Johannesburg - South
Africa’s central bank has recommended rejecting a bid to buy Habib
Overseas Bank’s local unit because of concerns about the source of the two
businessmen’s income and tax declarations, according to government officials
with knowledge of the matter.
The Reserve Bank
has written a letter to Finance Minister Pravin Gordhan recommending that the
merger between the Habib Overseas Bank unit and a South African company be
blocked, said the officials who spoke on condition of anonymity because the
decision hasn’t been made public yet. One of the businessmen is linked to
the Gupta family whom President Jacob Zuma describes as friends.
Salim Essa, a
director of VR Laser Services, which is partly owned by the Gupta family’s
Oakbay Investments, and Hamza Farooqui had bid to buy all of Habib Overseas
Bank’s South African assets. Habib Overseas, which is owned
by Luxembourg-based Pitcairns Finance, has about R1.1 billion in South
African assets, according to one of the people.
The deal would
have merged Habib’s South African arm and Vardospan, a joint venture between
Cinq Holdings and Pearl Capital, owned respectively by Essa and Farooqui.
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“We have
received no communication that our application has been rejected,” Farooqui
said Friday in an e-mail. “To be very clear, there is no information from our
side that is still pending or that has not been provided to SARB.”
‘Positive conclusion’
Essa expressed
confidence that the deal will be approved.
“Our agreement
with Habib Overseas Bank remains strong and in place. Vardospan continues to
engage with the regulator and our application remains under consideration,”
Essa said by e-mail on Thursday. “We are confident in our application and look
forward to a positive conclusion, allowing us to fulfil our vision of a 100
percent black-owned bank.”
South Africa’s
biggest lenders closed the accounts of Gupta-owned companies last year. The
Guptas have alleged that the lenders, including Standard Bank Group, Barclays
Africa Group, FirstRand and Nedbank Group, colluded when they decided to close
their accounts. The banks deny the accusation. Gordhan, in a court application,
identified allegedly “suspicious transactions” totalling R6.8 billion by the
companies.
“The application
is still under consideration,” the central bank said in an e-mailed response to
questions. “The South African Reserve Bank does not comment on the specifics of
the application or the application process,” it said in an e-mailed response to
questions.