Nedbank Faces R40 Billion Lawsuit Over Alleged Wrongful Fraud Listing of Durban Businessman

In one of the largest civil claims ever faced by a South African bank, Nedbank is defending a R39.8 billion lawsuit brought by Durban entrepreneur Shaun Naidu, who alleges he was mistakenly listed as a suspected fraudster for nearly a decade.

Naidu claims the listing, which appeared on the Southern African Fraud Prevention Service (SAFPS) database, not only caused reputational damage but also severely impacted his business operations and access to basic banking services. The businessman revealed that his blacklisting began in 2013 and continued until 2021—despite his repeated efforts to have the matter resolved.

Nedbank, in response to media queries, confirmed it is actively defending the matter but declined to offer further details due to the case being sub judice.

“As the matter is before the court, Nedbank cannot comment at this time,” a spokesperson told IOL. “We can however confirm that we are defending the matter. Nedbank would like to assure our clients that we adhere to a meticulous and thorough process before listing anyone on the Southern African Fraud Prevention Services (SAFPS) database. Please be assured that we are committed to resolving this matter in accordance with the principles of fairness and justice.”

A Listing with Consequences

According to an exclusive Sunday Times report, Naidu discovered he had been flagged on the SAFPS database—referred to internally as the “Shamwari” system—when he attempted to open a bank account in 2015. What was supposed to be a routine process turned into a bureaucratic nightmare.

“I was told I was tagged by Nedbank on the Shamwari database, which is created and maintained by SAFPS. Due to this listing, I couldn’t open a bank account at any banking institution. I was very confused at this stage,” said Naidu.

What followed were years of dead ends. Despite obtaining a police clearance certificate and seeking assistance from both SAFPS and the National Credit Regulator, Naidu says his name remained on the database until 2021. It was only after his legal team initiated a formal dispute that the listing was finally removed.

Economic Fallout and Personal Impact

While the legal battle unfolds, Naidu contends that the damage to his livelihood has already been done. Beyond losing access to banking services, he claims the listing cost him business deals and prevented him from attending international trade fairs—opportunities that could have expanded his enterprise.

“Besides losing lucrative business deals, I was not able to travel to international trade fairs that I was invited to for more possible business deals,” he explained. The inability to secure financing, sign contracts, or even open a basic bank account reportedly paralyzed his professional growth.

Understanding the SAFPS

- Advertisement -

The Southern African Fraud Prevention Service is a non-profit organisation that plays a pivotal role in South Africa’s financial landscape. Its mission is to reduce fraud and identity theft by maintaining a centralised database of suspected fraudsters. The database is accessible to member organisations—including major banks—which use it to screen applications and mitigate risk.

While the SAFPS positions itself as a safeguard against financial crime, Naidu’s case raises critical questions about accountability and recourse when individuals are wrongly listed.

The organisation states that it strives “to combat fraud through delivering a centralised fraud-prevention function” and is committed to “educating businesses and consumers about fraud, and assisting them to protect themselves.”

Legal Ramifications and Industry Scrutiny

The lawsuit has attracted significant attention from both legal and financial circles. At nearly R40 billion, the claim represents a monumental challenge for Nedbank—not just in monetary terms, but also in public trust. If Naidu’s claims hold in court, it could set a precedent for how such listings are handled and challenged in the future.

For now, the case remains before the courts, and both parties are preparing for what could be a lengthy legal process. Nedbank maintains that it follows rigorous procedures before making any listings on SAFPS, but critics argue that more robust safeguards and dispute resolution mechanisms may be needed to prevent future injustices.

As South Africa continues to tighten regulations on financial fraud and identity theft, this case may well become a litmus test for transparency, fairness, and accountability in the banking sector.