Johannesburg - Sponsors Absa and Sasfin have severed ties with Gupta-owned firm Oakbay Resources and Energy, due to a scandal over their relationship with President Jacob Zuma.
This comes after an email to KPMG staff, leaked to Fin24 on Friday and seen by Reuters, Chief Executive Trevor Hoole said he had decided to stop auditing Oakbay Resources and Energy, a Gupta mining firm, after consulting regulators, clients and KPMG's internal risk departments.
Oakbay, which owns mining assets, including Shiva Uranium and Eskom supplier Brakfontein coal mine, is valued at just more than R10bn.
"I can assure you that this decision was not taken lightly but in our view the association risk is too great for us to continue," Hoole said in the email.
"There will clearly be financial and potentially other consequences to this, but we view them as justifiable."
Oakbay confirmed the end of the 15-year relationship and said it understood it had been a "very reluctant decision" for KPMG. A KPMG spokesperson declined to comment.
Sasfin spokesperson Cathryn Pearman said the bank had resigned as Oakbay advisers effective from June 1.
The three Gupta brothers moved to South Africa from India at the end of apartheid in the early 1990s and went on to build a business empire that stretches from technology to media and mining.
They have also forged a close personal relationship with Zuma, whose son, Duduzane, sits on the board of at least six Gupta-owned companies, according to company registration papers.
Zuma has denied numerous allegations of the relationship allowing the Guptas to wield undue influence.
However, parts of corporate South Africa are turning their backs, especially since Deputy Finance Minister Mcebisi Jonas alleged last month the Guptas had offered him the top job at the Treasury before Zuma fired Jonas' boss, Nhlanhla Nene, in December.
Pearman declined to give reasons for Sasfin's decision to resign, but confirmed it had been taken two days after a newspaper report suggested the Guptas may have had a hand in Zuma's abrupt sacking of Nene.
PSG Capital, the investment banking arm of Stellenbosch-based PSG Group, was listed as an adviser to Oakbay in its purchase of struggling miner Optimum Coal from Glencore in December.
However, a source close to the bank said there was no long-term relationship, describing the deal as a "once-off thing".
On Sunday, Fin24 sister website, City Press reported that Oakbay also appears to have lost Absa as its banker.
At the time of Oakbay’s listing on the JSE in November 2014, Absa was Oakbay’s banker.
However, an Absa spokesperson this week said: “Absa Bank can confirm that we have no relationship with Oakbay Resources.”
The spokesperson declined to say when or why Oakbay and Absa had parted ways.
“We do not comment on confidential customer information,” said the spokesperson.
Oakbay Resources & Energy is 80% owned by the Gupta family’s private company, Oakbay Investments. The Industrial Development Corporation owns 3.57% of Oakbay Resources & Energy after controversially agreeing to convert a R256m loan into equity.