Johannesburg - Financial services provider Absa said in a responding affidavit filed in the North Gauteng High Court on Thursday it started its review into the bank accounts linked to the Gupta-owned companies in November 2014 already as part of its annual review into politically exposed people (PEPs).
Absa, wholly-owned by JSE-listed Barclays Group Africa [JSE:BGA], closed the bank accounts linked to Gupta-owned companies on February 16 this year.
The wealthy Gupta family has strong links with President Jacob Zuma and his son Duduzane.
Absa, however, pointed out that the definition of a PEP in terms of a guidance note issued by the Financial Intelligence Centre (FIC) is very broad and includes an individual who is or has in the past been "entrusted with prominent public functions as well as their families and closely associated persons".
Absa said in its 109-page affidavit in support of Finance Minister Pravin Gordhan's court application for a declaratory order that he cannot intervene in the banks’ dealings with their clients, Gupta-owned Oakbay requested a meeting with the bank, which the bank said it “politely declined”.
Absa states in the affidavit that “it did not consider that a meeting would be of assistance to either party".
Absa considers that it is essential that the court makes clear that no public functionary has the power or obligation to intervene in the relationship between banks and their clients, the bank said in its affidavit.
Absa's head of compliance Yasmin Masithela said in the responding affidavit “Absa is deeply concerned by the Oakbay companies’ efforts to persuade the minister to intervene”.
Absa said if Gordhan had given in to the requests to intervene, the consequences would have been significant:
* His conduct would have been unlawful;
* His intervention would have greatly undermined the confidence of the banking sector and raised the spectre of state intervention in private commercial relationships... at the instance of a select group of companies or persons;
* It would have set a dangerous precedent for the banking sector as a whole, would not have been in the public interest and would have created real risks for the confidentiality of the bank/client relationship; and
* Such intervention would have compromised Absa's contractual relationship as a correspondent bank with its international clearing bank.
Absa said it is compelled by law to implement specific controls to combat money laundering.
The bank said that guidance notes relating to the Financial Intelligence Centre Act sets out that the controls and mechanisms to identify high risk customers would include "politically exposed people" (PEPs).
According to Absa the reason for the required on-going enhanced due diligence requirement in relation to PEPs and their close associates is because of the higher money laundering risk that PEPs pose.
"The risks associated with PEPs are that by virtue of their position and the influence they hold, PEPs may be misused to conceal funds or assets which have been obtained illegally through the misappropriation of public funds or as a result of (their) power and influence."
Absa's court filing comes just over a week after Standard Bank Group requested the North Gauteng High Court to prevent Zuma and any of his ministers from intervening in its decision to close company accounts associated with Gupta-linked Oakbay.
Standard Bank claims suspicious transactions were among the reasons why it closed the accounts of Oakbay and its associated entities in June 2016.
Standard Bank filed its affidavit on Wednesday last week in response Gordhan's court bid, seeking a ruling that he doesn’t have the authority to interfere with whom banks choose as clients.
In March this year the big four SA banks FNB, part of the FirstRand Group, Absa, Standard Bank and Nedbank, notified Oakbay that they would no longer provide banking services to Oakbay or its subsidiaries, while listing sponsor Sasfin Capital and auditing firm KPMG also cut ties with the company.
FirstRand was the first bank to disclose that it severed ties with the Gupta family because of suspicions of "money laundering activities".
On November 2 former public protector Thuli Madonsela said in her state capture report that Cabinet’s attempt to intervene in the matter of local banks closing Gupta-owned company accounts may indicate a conflict of interest for Zuma, who has strong ties with the family.