High Court dismisses AYO bid to halt bank account closures
JSE-listed AYO Technology Solutions yesterday lost its court bid to stop First National Bank (FNB) closing its bank accounts.
AYO approached the South Gauteng High Court on an urgent basis two weeks ago, seeking interim relief to halt FNB’s plans to close the company’s bank accounts next week.
However, yesterday the court dismissed the application for an interim interdict. The court ruled the matter was not urgent.
FNB had given AYO until 3 May to find a new bank, after which it will close the company’s transactional banking facility.
The bank said it elected to exercise its contractual right to terminate the banking relationship with AYO due to the associated reputational and business risks.
FNB added that the bank’s relationship with a customer is not governed by administrative law, but private law of contract, which means there is no legal obligation on the bank to provide AYO with reasons for closing bank accounts.
AYO CEO Howard Plaatjes recently claimed there is an engineered attack on company operations and the banks are using that to close transactional facilities.
In his affidavit, Plaatjes said AYO generates revenue in excess of R2 billion annually by servicing over 500 companies, including those in financial services, healthcare, education and media, which is why it needs its banking facilities to remain in place.
“Banking facilities are important to AYO’s business and without which AYO cannot conduct business,” he told the court.
Plaatjes said the company employs 1 200 people, has an annual salary bill of R430 million and pays taxes in excess of R495 million, which include R289 million in VAT, R98 million in income tax, and R108 million in Pay-As-You-Earn.
Reacting to the court outcome, FNB welcomed the decision, and denied discrimination allegations.
“The bank also wishes to condemn and firmly refute the client’s public allegations of discrimination in respect of the decision to terminate the banking relationship. FNB has a zero tolerance for discrimination against anyone and on any of the grounds listed in the Constitution of South Africa.”
The conflict has also sucked in trade unions, which have come out in support of AYO and said yesterday that AYO has not been found guilty of any crime, therefore there is no reason for FNB to take such a stance.
Zwelinzima Vavi’s South African Federation of Trade Unions condemned the banks for “selective morality”, saying the banks seemingly “are abusing their power as banking oligarchs to target political opponents and competitors”.
The National Union of Metalworkers of South Africa said: "We cannot fold our arms and allow FNB to abuse its power to the extent that it results in thousands of unnecessary job losses.
“If FNB is allowed to arbitrarily close AYO’s bank accounts, without any good reason, this will mean AYO is unable to trade and will therefore have to dismiss all 1 275 employees in its employ. Over 3 825 families will be affected by this cruel and heartless decision, and this is why they must be stopped.”