[DEBATE] : (Fwd) Zim sanctions debate: defanging the bank that bit Bredenkamp

[Patrick Bond]

*Star (SA), 31 March *

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* SA man accused of funding Mugabe takes bank to court *

Judge stops institution from closing billionaire's accounts

Baldwin Ndaba

John Bredenkamp, the South African billionaire accused of bankrolling 
Zimbabwean President Robert Mugabe, has won an interim order preventing 
Standard Bank from closing his bank accounts. In December, Standard Bank 
wrote to Bredenkamp, who holds several accounts with them, notifying him 
of their decision to close his accounts. The bank's threat to Bredenkamp 
followed a decision by the US Department of Treasury's Office of Foreign 
Assets Control to list Bredenkamp and his associated entities as 
"specially designated nationals" on November 25. This meant Bredenkamp 
and his companies became subject to the sanctions imposed and enforced 
by the US office. Standard Bank became aware of the listing and that the 
US office suspected Bredenkamp of "being involved in illicit business 
activities, including tobacco trading, arms trafficking, oil 
distribution and diamond extraction, and of being a confidant and 
financial backer of Zimbabwe's President Robert Mugabe".

The bank relied on various newspaper reports in a number of countries 
between September 1996 and March this year that indicated Bredenkamp's 
purported notoriety at the time of the US Office of Foreign Assets 
Control listing. In their papers before Johannesburg High Court Judge 
Mahomed Jajbhay, Standard Bank argued that it was worried about its 
reputation. The bank believed domestic and foreign business partners 
"might believe or suspect that accounts held at Standard Bank would or 
could be used to facilitate unlawful or unethical acts. "An association 
with a conductor (Bredenkamp) or a financier of allegedly illegal or 
improper transactions might well undermine a bank's hard-won and fragile 
national and international reputation in the eyes of regulatory bodies, 
financial institutions, media organisations and members of the public 
worldwide," the bank argued.

According to the bank, "in not dissimilar circumstances, other blue chip 
financial institutions such as Barclays, Standard Chartered and Old 
Mutual had come in for scathing criticism in influential international 
publications. In addition to the risk of harm to its reputation, 
Standard Bank faced material business risks to its relationship with 
foreign banks." Bredenkamp challenged the bank's decision in the high 
court, saying he had lodged appeals against the US office to impose 
sanctions on him. He also argued that if Standard Bank closed his 
accounts, none of the other banks would want to have any dealings with 
him. Yesterday was the date set down by Standard Bank to implement its 
decision, but Judge Jajbhay granted Bredenkamp an interim order blocking 
the bank from closing his accounts. Bredenkamp denied allegations that 
he was a Mugabe crony, saying he had been imprisoned by the "Mugabe 
regime", which had also taken his Zimbabwean passport, but had won the 
case in the local high court.

Judge Jajbhay agreed with Bredenkamp. In his ruling, he said: "A 
business entity must, in order to carry out its objects, have one or 
more bank accounts. This is not simply because transactions through a 
bank are convenient and customary. It is because the banks operate an 
interchange system that makes it all but impossible for a person to do 
business without operating through a bank." The judge further said the 
termination of a bank account for whatever reason created a black mark 
against the customer's name. "The effect is drastic, since it makes it 
very difficult for the customer to acquire another bank account. A bank 
… will naturally want an explanation for why the account was closed and, 
in the light of the explanation, will almost certainly refuse to grant 
the customer the facilities requested," the judge ruled. He said the 
termination by Standard Bank of Bredenkamp's accounts was "oppressive" 
because, in the circumstances, Bredenkamp and his companies were unable 
to find alternative banking facilities.