Johannesburg - Finance Minister Pravin Gordhan alleges in an explosive affidavit, filed on Friday, that Gupta-owned Oakbay was seeking to harm the banking and financial sectors when it asked him to interfere in the private sector.
The news comes three weeks before Gordhan is due to appear before court on charges of fraud over allegations that he illegally authorised an early retirement and established an illicit investigative unit when he headed the South African Revenue Service. This has been viewed as a continuation of the tussle between President Jacob Zuma and Gordhan over control of SA’s finances, which is coming to a head.
The 13-page affidavit, released to the public by the National Treasury on Sunday, cites 14 Gupta-controlled companies - including Oakbay Investments, Oakbay Resources, Tegeta Exploration & Resources and Sahara Computers. It also cites the big four banks, which earlier this year closed accounts belonging to companies linked to the controversial Guptas.
Gordhan has approached the North Gauteng High Court, asking for an order that the Finance Ministry cannot, by law, intervene when banks close companies’ accounts.
This comes after several heads of Gupta-owned companies, claiming that thousands of jobs would be lost, approached Gordhan at various times seeking his intervention.
Gordhan’s affidavit also exposes several allegedly dubious transactions reported to the Financial Intelligence Centre by the banks, which total R6.8 billion.
In his affidavit, the minister - due to present probably the most important mini budget ever next Wednesday - says “the continued assertions by Oakbay that, as Minister of Finance, I should intervene in, or exert pressure upon, the banks regarding their closure of the Oakbay accounts is harmful to the banking and financial sectors, to the regulatory scheme created by law, and the autonomy of both the governmental regulators and the registered banks themselves”.
Gordhan also notes that Oakbay has placed on record that its own legal advice indicates that it has no basis to challenge the banks' decisions. It has also failed to approach the courts over the matter, despite its assertions that it has done nothing wrong.
“Nothing in law, the opinion [by a lawyer after the Guptas’ approach to him] advised, authorised governmental intervention with the banker-client relationship arising by contract.”
A recent Personal Finance investigation notes the Code of Banking Practice says a bank will not close an account without giving “reasonable prior notice”. However, a bank reserves the right to “protect our interests in our discretion, which might include closing your account without giving you notice: If we are compelled to do so by law (or by international best practice); if you have not used your account for a significant period of time; or if we have reason to believe that your account is being used for any illegal purposes”.
The minister says Oakbay’s failure to seek court assistance creates uncertainty, which is also harmful to financial stability, as well as the standing of regulatory authorities, the operation of the banking and financial sectors, the South African economy at large, and Oakbay’s staff.
Oakbay has variously claimed that 6 000, 7 500 or 15 000 jobs were at risk. These claims have been rubbished by AfricaCheck , which argues, after analysing all the Gupta companies, they employ between 2 672 and 2 892 people, excluding The New Age newspaper’s staff, as it was not able to access these figures.
“The grant of the declaratory orders sought is called for in the public interest,” says the minister’s affidavit.
The Guptas have reportedly denied any wrongdoing, and indicated they will respond in full when they have studied the affidavit in detail.
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