Justice Raymond Zondo heads the commission of Inquiry into State Capture. Picture: Karen Sandison/African News Agency (ANA)
Justice Raymond Zondo heads the commission of Inquiry into State Capture. Picture: Karen Sandison/African News Agency (ANA)

Red flags about Guptas led to termination of accounts, #StateCaptureInquiry hears

By Getrude Makhafola Time of article published Sep 17, 2018

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Johannesburg - Allegations of bribery attempts and negative conduct by the controversial Gupta family drove Standard Bank to launch an internal probe and subsequently shut down Gupta-linked business accounts as they posed a risk, the state capture commission of inquiry heard on Monday.

Standard Bank's chief compliance officer, Ian Sinton, an attorney, testified before the state capture commission of inquiry on Monday. 

He said the bank embarked on its internal investigation on Gupta holding company Oakbay Investments' accounts amid allegations of attempted bribery by the Guptas and their improper conduct reported by former deputy minister Mcebisi Jonas, ex-MP Vytjie Mentor, and fired government spokesman Themba Maseko. 

The botched Estina diary project in the Free State and the then minerals minister Mosebenzi Zwane accompanying the Guptas to Switzerland on a Gupta private jet to negotiate the purchase of the Optimum Colliery coal mine from Glencore in 2016 raised red flags, indicating there was something wrong with the Guptas' business dealings, said Sinton.

''We were at risk as a bank in our continued dealing with these [Gupta] entities, as we would have been drawn into possible money laundering acts. A decision was taken based on those factors to terminate the banking relationships,'' Sinton said.

He added that a written request by Gupta holding company Oakbay Investments to Standard Bank to transfer R1,4 billion held in a trust by the bank for the rehabilitation of Optimum added to ''sufficient red flags'' that made the bank cut ties with Oakbay.

Sinton explained that the banking industry was regulated by rules, including the Financial Intelligence Centre Act, that needed to be strictly adhered to. He said there were no prior discussions with other banks before the accounts were terminated. Absa shut down the accounts first in December 2015, and the rest followed suit, as the banks were at risk, said Sinton.

''Failure to report a suspicious transaction is, in itself, an offence...also, disclosing such reporting of a suspicious transaction is also an offence, according to the Financial Intelligence Centre Act,'' he said.

Sinton explained that customers' accounts are monitored and any compelling suspicious activities which may point to improper conduct are investigated with the help of outside experts. If such conduct is backed by the investigation, the account is terminated, he said. 

''The client is given an opportunity to state their story in some cases, but if the client is found to have been convicted of a crime, the account is shut down.''

Commission chairman Deputy Chief Justice Raymond Zondo raised questions about the unfairness in solely taking a decision against a client without affording them an opportunity to explain.

"I would say it's difficult to balance the obligation to comply with a strict prohibition to engage with the client,'' he said.

Sinton's submission at the inquiry formed part of an affidavit supporting the then finance minister Pravin Gordhan's application at the high court last year, where he sought a declaratory order confirming the independence of the country's banks.

African News Agency/ANA

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