The embattled Gupta-owned Oakbay Investments tasted a small victory on Friday after the North Gauteng High Court asserted that former finance minister Pravin Gordhan’s application to seek a declaratory order that he could not intervene in the dispute between the company and banks was unnecessary
The company said in a statement that it had always believed that the application was a waste of time.
“We have faith in South Africa’s judiciary and are grateful for the independence it has exhibited today - acting on facts in front of them, not rumours and media speculation,” the statement said.
However, Judge Aubrey Ledwaba said Gordhan was legally correct in his assertion that it would have been improper for him to have intervened on behalf of the Guptas and their companies, whose bank accounts were blacklisted by the country’s top four banks last year.
“There is no statute that empowers a member of the national executive such as the minister to intervene in a private bank-client dispute,” the judgment said.
“It is not appropriate for a member of the national executive to draw the judiciary into the exercise of his executive functions as evidenced in this application. To grant the minister the declaratory relief would allow the judiciary to stray into the exercise of executive functions where the circumstances do not warrant this involvement.”
Last year saw a flood of banks, including the country’s big four, cutting ties with the Guptas and their companies, citing reputational risk as more and more corruption allegations were levelled against the family and its dealings with state-owned companies.
First National Bank said in its court papers that it had taken the decision because they believed the accounts might have been used to launder money.
The family then approached the government to intervene following the shutting down of their accouts.
In his affidavit, Gordhan cited the meeting he had with the Guptas and the correspondence they sent to him as proof that the politically connected family had put pressure on him to intervene.
Gordhan said the Guptas had pleaded for assistance, raising “concern around the livelihoods of our 7500 staff”.
The Guptas countered Gordhan’s claims and said his affidavit was “replete with allegations and commentary which is unfounded, irrelevant, vexatious and scandalous”.
Pierre de Vos, a constitutional law expert, said the judgment meant that a minister of finance or any of his executive colleagues were not allowed to interfere in such disputes.
“The court declined to rule on Gordhan’s application about Guptas interfering because what he asked it to do is already settled law,” De Vos said.
The small victory was the second for the family and its conglomerate of companies.
Early this year, High Court Judge President Dunstan Mlambo ruled in the family’s favour when its investment vehicle, Oakbay, asked the court to strike out a certificate issued by the Financial Intelligence Centre (FIC) referring to 72 transactions involving companies affiliated with them as part of Gordhan’s application. This meant that Gordhan was prohibited from using the information in the report to support his case.
However, the judgment did little to provide the family with reprieve as its banking woes continued unabated. Reports emerged this week that the family and its group of companies were in the process of suing the Bank of Baroda for closing their accounts.
Cas Coovadia, the managing director of the Banking Association of South Africa (BASA), said that the judgment confirmed the sanctity of client-bank relationships and confirmed there should be no interference in that, political or otherwise.
“We are also of the view we have a proactive and efficient bank regulator and a Financial Intelligence Centre Office that is diligent in overseeing efforts to combat financial crime. These bodies, together with appropriate legislation and regulations, are very capable in overseeing the conduct of banks in relation to their clients, without interference,” Coovadia said.
Minister of Finance Malusi Gigaba welcomed the ruling, saying he would not be opposing it.