Treasury’s response to a challenge to “put up or shut up” regarding the creation of a black-owned bank was as brusque as the challenge issued.
The second court case involving the now former finance minister, Pravin Gordhan, this week was an urgent application brought by Vardospan, the Gupta-linked company trying to buy out Habib Overseas Bank.
Vardospan director Hamza Farooqui filed papers trying to force Gordhan and the SA Reserve Bank to make a call on its application last year to take over the bank.
In a press statement, Farooqui challenged Gordhan to “put up or shut up” and accused him of blocking the creation of a 100% black-owned bank.
The replying affidavit by Treasury director-general Lungisa Fuzile hit back hard.
In Fuzile’s short affidavit, he lambasted Vardospan for trying to impose regulatory deadlines on Treasury and the central bank – and then orchestrating a nearly impossible court deadline to enforce the earlier deadline while Gordhan and Fuzile were not even in the country, having begun their ill-fated roadshow in the UK.
Vardospan’s deadline for approval, March 31, stems from its agreement with Habib’s current owner, Luxembourg-based Pitcairns Finance, to clinch the deal by the end of March.
It was not the government’s problem that Vardospan made a deal with an unrealistic timeline, argued Fuzile.
What’s more, added Fuzile, if the central bank was forced to make a decision this quickly, it would have to be to deny Vardospan’s application.
The court agreed with Fuzile and the case was dismissed for lack of urgency on Friday morning, leaving Vardospan to pursue is later.
It has been seven months since Vardospan’s initial application, but the Banks Act “contemplates a minimum period of four years” for a minority shareholder to raise its shareholding in a bank to above 74%, said Fuzile.
The two shareholders in Vardospan hoping to own Habib are Pearl Capital and Cinq.
Both are shelf companies, activated last year.
Pearl is controlled by serial entrepreneur Farooqui, while Cinq belongs to Salim Essa, widely seen as a Gupta proxy.
Vardospan has told the Registrar of Banks that it will pay R327 million for the bank, and then inject another R150 million in capital.
The Reserve Bank had asked Vardospan to prove it had this capital, but the only proof it got was that Cinq is backed by Essa’s shares in three companies – all of which have been identified in former Public Protector Thuli Madonsela’s State of Capture report as warranting further investigation.
These are Tegeta Exploration and Resources (accused of scoring a sweetheart coal deal with Eskom), Trillian Capital Partners (accused of extracting unearned cash from Transnet) and VR Laser Services (accused of dodgy dealings with Denel).
Despite the Reserve Bank having requested the financial statements of all three companies as well as Pearl Capital, these have apparently not been provided.
Vardospan served papers on Gordhan late on Monday for a hearing on Thursday.
Habib is a tiny bank with a balance sheet of about R1.3bn and a loan book consisting largely of short-term trade credit.