The Banking Mafia – Conflict of Interest, Account Closures, and the Need for Reform

By Edmond Phiri

Standard Bank, Absa, Nedbank, FNB and the mainstream banks are nothing but institutions run by ‘mafia’ dressed in shiny suits, speaking polished English in boardrooms. Their smooth words and corporate jargon mask a culture of unchecked power and predatory behaviour. Conflict of interest is not the exception but the very backbone of their operations.

Using "reputational risk" or vague "commercial considerations" as their weapon of choice, they crush competition and shut down challengers. Behind their polished façades, they mirror the tactics of the Sicilian Mafia or Al Capone's Chicago Outfit. In much the same way that Al Capone’s outfit would secretly own stakes in businesses they wanted to control, banks today invest in companies that compete with their own clients. When a bank owns shares in a rival business, they have every incentive to ensure their ‘competitor’ client fails.

Take the case of Sekunjalo Group, one of the most publicised battles against the banking sector’s overreach. Sekunjalo owns over 200 companies operating across industries such as fisheries, ICT, property, and media. The company, its directors, and subsidiaries have never engaged in any wrong-doing, nor engage in questionable or unethical practices.

To see the clear case of conflict of interest by the banking sector, consider Standard Bank and Oceana Group as a case in point. Oceana is one of Premier Fishing’s fiercest rivals. Premier Fishing is owned by Sekunjalo, while Oceana is banked, funded, and even sponsored on the JSE by Standard Bank. The web of conflict does not end there. Some Standard Bank directors hold directorships in companies that compete directly with Sekunjalo’s other businesses in property, ICT, and media.

Absa’s conflict is no less glaring. It is a shareholder in Community Investment Ventures Holdings, a private equity firm that competes in the ICT sector with Sekunjalo-owned SGT Solutions. Unsurprisingly, Absa was the first to announce the closure of some Sekunjalo entities' accounts. Nedbank, too, has its hands in competing pies, with interests in COMSOL Networks (ICT), the Avo SuperApp (e-commerce), and property companies such as Visigro Investments and Kingsmead Properties—all of which directly compete with Sekunjalo entities like Loot Online and IOL Property.

FirstRand and FNB are not exempt. Their parent company, RMB, owns Ashburton Fund Managers, which invests in Naspers. Naspers, in turn, owns Media24, a direct competitor to Sekunjalo’s Independent Media – whose bank accounts are now closed. Rupert-owned REMGO, a significant shareholder in FirstRand, exemplifies the octopus-like structure of overlapping interests across multiple sectors. These relationships lay bare the murky waters of conflicts of interest in the banking sector, where the same institutions meant to act neutrally are active participants in cut-throat competition against its clients.

Sekunjalo and Dr Iqbal Survé are not the only ones who have fallen victim to banks' diabolical practices. Many individuals, businessmen, and companies have had their bank accounts closed under the guise of “reputational risk”.

When a bank owns shares in a company that competes with yours, it’s not just a business relationship—it’s a loaded gun pointed at anyone who dares to step into their territory. The so-called "reputational risk" they cite as a reason to close accounts is as opaque and arbitrary as the mafia's "code of honour". It’s not a safeguard, but a weapon to crush dissent and remove competition. The closure of Sekunjalo’s bank accounts by the banks seems to be about the elimination of a competing business rivals by the banks.

This behaviour mirrors the tactics of Al Capone, who famously eliminated competition by monopolising supply chains and coercing rivals. Like synchronised Olympic swimmers, the banks coordinated the closure of Sekunjalo’s accounts and those of its related entities under the guise of “reputational risk”. The closure of the bank accounts was not an isolated incident but a systematic and synchronised assault.

Let’s be clear: reputational risk isn’t a legal term. It isn’t grounded in any transparent standard or set of measurable criteria. Instead, it’s a vague and subjective label that allows banks to act as judge, jury, and executioner. Imagine living in a neighbourhood where the mafia decides who gets to run a bakery and who doesn’t, based on whether they "approve of your reputation." That’s the reality of modern banking. The same institutions supposed to contribute to economic transformation are the very ones destabilising industries by shutting out competitors under the guise of protecting their brand.

The “reputational risk” excuse is no more credible than the mafia’s old threats of “protecting the neighbourhood.” Just as mob bosses would demand payment for protection while secretly orchestrating the very threats they claimed to neutralise, banks exploit this vague concept to protect their own commercial interests. In the case of Sekunjalo, the competitive interests of the banks in fisheries, ICT, media, and property sectors create a direct incentive to eliminate a rival by choking off its access to financial systems. It is capitalism at its most brutal: every chicken looks after its eggs.

In a crucial ruling in November last year, the Competition Commission, declared Nedbank and several other banks guilty of colluding to push the Sekunjalo Group out of the banking market through prohibited practices. The basis of their collusion or collusive practices has already been established now.

South Africa is no stranger to the banks’ unethical conduct. When the banks were exposed for colluding to fix the rand, they revealed themselves as institutions far removed from any moral high ground, or being guardians of morality. Yet, these same banks have been allowed to self-regulate, applying the “reputational risk” punishment without any checks or balances. It is akin to hyenas guarding the sheep. The regulators, who should act as impartial referees, have done little to address these glaring conflicts of interest.

The infamous “Bredenkamp rule” provides further context. Named after John Bredenkamp, whose accounts were closed due to alleged reputational risks and enforcing commercial contract, this rule has been invoked time and again to close accounts of individuals and businesses without justification. But reputational risk is a convenient smokescreen. The real motive, as evidenced in cases like Sekunjalo’s, is commercial interest. Business, by its nature, is cut-throat, and banks are capitalist institutions. Given the opportunity, they will destroy their competitors—directly or indirectly.

Even Al Capone’s methods seem less insidious in comparison. Capone at least made no pretensions about his intentions; his rivals knew the rules of engagement. Banks, however, hide their motives behind legal jargon, regulatory loopholes, and self-righteous rhetoric. The result is economic terrorism masquerading as sound business practice.

The impact of the actions by the banks on businesses and entrepreneurs is devastating. In a country like South Africa, where unemployment is at crisis levels and businesses under Sekunjalo are part of the backbone of job creation, the arbitrary closure of accounts isn’t just damaging—it’s catastrophic. It destroys livelihoods, dreams, and opportunities. How do you run a business when your bank account—a basic requirement for any enterprise—is unilaterally closed without recourse? This is not just bad for business; it’s bad for the country.

The current system of banking self-regulation is deeply flawed and farcical. South Africans are like a herd of sheep guarded by hyenas when it comes to the oversight of the banking sector. For years, the glaring conflict of interest in this industry has gone unchecked, with banks enjoying unfettered power to open and close accounts like a Hillbrow brothel shuffling its clientele. Regulators must step in and level the playing field.

Banks should not be allowed to act as both player and referee, applying vague standards of reputational risk to serve their commercial interests. The conflict of interest at the heart of these decisions should raise alarm bells across the financial and regulatory landscape. If left unchallenged, this unchecked power will not only harm individual businesses but will also erode trust in South Africa’s financial system.

Mafia bosses operate with impunity because they know no one will challenge them. The regulators need to step in and rescue the financial system from itself. Whether it’s a mafia in Sicily or a bank in Johannesburg, unchecked power leads to corruption, and corruption leads to collapse. South Africa’s economic future depends on fairness, transparency, and accountability in the banking sector. It’s time to demand better.

* Edmond Phiri is an independent writer, commentator and analyst. 

** The views expressed do not necessarily reflect the views of Independent Media or IOL.