Gordhan exposes Guptas in explosive affidavit

Finance Minister Pravin Gordhan Picture: Leon Lestrade

Finance Minister Pravin Gordhan Picture: Leon Lestrade

Published Oct 16, 2016

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Cape Town - The Gupta family’s efforts to force Finance Minister Pravin Gordhan to intervene after their banks closed their business accounts has spectacularly blown up in their faces, leading the minister to seek a court order declaring that he may not do so and in the process exposing the extent of transactions reported to the Financial Intelligence Centre, totalling R6.8 billion.

Among the transactions is an apparent attempt to transfer R1.3bn from the Optimum Coal Mine Rehabilitation Trust to the Bank of Baroda - the only bank still serving the Guptas - with the approval of the Mineral Resources Department, whose minister is Mosebenzi Zwane.

Gordhan’s explosive affidavit and supporting documentation, filed in the Pretoria High Court on Friday, adds a new twist to the controversy surrounding the release of outgoing Public Protector Thuli Madonsela’s “state capture” report on allegations of undue influence by the Gupta family, which President Jacob Zuma and Co-operative Governance Minister Des van Rooyen have sought to interdict.

Gordhan says in it the continued assertions by Oakbay that “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”.

For this reason he asks the court to declare once and for all that he is not legally empowered or obliged to do so.

But he notes that while he may not approach the banks for information regarding the accounts of their clients, his lawyers have advised that Gupta firm Oakbay may require them to do so in response to the application, and the banks themselves may disclose reports they have made to the Financial Intelligence Centre in answer to the application.

This raises the possibility that details of all such transactions relating to the Guptas and their companies may be revealed in court.

Already, Gordhan was forced in response to the repeated requests for his intervention from Oakbay chief executive Nazeem Howa, despite his having informed Howa that he could not legally interfere in the relationship between banks and their clients, to write to Financial Intelligence Centre director Murray Michell, asking him to confirm whether the banks had reported any transactions and to list the sums involved, without disclosing further details.

It is the report Michell sent to Gordhan in response that exposes the full extent of reported transactions involving the Guptas, dating back to 2012, when an amount of R859 993 is reflected against the name of Ajay Gupta. But this is small change compared to subsequent transactions - R38m for Atul Gupta on February 6, 2014 and the same sum the next day; an amount of R11.475m by Sahara Computers in February this year; R374m from Oakbay Investments in March; R1.37bn from the Optimum Coal Mine in April and on the same day R1.207bn for Koornfontein Mines, followed by R1.34bn for the Optimum Mine Rehabilitation Trust on May 11.

In his affidavit, Gordhan notes that monies from the trust are not taxed, and if they are used for any purpose other than mine rehabilitation it amounts to both a loss in taxes to the fiscus and the placing of the burden for the mine’s rehabilitation on the taxpayer.

“It appears from a letter from attorneys acting for the business rescue practitioners of Optimum, with the written approval of the Department of Mineral Resources R1.3bn was intended to be transferred from the account closed by Standard Bank to the Bank of Baroda,” Gordhan notes.

Oakbay acquired the Optimum mine with the direct help of Zwane, who accompanied its executives to Switzerland on a visit to previous owners Glencore.

Overall, the FIC report reflected “the increasingly serious state of affairs which has arisen”, Gordhan says.

In another letter to Gordhan, Registrar of Banks Kuben Naidoo says he has been informed by the Financial Surveillance Department that Standard Bank had informed it about a transaction involving VR Laser Asia “which could form the basis of an exchange control-related investigation”.

VR Laser Asia is the firm at the centre of a dispute between Gordhan and state arms-maker Denel, which he says entered into a joint venture agreement with the firm without obtaining his permission as required by the Public Finance Management Act.

Oakbay has 15 days to respond to the application.

Political Bureau

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