Inquiry hears why Standard Bank cut ties with McKinsey, Regiments
The Zondo commission has heard how the Gupta's Oakbay Resources requested that trust money, set aside for mine rehabilitation, be transferred from Standard Bank to Oakbay's Bank of Baroda account.
Ian Sinton, from Standard Bank's legal department, told the commission on Tuesday that he received an email from Ronica Raghavan from Oakbay who asked that the funds in the trust account administered by the bank be moved into an Oakbay bank account.
At the time Gupta-linked Tegeta had purchased Optimum Holdings in late 2016, which included Optimum mine, from Glencore.
The trust account referred to by Sinton was administered by Standard Bank on behalf of Optimum. The trust account had R1.7 billion.
Sinton said he received an email requesting that the funds be transferred shortly after the Guptas took over Optimum.
He said Standard Bank was reluctant to transfer this money and told Raghavan that approval was needed from the board trustees of the trust and the minister of mineral resources.
He said after this the trustees were changed and the money was transferred.
Sinton also told the inquiry how Standard Bank decided to cut ties with multi-international consultancy company McKinsey after media reports emerged about the company's involvement in dealings at Eskom with Regiments Capital and Trillion Capital Partners.
He said McKinsey explained away the reports and said there was bad behaviour but not to the extent reported by the media.
He said the bank was not happy with the response from McKinsey so it decided not to continue with its relationship with McKinsey's management consultancy services.
Sinton then dealt with the risk Standard Bank was worried about regarding Regiments Capital, which is a consultancy firm with links to the Guptas.
Advocate Vincent Maleka, for the commission's legal team, introduced numerous bank statements which belonged to Regiments. The company had one transactional account with the bank.
The bank statements show numerous cash flows from Regiment's account into various other business accounts. It also shows large payments of over R50 million from state-owned enterprise Transnet. Money was flowing out quickly as it came in certain circumstances.
Gupta associate Mohamed Bobat was also paid through the account as well as Regiment directors who were paid R3 million each.
Sinton said observing all these transactions the bank, which is obliged by law to report suspicious bank activity, summoned Regiments Capital to explain the various account activity.
He said at first a representative from Regiments said the company needed time to gather the facts and documents.
Sinton said a meeting was later arranged. At the meeting with Sinton and representatives from Regiments, the company had various explanations about the transactions in its bank accounts.
With the payments from Transnet, Regiments said it had a stake in a contract McKinsey had with Transnet and that the company was entitled to a 30% share in the payment.
Regiments also explained that Salim Essa of Trillion Capital, a known Gupta associate, had a 30% share in the payments received by Regiments and a Kuben Moodley had a 5% share. Essa’s share later went up to 50%.
Sinton said Standard Bank was concerned about the explanation supplied by Regiments and the agreements of payments to various parties. The bank terminated services with Regiments.