Johannesburg - Bank of Baroda’s South African unit has
started closing accounts of companies controlled by the Gupta family, according
to three people familiar with the matter, potentially leaving the friends of
President Jacob Zuma without banking facilities in the country.
The Mumbai-based lender is winding down its relationship
with companies related to the Gupta family to ensure it is in compliance with
banking rules, the people said, asking not to be identified because the matter
is confidential. The Guptas, who are in business with Zuma’s son, have been
accused by opposition parties and some ruling party officials of using their
friendship with the president to influence cabinet appointments and government
contracts. They have denied the allegations.
Oakbay Investments, the Gupta’s main holding company,
said it isn’t aware that Baroda will close its accounts.
“Oakbay is not aware of any such information,” the
company said in an emailed response to questions. “I can only imagine that your
source has their own agenda, and wants to put pressure on Bank of Baroda.”
South Africa’s four biggest banks last year closed
accounts linked to the Gupta family, giving them more than a month’s notice and
citing the need to comply with international banking rules when dealing
with customers and concern over their reputations. The family, led by
brothers Atul, Ajay and Rajesh, asked Finance Minister Pravin Gordhan to stop
the banks terminating the accounts, spurring Gordhan to seek a court order
stating that he can’t prevent lenders from cutting clients.
‘Suspicious transactions’
Gordhan’s court application in October included a
document from South Africa’s Financial Intelligence Centre listing 72 reports
of suspicious transactions totalling R6.8 billion that implicated members of
the Gupta family and their companies. The family has asked the court to dismiss
Gordhan’s application, while their lawyer has said that none of the
transactions were dubious.
A Mumbai-based spokesman for the Bank of Baroda didn’t
immediately respond to an email and two calls to his office phone.
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“We’ve not received any notice in this regard and can
only investigate where this is coming from,” Gert van der Merwe, the Guptas’
lawyer, said by text message on Thursday about the Bank of Baroda closing
accounts linked to the family.
Bank of China's South African branch dropped the
Guptas as clients in September, according to court documents filed by the
family in January. The country’s anti-graft ombudsman in November called for a
judicial inquiry into the allegations against the Gupta family.
Political pressure
Salim Essa, a director of a company part owned by the
Gupta’s Oakbay Investments, and Hamza Farooqui have bid to buy all of Habib
Bank Ltd.’s South African assets. At the beginning of February South Africa’s
central bank recommended rejecting the bid for the Pakistan-based lender
because of concerns about the source of the two businessmen’s income and tax
declarations, government officials with knowledge of the matter said at the
time.
Political pressure on South Africa’s banks has since
intensified with Zuma saying on Feb. 10 the dominance of the country’s four
major banks must end. The racial makeup of the banks’ leaders has also made the
industry a target for politicians. Of the five biggest lenders, which together
control about 90 percent of the local banking market, only Standard Bank has a
black co-chief executive officer.