Johannesburg - For two years the Gupta family has been quietly working on a plan to bypass South Africa’s major banks by acquiring their own financial institution.
Their plan, which goes back as far as 2014, acquired more urgency earlier this year when Absa closed their company business accounts, soon to be followed by FNB, Nedbank and Standard Bank.
While the banks have never publicly disclosed their reasons for taking such drastic actions against Gupta vehicle Oakbay Investments and its associated companies, speculation is rife in political and financial circles that the banks were motivated by fears that the Gupta accounts exposed them to regulatory risk.
The move plunged Oakbay and its related companies into a financial management crisis they claim has placed the jobs of thousand of their employees at risk.
But an Independent Media investigation suggests that the Guptas may have known before the banks acted that they faced the risk of losing their banking services, and acted to circumvent the possibility.
It has emerged that the Guptas initially made an offer to acquire the bank in 2014, a year before they ran into trouble with the big banks, but the initial offer was declined.
The successful acquisition of the bank by Oakbay would allow the company to circumvent whatever obligations have been put on Oakbay by the big four banks, which led to the closure of its accounts.
The purchase would also see the Gupta family add the financial sector to the list of industries - which include mining, media and IT - to which their vast business interests stretch.
UBank, a small retail bank catering for miners and largely prominent in mining towns, is owned by the TEBA Trust Fund, which is jointly managed by the SA Chamber of Mines and the National Union of Mineworkers (NUM).
The move to sell the bank, which is under pressure to raise about R152 million to keep its banking licence and nearly R800m for recapitalisation, has created further tensions within the already divided NUM.
NUM general secretary David Sipunzi confirmed to Independent Media he had been approached by Oakbay chief executive Nazeem Howa about Oakbay’s interest in buying the bank.
However, the proposal seemed to enjoy only lukewarm support within the NUM, with a faction of the union preferring the required capital to save the bank be raised elsewhere, instead of the outright sale of the asset.
“Our stance is that UBank is not for sale. We will make all necessary means to finance the recapitalisation and selling would be the most last resort,” said Sipunzi.
Several union leaders, who spoke on conditions of anonymity, have claimed that the sponsoring of the NUM’s annual central committee meeting to the tune of R1m raised suspicions.
“Although we have not heard anything about Oakbay’s intentions to purchase UBank, we are not surprised. When the donation came, we knew something was brewing,” said one unionist.
In a strongly-worded statement after its NEC meeting in February, the union appeared to be suspicious about moves to sell the bank, whose main beneficiaries are mineworkers and their families.
The bank is believed to have in its possession deposits belonging to mineworkers in the region of R5 billion.
The transaction would have to be approved by Finance Minister Pravin Gordhan if the company aims to get more than 25 percent of the bank.
Treasury spokeswoman Phumza Macanda cited Section 54 (1) of the Banks Act which states that “the minister must consent, in writing and conveyed through the Registrar, to an arrangement for the transfer of more than 25 percent of the assets, liabilities or assets and liabilities of a bank to another person”.
It is, however, unclear if Oakbay would meet the Reserve Bank’s requirements for it to own a bank if it has already been rejected by the banks.
The Reserve Bank this week refused to divulge details of any specific transactions, but said the Registrar of Banks had a right to conduct a fit and proper persons test on an entity seeking to acquire a bank.
“The criteria for such a test includes, but is not limited to, fiduciary oversight capacity as well as the background of the acquiring entity in terms of governance, integrity and soundness.
“The Registrar’s office is also permitted to conduct fit and proper persons tests on key executives and certain non-executive directors of the bank,” said spokesman Jabulani Sikhakhane.
Top members of the Gupta family, including Ajay and Atul Gupta and President Jacob Zuma’s son Duduzane Zuma, recently resigned as directors of Oakbay after the banks’ decisions to cut ties following gross allegations of how they were wielding undue influence over Zuma, some members of his cabinet, and executive and board members of some state-owned enterprises.
Howa refused to answer questions directly when contacted by Independent Media, and asked for questions to be emailed to Oakbay’s public relations company.
These had not be answered at the time of publication.
THE STAR