Recently, it has become all too familiar that certain companies or individuals find themselves “unbanked,” cut off from essential banking services due to purported “reputational risks.
The phrase has been echoing across headlines with troubling frequency. These risks, banks claim, stem from associations with scandalous activities or contentious figures. A closer examination, however, exposes a glaring hypocrisy and inconsistency, casting the entire argument as a self-serving fallacy.
The most striking contradiction lies in the very clients that major banks continue to serve without hesitation: government and public sector institutions, many of which are embroiled in scandals, controversies, and corruption on a scale that dwarfs most private enterprises.
The grand scale of corruption revealed at the Zondo Commission is but one egregious example.
If banks were to genuinely apply this so-called rationale of reputational risks, logic dictates that a significant portion of government and public sector institutions would find themselves ineligible for traditional banking services. Between allegations of bribery, corruption, and mismanagement of public funds, the headlines reveal daily occurrences of governmental wrongdoing.
The damning evidence is not limited to headlines.
South Africa loses billions to corruption, with the corruption funds funnelled and channelled through the very banks decrying reputational risks. Auditor General (AG) reports, and various commission and forensic investigation reports should render the entire government unbankable. Yet, despite public reports, banks do not close the accounts of these institutions.
Clearly, the issue at hand is not about “reputation,” but rather the weaponisation of banks against those who are not aligned with the establishment.
This hypocrisy is further highlighted by the targeted unbanking of entities that resist conformity, such as companies like Sekunjalo and Independent Media. Meanwhile, governments and larger institutions, despite their corruption-filled daily headlines, enjoy uninterrupted access to banking facilities.
This discrepancy not only undermines the “reputational risk” argument but also lays bare the questionable motives behind debanking decisions.
Are banks hiding behind a smokescreen, concealing a tangled web of their interests, political pressures, or subjective biases?
We must recognise that banks are not neutral entities but influential corporations with vested interests that shape their decisions. These decisions, driven by undisclosed motives, can drastically affect those suddenly cut off from the financial system. The Sekenjalo Group has 8,000 families and over 40,000 indirect beneficiaries who would lose their livelihoods as a result of banks’ decisions.
The need for transparency and accountability is pressing. If we are to accept unbanking, it must be grounded in a consistent and verifiable framework applied equally to all clients. Anything less leads to a system that favours the powerful, undermining trust in financial institutions and eroding the principles of equality and fairness essential to our economy.
The reported closure of Sekunjalo and Independent Media bank accounts illustrates the fight to silence voices that dare expose corruption, and a fight against media freedom.
Banks cannot continue to hide behind the nebulous concept of “reputational risk” without clear and consistent criteria. Such obfuscation threatens trust in banking and the fabric of our democratic society.
It’s time to confront this fallacy and demand a financial system that works for all, not just the privileged few or a cabal aligned with the establishment. Only then can we move towards an economy that genuinely serves the interests of the people.
* The views expressed do not necessarily reflect the views of IOL or Independent Media.
