Pretoria – North Gauteng High Court Judge Ronel Tolmay on Thursday said the urgent application against Registrar of Banks and deputy governor of the SA Revenue Bank (SARB) Kuben Naidoo and Finance Minister Pravin Gordhan may have been filed too late for the court to consider.
After hearing the urgent application on Thursday afternoon, she said she will rule on the matter at 10:00 on Friday.
Vardospan - headed by Hamza Farooqui and Salim Essa, close associates of the controversial Gupta family – filed the urgent application on Monday to review and set aside the alleged failure by Naidoo and Gordhan to determine its application and grant it permission to buy a majority stake in Habib Overseas Bank and be registered as the controlling company.
The agreement Vardospan made with Pitcairns Finance on 31 August 2016 to purchase a majority stake was based on a condition that they got regulatory approval by 31 January 2017, extended to 31 March 2017.
That means the deadline to make the deal is on Friday, when the judge will rule on the matter.
Tolmay said that considering the practicalities, such as the papers not being in order, that even if she hears the case she doesn’t know how she would be able to rule on it.
Tolmay asked Vardospan’s counsel why the urgent application wasn’t brought earlier, saying this issue could have been prevented. “I couldn’t see why there wasn’t (legal) compliance and why it wasn’t brought earlier,” she said.
“Wasn’t it quite obvious that you would not have found joy before 31 March. Should you not have brought the application earlier?
“They (Treasury and SARB) can’t make a decision in 24 hours,” she said. “Even if I find this matter is urgent, it will be impossible to deal with this urgent application.”
Vardospan’s advocate Arnold Subel said Thursday’s matter was simply to enroll the urgency of the matter and that he would argue the merits on Friday.
Subel said it might be sufficient for the court to get some clarity on when Gordhan and SARB would be able to make a decision, because then Vardospan could attempt to negotiate a further extension with Pitcairns.
Subel argued that Monday was an appropriate day to file the urgent application, as this is when Vardospan realised the matter wasn’t going to be finalised by its deadline.
Vardospan said the seven months they gave SARB to approve the deal has “proved to be inadequate”, Subel said. “We are none the wiser as to why this time was insufficient.”
Gordhan’s advocate Matthew Chaskalson said there is no evidence that the purchase agreement is on Friday.
In addition, he said an applicant can't create its own urgency by setting up a deadline the minister and authorities must then abide by. He added that Vardospan should have brought this application months ago.
Chaskalson added that the process of analysing a company with no track record of banking could not be done quickly.
Advocate Gilbert Marcus, representing SARB, said it appeared that Vardospan saw the reserve bank as an adversary, when it is in fact a regulator.
He said that SARB’s independence is as sacred as the independence of the judiciary. “It requires the absence of outside interference.”
He said this was a takeover of a bank and so the regulators needed to “exercise the utmost caution”, adding they need to guarantee the stability of the banking sector and avoid historic events, like the collapse of African Bank.
Marcus said they have jumped the gun with this application.
Marcus said Vardospan should understand the complexities of buying a bank, claiming the applicants knew they needed approval from the Competition Commission, the Finance Minister and the Registrar of Banks. They have Competition Commission approval.
He said the cut-off that Vardospan and Pitcairns agreed on had nothing to do with the regulators.
Marcus said it took three weeks for Vardospan to answer a request for information, so doesn’t understand where their urgency is.
WATCH: eNCA interview with Vardospan director Hamza Farooqui after court procedings
“We are very grateful that the court has given us an opportunity and we are hopeful that we will reach a resolution,” Farooqui told eNCA.
“Irrespective of the resolution, Salim (Essa) and I are both fully committed to create a banking opportunity in this country.
“A gap exists and even if we don’t make it here, we will continue to work towards a banking platform to empower the people in South Africa who really are underbanked and need an opportunity.”
Is urgency linked to Guptas?
Business Day political editor Natasha Marrian believes the Guptas are at the heart of the urgency, as they may not have a bank by Friday.
According to her sources, “more than half of the bank accounts of Gupta-related entities have been closed in recent weeks by their last remaining bankers, the Bank of Baroda, with the process continuing”.
Oakbay denied the allegations, while the Bank of Baroda referred queries to its parent company in India.
Judgment in the Guptas' bank case that Gordhan brought to the North Gauteng High Court was reserved on Wednesday following a two-day hearing this week.
Here, Gordhan was seeking relief from having to intervene on behalf of the Guptas to get their Oakbay and related companies' bank accounts reopened following their blacklisting by Nedbank, FNB, Standard Bank and Absa.