Johannesburg – The statement by Finance Minister Pravin Gordhan to “clip the wings” of the Gupta family is what led to Oakbay Group’s demise, according to an affidavit.
The affidavit was filed by Oakbay Group’s acting CEO, Ronica Ravagan, at the North Gauteng High Court on Friday.
The affidavit highlighted that the statement by Gordhan led to the decision by various businesses and banks to cut ties with the group.
Gordhan it said made this statement on 29 February 2016 at Nedbank’s office in Sandton, where he met with 60 “captains of industry”.
The court papers say that the Oakbay Group was not invited to the meeting and Gupta family members were not present either, implying that the Gupta family was deliberately excluded from the meeting.
At the meeting Gordhan listed different threats to the South African economy, one of these being a “family in South Africa who is involved in politics in business”.
Sources, who do not want to be named, told her that it was clear the minister was referring to the Gupta family. “I was told that the minister made sure that everybody present knew exactly what he meant and to whom he referred,” the affidavit quoted Ravagan.
“The minister’s statement resulted in a sudden refusal of many South African companies to conduct business with any entity who is linked to the Gupta family."
Among the list of 24 companies which withdrew include consultant firms EY, Deloitte, PwC and Grant Thornton, as well as firms LG Electronics and Barloworld Equipment.
The only company which disassociated with Oakbay prior to Gordhan’s statement was Absa. The bank closed all accounts held with them in December 2015, on the grounds of reputational risk.
Subsequently auditors KPMG terminated their relationship with the group in March 2016, over reputational risk. “KPMG had given Oakbay Group clean audits for 16 years prior to this with no concerns or exceptions,” stated the affidavit.
The group believes KPMG withdrew out of fear of falling out of favour with other clients.
In April 2016 banks FNB, Nedbank and Standard Bank closed the group’s accounts.
The timing of Standard Bank’s closure is being questioned. These accounts were activated on 10 February 2016. “I am advised Standard Bank would have performed due diligence on the Oakbay Group before activating the accounts,” stated Ravagan.
The fact that Standard Bank opened the accounts in the first place implies that no red flags were raised during the due diligence process, according to the affidavit.
The termination of Tegeta Explorations’ accounts by FNB, Standard Bank and Nedbank within five days of each other, was also listed as examples of withdrawals from the business.
“It is inconceivable that three different commercial banks could, independently from each other, within such a short space of time, come to the same conclusion to terminate their respective banking relationships with Oakbay Group within a period of five days,” stated Ravagan.
The affidavit indicated that Gordhan's “interference in private business affairs” of Oakbay Group was supported by other government entities such as Sars and the South African Reserve Bank (Sarb). It calls for this interference to be investigated.Read Fin24's top stories trending on Twitter: Fin24’s top stories