Swift sale of Gupta family empire in South Africa raises eyebrows
JOHANNESBURG - The crumbling Gupta empire parted with assets valued at more than R3billion to little-known business entities, raising fears that the family was offloading the assets to people it could control behind the scenes.
The rapid sale of assets come as the controversial family came under increasing pressure to find new bankers as the Bank of Baroda, which is the last lender to hold the family accounts, gave notice that it would be shutting down the accounts next week. The sale of Oakbay’s media and mining business raised further speculation that the company was selling the businesses to themselves.
On Monday, the family announced that it had sold its 24-hour news station ANN7 and The New Age (TNA) for a combined R450million to controversial ex-government spokesperson Mzwanele Manyi in a vendor finance option. The deal was followed a day later by the disposal of Tegeta for R2.97bn to a Switzerland-based businessman, with more assets expected to be sold off in the coming days and months.
Oakbay acting chief executive Ronica Ragavan described the sales as consistent with the group’s commitment to preserve jobs, provide certainty and to allow the Gupta family time to focus on clearing their name. The family indicated last year it would be disposing of all its South African assets in the wake of the damning state of capture report by former public protector Thuli Madonsela and major South African banks and auditing firms severing their ties with Oakbay.
“As a family, we now believe that the time is right for us to exit our shareholding of the South African businesses which we believe will benefit our existing employees,” the family said. “As such, we announce today our intention to sell all of our shareholdings in South Africa by the end of the year.
“We are already in discussions with several international prospective buyers.” The Guptas also lost support of international banks, with the Bank of China and the Bank of Baroda also cutting ties with the company. Oakbay was further dealt a blow early this year after Vardospan, a company controlled by the Guptas’ associate Salim Essa, failed in its court bid to force the SA Reserve Bank and the Treasury to make a decision on its application to buy Habib Bank in an R450m deal.
The central bank was adamant that Vardospan had not provided tax and financial information required by the regulator. The business community was, however, not letting up on requests for a judicial commission of inquiry into state capture allegations levelled against the Guptas to be established. Jabu Mabuza, the chairperson of the CEO initiative on Friday said the grouping had told Finance Minister Malusi Gigaba that President Jacob Zuma would do well to establish a state capture commission urgently.
The CEO initiative was undertaken in 2015 at the request of Zuma and his deputy, Cyril Ramaphosa, in light of the investor crisis the country was facing to try to stave off credit-ratings downgrades and transform the economy. The sales come weeks after the Treasury ordered a forensic investigation into the Tegeta report which was handed over to the standing committee on public accounts (Scopa).
The Treasury said the investigation would look at whether Tegeta or its associates offered any “gratification” to suspended Eskom chief financial officer Anoj Singh and suspended interim-chief executive Matshela Koko, or any other government official, to improperly influence decisions, and whether these amounted to an abuse of power and a violation of the Prevention and Combating of Corrupt Activities Act.
Other areas the inquiry would look into was whether Tegeta was involved in organised crime and whether the company received any confidential information from Singh, Koko or any other official.
- BUSINESS REPORT