In a final throw of the dice, Ayo Technology Solutions, the listed IT holding company indirectly controlled by Iqbal Survé, has procured an alternative banking arrangement that will allow it to continue to trade, just a day before FNB was to close its last remaining transactional bank account.
The development will come as a relief to the company’s 1,200 employees, as Ayo previously said in court papers that if FNB closed its accounts it would cease operating and face liquidation.
The company said in a Sens announcement on Friday evening that it had managed to put in place “alternative, third-party payment solutions” just before the deadline imposed by FNB expires at the close of business on Monday.
Ayo did not say who its new banking partner is.
In a statement issued on Friday night, Ayo’s board said it had directed the company’s management team to ensure the sustainability of the business by opening accounts with “professional third parties, financial services institutions and trusts” to enable Ayo to continue to trade. “Ayo can confidently state that such third party arrangements are now in place,” it said, but did not provide further details.
Management would continue to engage with local and international banks to open transactional banking services, it said. “The company has received positive feedback from some banking institutes indicating willingness to engage with Ayo. Ayo will be finalising these engagements over the next few weeks,” it said.
In March FNB communicated its intention to close Ayo’s accounts owing to perceived “reputational and other risks” associated with continuing to bank the group that has been the subject of a number of controversies in recent years.
FNB stated in court papers that the account opened in October 2020 was an oversight, as the bank had previously taken a decision that it would not provide services to Survé or any companies associated with him.
The development appears to be a sharp reversal from the situation Ayo presented on Thursday, when it brought an urgent application before the high court in Johannesburg seeking to have FNB’s decision to close its accounts reviewed.
Ayo’s legal counsel, advocate Nazeer Cassim, said the company had failed to open accounts with other banks despite multiple attempts. The relief sought against FNB was its “only avenue to prevent the cessation of commercial activities that would lead to liquidation”.
Ayo was joined in the matter by the National Union of Metalworkers of SA (Numsa), which successfully applied to join as a friend of the court. Numsa argued that FNB’s decision had a constitutional effect on the rights of Ayo’s employees.
By closing the company’s accounts, Ayo would be unable to pay staff and this would create adverse consequences for their wellbeing and that of their families, the union’s counsel argued.
Judge Gregory Wright did not believe the test for dealing with the matter on an urgent basis was met and struck it off the roll. It is unclear whether Ayo will still pursue the matter.
The board on Friday said it was of the view that Ayo might be facing a targeted campaign aimed at destabilising the company, despite it having fully co-operated with regulators and the Mpati commission of inquiry into the Public Investment Corporation (PIC).
“If Ayo has made mistakes, these were mistakes of omission and when brought to Ayo’s attention, processes, governance and team were strengthened so that such mistakes would not and have not recurred,” it said. It planned to appoint an independent legal expert to review the Mpati commission’s findings against it.
The Mpati commission was appointed by President Cyril Ramaphosa in 2018 to investigate allegations of impropriety at the PIC, which bought a 29% stake in Ayo for R4.3bn.
The PIC is Africa’s biggest asset manager, and manages investments on behalf of the Government Employees Pension Fund, the Unemployment Insurance Fund and the Compensation Fund, in addition to a number of smaller funds. Its total assets under management stood at R1.9-trillion at the end of March 2020.
The board said Ayo would be restructured into a core investment company, and “reduce its footprint” at both corporate and subsidiary level. “Regrettably this may result in possible job losses. However this drastic step is necessitated by the need to ensure the sustainability of the company,” it said.
Ayo’s role in its subsidiary companies would change from an operating entity to an investor, creating an opportunity for management and staff to become shareholders, it added. It did not elaborate, saying only that further announcements would be made at a later date, in line with the requirements of the JSE.
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