their parent companies deserve a bad reputation is not something for Absa to ponder or decide. Absa must decide what effect this will have on its own reputation.”

Keeping it on the down-low

Despite the potential for ruinous damage, none of Sekunjalo’s three JSE-listed companies, AEEI, Ayo and Premier, made any announcements on the stock exchange’s news service.

The JSE rules are not explicit about this, but there is a good case to be made that Premier, Ayo and AEEI have all breached JSE regulations by not advising the market that they have lost their bank facilities – notwithstanding Ayo’s claim that all “business critical developments” had been disclosed.

The JSE said in response to an amaBhungane query: “There is a general obligation of disclosure placed on an issuer to announce price sensitive information … defined as unpublished information that is specific or precise, which if it were made public, would have a material effect on the price of the issuer’s shares.

“Directors of issuers are currently required to determine what will constitute price sensitive information with reference to the Listings Requirements … Bankers are considered to be important service providers and essential for doing business.”

The silence from the three listed entities is especially problematic considering claims made by Premier’s chief executive Rushaan Isaacs in her sworn affidavit.

Evidence Docket

See copies of two key documents:

Absa letter to Premier terminating services

Court papers filed by Rushaan Isaccs of Premier Fishing against Absa

ABSA answering affidavit in Premier case

Challenging Absa’s decision, she warned, “The businesses will certainly become unbanked for a period. Premier Fishing and Brands will be de-listed. Premier Fishing will lose all its fishing licenses and catching quotas. The Group’s 900 employees will be a risk of losing their jobs. The businesses will close.”

It is hard to imagine a better instance of precise price sensitive information which has nonetheless not been declared to the market.

In his answering affidavit, Absa’s Janse van Rensburg picked up this point.

“The applicants say that Premier will become de-listed. Yet they fail to provide the Stock Exchange News Service (SENS) announcement warning investors of their potential imminent removal from the Johannesburg Stock Exchange (JSE). Surely, if the applicants honestly

and in good faith harboured the view that Premier’s de-listing was contingent on the outcome of this court case, they would have warned stakeholders, the bourse, and investors about this fact. Yet the applicants provide no evidence that they have done so.”

Where to stash the cash?

The most dramatic impact of Absa’s action against the Sekunjalo group is that it forces it to find a new home for the enormous cash pile sitting in Ayo after the PIC investment – money the state-owned asset manager still hopes to recover. At last count Ayo had R3.2-billion left which makes up practically the entire cash reserves of the larger group of Sekunjalo companies.

The revelation that Absa has dumped Sekunjalo companies may help to explain a peculiar set of developments evident from Ayo’s most recent financial statements, for the financial year ending 31 August 2020.

In a disclosure related to which banks host the company’s cash deposits, Ayo still noted that “Absa Bank provides the majority of banking services used by the Group”.

At the same time it was however very evident that Ayo was rapidly moving cash out of Absa and had been doing so since 2019.

At 31 August 2018 all of Ayo’s cash, then over R4-billion, was deposited at Absa. At 31 August 2019 Ayo had R2.735-billion at the bank after, among other things, moving half a billion rand to the Bank of China (BoC). A year later the money kept at Absa had shrunk to R1.339-billion. The accounts holding whatever is left of this money will now be closed.

There is at least one reason AEEI may have started moving cash out of Absa long before having its facilities terminated.

According to Absa’s court papers the bank had already written to AEEI on 26 July 2019 stating that “we will not consider any expansion under our current facilities with the Bank, or open new accounts in the Group”. This followed testimony about Ayo at the Mpati commission.

Since then, the Ayo money kept getting moved to the Bank of China, the same disclosure shows. At 31 August 2019 Ayo had R501-million deposited at the BoC. A year later this was R1.355-billion.

It seems however that Ayo has found a reason to abandon the BoC as well. In its financial report covering the year to 31 August Ayo revealed that it had, after August, moved R740-million out of BoC and split it between two asset managers. Numus Capital, a “niche stock broking and asset management firm” received R540-million to invest in shares on the JSE while Ninety One Fund Managers got R200-million to “invest in the money market”.

Ayo had earlier told amaBhungane that the cash movements reflected sound money management when interest rates fell to record lows last year. It did not mention that it was forced to move money out of Absa.

AmaBhungane questions to which the Sekunjalo companies did not respond included which other banks had closed or threatened to close its banking facilities.

The BoC did not respond to a request for comment.


Read more stories on Iqbal Survé and Ayo

PIC looks on while ‘Survé Inc’ burns through state pensioners’ billions

Iqbal Survé takes another bite at the PIC apple

Sasol dumps Survé

Survé’s share ‘manipulation’: the smoking gun(s)



Dewald van Rensburg and Sam Sole

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