Court delivers major blow to Gupta companies
JOHANNESBURG - The fate of the more than 15 Gupta owned companies is in the balance after the companies lost their interdict application to stop the Bank of Baroda from closing their accounts at the end of the month.
The North Gauteng High Court ruling served as a blow to the embattled Oakbay and its group of companies as the Bank of Baroda was the last bank to accommodate the company after all big South African bank’s and the Bank of China severed ties with the group over “reputational risks” issues. Judge Hans Fabricius said the Gupta companies had not pleaded a cause of action based on provisions of Section 34 of the Constitution and thereby dismissed their application.
Earlier this month, the Bank of Baroda had also argued that it wants to terminate the accounts of Oakbay over reputational risks.
In arguing for its case, the bank had told the court that the Gupta family and its group of companies are conducting between 150 to 200 transactions a week and the bank has reported more than 30 suspicious transactions valued at R4.2 billion the Financial Intelligence Centre (FIC).
The Gupta counsel had hit bank at the bank and argued that the Bank of Baroda had not made out its case that it has or would suffer reputational damage by keeping the Gupta companies accounts opened and that the bank had been aware of the political risks and the fact that they were dealing with what they term as politically exposed persons.
In an affidavit deposed with the High Court last year to seek a declaratory order that a minister of finance cannot intervene between banks and their clients, former minister of finance Pravin Gordhan had included 72 transactions worth R6.8bn that were flagged by the FIC because there had been "no apparent business or lawful purpose" for the transfers.
Oakbay Investment’s isolation by the financial services companies has seen the group disposing of its media assets. The group in August sold its New Age newspaper and 24-hour news channel ANN7 to former government spokesperson Mzwanele Manyi for R450m. This disposal was followed by Oakbay selling its Tegeta mining operations to a little-known Swiss national for R2.9 billion.
The Gupta’s last desperate attempt to stay in business failed as Judge Hans Fabricius found that our law did not recognise a cause of action for an “interim-interim” interdict.
He also said: “I am of the view that the application to be heard in December and the main application (to be heard next year) has very little prospect of success….The respondent (the bank) is very likely to suffer should it be forced, against its will, to continue with the relationship with the applicants.”
Judge Fabricius said the bank is subject to a number of statutory provisions which in the main seek to uphold the integrity of the financial system in the country. “It seeks to uphold such integrity with honest transparency.” The judge said on the other hand there is the well-founded suspicion that the applicants subverted the integrity of the financial system “to put it gently” .
Judge Fabricius delivered a 75 page judgment in which he dealt in detail with the allegation of irreparable harm to the applicants if he did not rule in their favour and the the substantial prejudice to the bank if he ruled against it (the bank).
Amongst the companies that were listed as applicants is Shiva Uranium, Sahara and Duduzane Zuma’s investment vehicle Mabengela Investments. Earlier this month, Zuma broke his silence on the matter and accused Gordhan of conspiring with the banks to close their accounts and driving the Gupta’s and himself out of business.
- BUSINESS REPORT