In a recent incident, Standard Bank found itself at the center of a controversy as it mistakenly labeled two proof of payment documents sent by the Economic Freedom Fighters (EFF) to AfriForum as “fraudulent.” The bank later clarified that this labeling was due to a “misunderstanding” and did not directly implicate its Fraud Centre as the source of the error.
The source of the misunderstanding appears to have stemmed from Standard Bank’s business unit, which had been using outdated templates for generating pay alerts for the past eight years. These templates featured a letterhead listing directors who had resigned in 2015, along with an outdated company logo in the top left corner. Standard Bank’s apology admitted to the use of these outdated templates in “isolated incidents,” a factor that likely triggered suspicion within the bank’s Fraud Centre.
However, an investigation by Scorpio suggests that the use of these outdated templates may not have been as isolated as Standard Bank initially claimed.
This incident raises concerns, particularly as South Africa seeks to demonstrate its commitment to combating fraud, corruption, and money laundering to international bodies such as the Financial Action Task Force. The credibility of banks and law enforcement agencies in South Africa is crucial in this regard.
The Origins of the Dispute
The incident began when Ian Levitt Attorneys, the legal firm representing the EFF, sent two proof of payment notifications to Hurter Spies Inc, AfriForum’s lawyers in Pretoria on November 6th. The EFF owed AfriForum R316,000 in legal costs following a land invasion case.
On the same day, AfriForum’s attorney Daniël Eloff and CEO Kallie Kriel shared the proof of payment documents on social media. Observant individuals, including Khaya Sithole, a chartered accountant and radio host, noticed discrepancies in the list of Standard Bank directors printed at the bottom of the documents. Fred Phaswana, a former joint chair of Standard Bank, had left the bank in 2015, yet his name appeared on the list of directors in the documents provided by the EFF.
Further scrutiny revealed more potential signs of tampering, such as an outdated Standard Bank logo in the top left corner of each document. Additionally, historical proof of payment documents from the EFF dating back to 2020 raised similar concerns.
Confirmation Requested
In response to these concerns, Hurter Spies Inc. reached out to Standard Bank for confirmation of the legitimacy of the proof of payment documents. On the morning of November 9th, Standard Bank’s Fraud Centre promptly responded with a terse email stating, “The below are fraudulent.”
The incident has not only exposed Standard Bank to criticism but has also fueled a verbal exchange between the EFF and AfriForum, highlighting the need for vigilance and accuracy in handling financial matters, especially in a country working to combat financial crime.
A recent email has shed light on a telephonic conversation between AfriForum’s attorneys at Hurter Spies Inc. and Standard Bank representatives, where the bank initially conveyed its “fraudulent” finding to the attorneys. Kallie Kriel, head of AfriForum, revealed this information to Scorpio.
Despite the bank’s claims of fraudulence, AfriForum’s bank account at Absa showed evidence of two payments totaling R316,579.89, with amounts of R163,441.39 and R153,138.50.
In response to this situation, AfriForum jumped to the conclusion that the Economic Freedom Fighters (EFF) had tampered with the proof of payment documents. They swiftly issued an online press release titled “Falsified Documents: AfriForum Exposes Dodgy EFF Payments.”
Upon investigation, conducted jointly by Scorpio and Jean le Roux from the Digital Forensic Research Lab, it became evident that the proof of payment documents provided by the EFF did indeed raise concerns. Suspicious metadata added to the skepticism, but the most significant red flag was the outdated list of directors and Standard Bank logo.
To verify their findings, this journalist generated a Standard Bank proof of payment from a private individual’s Standard Bank account. The document appeared correct, featuring the latest Standard Bank logo and an up-to-date list of directors.
As an additional control, Le Roux conducted an online search for a proof of payment document created by a Standard Bank business account with no affiliation to the EFF or AfriForum. This document, created in February 2022 and uploaded by the Knysna Municipality, resembled the EFF’s proof of payment document with an outdated logo and list of directors.
Le Roux speculated, “The likely situation is that Standard Bank used a different system to generate Business Online proof of payments and their non-commercial proof of payments. While the non-commercial proof of payments had their letterheads changed to reflect the new logo and board composition, this was not applied to the Business Online letterheads.”
EFF’s Swift Response
In response to AfriForum’s accusations, the EFF acted swiftly to defend its innocence. Within 24 hours of AfriForum’s allegations, EFF lawyer Ian Levitt was instructed to send a strongly-worded letter to the civil rights organization, demanding an apology. The letter also warned of legal action if an apology was not issued, resulting in a predictable exchange of aggrieved emails.
Notably, the EFF provided Scorpio with redacted versions of its Standard Bank statements, which included evidence of the payments made to AfriForum’s lawyers, further substantiating their side of the story.
Levitt subsequently forwarded emails that clearly indicated that Standard Bank’s system generated and dispatched proof of payment documents, also known as “pay alerts,” to an EFF inbox labeled as “statements.” Subsequently, these proof of payment documents were sent to EFF treasurer Omphile Maotwe, who then forwarded them to an attorney at Ian Levitt Attorneys.
These emails, in conjunction with bank statement excerpts from both the EFF and AfriForum, conclusively demonstrated that the EFF had indeed made payments to AfriForum from its primary Standard Bank account.
This incident triggered significant commotion within Standard Bank, leading to a series of meetings involving representatives from the EFF and AfriForum throughout the latter part of last week and over the weekend. Shortly before midnight on Friday, the bank issued an apology to the EFF, followed by another apology to AfriForum on Saturday afternoon.
Notably, the Standard Bank Fraud Centre, a critical component of the bank’s operations, was conspicuously absent from both of these apologies.
Presented below is Standard Bank’s comprehensive response to the situation.
In his second communication to AfriForum, Levitt conveyed that the EFF had issued a demand for an apology from AfriForum and the legal firm Hurter Spies Inc by 1 pm on Monday, November 13th. Levitt categorically labeled the allegations made by the organization as “defamatory” and firmly refuted the applicability of the fair comment defense.
Levitt emphasized, “One of the key prerequisites for employing the fair comment defense is the factual accuracy of the basis upon which such commentary is founded.”
He cited a legal precedent from the EFF’s past, highlighting their unfavorable outcome in a defamation lawsuit brought against them by former minister Trevor Manuel. Levitt pointed out that the EFF had learned, from their own painful experience, that it is untenable to assert the justification of criticism when fundamental facts are erroneous and no effort was made to validate their accuracy.
AfriForum has since removed the contentious press release, accusing the EFF of criminality, from its website.
Kriel, in a conversation with Scorpio, expressed AfriForum’s contentment with Standard Bank’s apology, emphasizing, “It is crucial to clarify that we did not engage in falsehoods but relied on information from Standard Bank’s Fraud Centre.”
AfriForum firmly denied any allegations of defamation, asserting that they would contest any further legal action pursued by the EFF, as they believed the EFF’s prospects of success under the circumstances were limited.