Another bank closes Gupta accounts

Ajay and Atul Gupta File photo

Ajay and Atul Gupta File photo

Published Mar 3, 2017

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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.

Read also:  SARB opposes Gupta associate's bank bid

“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.

BLOOMBERG

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