Cape Town - Oakbay Investments acknowledges that the affiliation of President Jacob Zuma's son Duduzane with certain of the group's businesses, results in those businesses being considered as "close associates" of a "politically exposed person" and, therefore, subject to enhanced due diligence.
This is according to an affidavit by Ronica Ragavan, acting CEO of Gupta-owned Oakbay. The affidavit forms part of Oakbay's response in an application by Finance Minister Pravin Gordhan to prevent him from intervening with banks on their behalf.
Ragavan points out that it is recognised practice that bank customers associated with a so-called "politically exposed person", a family member of such a person or a close associate of such a person, standing alone, does not mean a bank should not be willing to do business with such a customers.
She said according to recognised practice, it is, however, important to understand that the majority of politically exposed persons do not abuse their position and will not represent any undue additional risk to financial institutions solely by virtue of that categorisation.
According to Ragavan, Duduzane Zuma's relationship with the group has developed from a young age. He started working for Sahara in 2005 - at the age of 24.
"The Oakbay Group has had a long and strong tradition of recruiting young aspiring individuals and training them as part of the group's commitment to the black empowerment initiatives in the country," states Ragavan.
She points out that at the time of the group appointing Duduzane, his father had been relieved of his duties as vice president.
She says Oakbay accepts that Duduzane Zuma is now a politically exposed person and that his continued shareholding in the Oakbay Group could result in those companies being a close affiliate of a family member of a politically exposed person.
She adds that the facts, however, demonstrate that Duduzane Zuma's shareholding in the Oakbay affiliated companies is quite proper and the result of many years of hard work, business skills and the benefit of black empowerment programmes promoting share ownership and other involvement.
"Moreover, the organisational structure and share ownership of the affiliated companies is not unusual for a large conglomerate and provides no basis for any suggestion that the entities were created to conceal improper transactions," states Ragavan.
"Many of the allegations raised by the minister hint at public corruption. In evaluating the corruption risk associated with the Oakbay affiliated businesses, the first consideration should be to evaluate which businesses do any government business and second, what businesses do any government business and the extent of that business."
It is Ragavan's submission that Oakbay demonstrates in its response to Gordhan's affidavit that the Oakbay related companies, while affiliated with a family member of a politically exposed person, in fact present low risk for anti-money laundering and use of the financial system to further corruption.Read Fin24's top stories trending on Twitter: Fin24’s top stories