Johannesburg - Even if the Gupta linked companies succeed in acquiring ‘interim relief’ from the courts forcing the Bank of Baroda to keep their accounts open they will still not be able to pay their employees.
So said Gilbert Marcus, legal counsel for the bank in his heads of argument delivered in the High Court in Pretoria on Friday.
The Bank of Baroda argued that they no longer wanted to do business with the firms, because of the reputational damage and risks the firms presented as they were regarded as “politically exposed”.
Around 20 Gupta-owned or linked companies approached the court for the interdict. These included tech distribution firm Annex Distribution Confident Concepts, Sahara Computers VR Laser Services, property owner Islandsite Investments, 188 Koornfontein Mines, Oakbay Investments, Optimum Coal Mine, Shiva Uranium, Tegeta Exploration, Westdawn Investments, Idwala Coal and Mabengela Investments all of which feature prominently in the leaked Gupta e-mails.
Marcus said even if the court ordered the Gupta-linked companies’ accounts be retained until December 2017, they would still not be enabled to pay their employees as they had never done so previously.
Moreover, he said, the bank was not in a position to do so considering it only had a staff complement of 16 members across its entire South African operation.
Marcus said: “The applicants are generating approximately 150 to 200 transactions per week, which have to be subjected to a high level of monitoring.”
“Even the bank’s CEO stressed that it is not and never had been set up to commit such resources,” he added.
The lawyer added that the volume of the various companies’ transactions had been increasing and were likely to bulk up even further following the State Bank of India’s and the Bank of India termination of their accounts in July.
In just a 10-month period between September 2016 and July 2017, the companies were said to have engaged in no less than 36 suspicious and unusual transactions with a combined value of over R4.25 billion.
This was allegedly in addition to the 72 initially picked up involving companies within the Oakbay group previously revealed by the then Minister of Finance, Pravin Gordhan.
“This short number of reportable transactions generated in such a short period indicates that the Bank is at risk that it may inadvertently fail to detect and report on such transactions exposing the bank and its employees to liability,” the legal representative said.
Marcus added the companies were afforded ample time to wind down their facilities with the bank from July 6th until September 30th. Legal representative Rafik Bhana, on behalf of 15 of the companies, maintained that the termination of the overdraft and calling in of loans without proper notice would cause irreparable harm.
Bhana said two international banks and four South African banks had already sent the companies away but he was unable to give Judge Hans Fabricius the reasons thereof. He insisted that keeping the accounts open would be highly profitable for the bank as they could charge any additional cost.
“After 30 September there is no bank left and 7000 employees stand to suffer. The opening of new accounts pending the outcome the ruling on December 7th won’t repair the damage that would have been done,” he said.
Bhana insisted suspicious transactions did not necessarily equate to unlawful transactions.
Judge Fabricius said after the court session, however, that he would only rule on the matter on September 21.