Gupta firms in desperate fight to keep Baroda accounts open

Johannesburg - The Pretoria high court will hear an urgent application on Friday against Indian-based bank Bank of Baroda to keep Gupta-owned companies' bank accounts open.

This is after the bank gave the companies until the end of September to remove their money from the bank.

Twenty Gupta-owned companies have brought an urgent application to interdict the bank from closing down the accounts.

It is desperate times for the companies, with many left unable to pay suppliers, employees and conduct business in general because they are unable to find a new bank. If the interdict is granted, it could buy the Gupta companies some time before a final court battle is fought in December. 

Closed-down accounts

South Africa's four big banks  - ABSA, Nedbank, Standard Bank and First National Bank - have all closed down the group’s accounts. The Bank of China also closed the accounts three weeks after one of the companies, VR Laser, opened an account with them.

Bank of Baroda then notified the companies in March that their accounts would be closed from the end of August, and the deadline was extended to the end of September. In August the companies brought a suit against Bank of Baroda, which will be heard in December. But they simply can't wait that long. 

Already court papers, which the Daily Maverick reported about on Friday, have revealed the desperate dealings of the Gupta companies, and how much money had flowed through the Bank of Baroda. Bloomberg reported that the bank's assets in South Africa nearly doubled as the Guptas moved their money into the bank.

Companies bringing the application include Annex Distribution, Confident Concepts, Sahara Computers, VR Laser Services, Islandsite Investments 188, Koornfontein Mines, Oakbay Investments, Optimum coal mine, Shiva Uranium, Tegeta Exploration, Westdawn Investments, Idwala Coal, and Mabengela Investments.

Ronica Ragavan, a director of the companies, argued in her affidavit that closing down the Baroda account would close down their ability to conduct business or pay suppliers.

Bank of Baroda and FIC

In its answering affidavit, Bank of Baroda’s acting CEO in South Africa, Manoj Kumar Jha, said it had reported 45 suspicious transactions, amounting to R4.2bn, to the Financial Intelligence Centre (FIC) between September 16 2016 and July 14 2017. His affadavit confirmed that the bank simply did not want to do business with the Guptas any more. 

It also emerged this week that the FIC had fined the Bank of Baroda R11m for its conduct when it helped the Guptas buy Optimum coal mine from Glencore in 2016, according to a report. The fine was levied after auditors Deloitte - appointed by the South African Reserve Bank - conducted an investigation into transactions related to the R2.15bn acquisition of the mine by Tegeta in 2016, according to an exclusive report on Moneyweb.

Jha said in court papers that the Guptas pose the greatest risk for the bank breaching its Fica and other legal requirements. “The Gupta family and the companies face very serious allegations of unlawful conduct including corruption and money laundering.”

'Logistical nightmare'

The bank  also said in court papers its small staff of 16 in South Africa does not have the capacity to handle all the accounts. City Press reported that one of the Gupta companies, VR Laser, is anxious about Friday's application. Pieter van der Merwe, the CEO of the business, said banking with Bank of Baroda is a logistical nightmare, and that it has no internet banking facilities. 

“A transaction that takes a minute at a normal bank takes us days.

“But Bank of Baroda is our last bank. A company can’t do business without a bank account. You need it for tax purposes and you need it if you want to tender for any contract," said "Without a bank account, you are not allowed on Treasury’s central database of suppliers.

“I don’t have a problem with steps being taken against any company where there are merits [for doing so]. I do have an issue with a blanket approach where thousands of innocent employees have to bite the bullet for political reasons," he said.

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