Cape Town – FirstRand was the first of South Africa’s four big banks to disclose that they severed ties with the controversial Gupta family because of suspicions of money laundering activities.
The Sunday Times reported that Johan Burger, FirstRand CEO, filed an affidavit to the High Court in which he said the bank was obliged to comply with best practices and standards as expected by the Reserve Bank, which require it to take steps to prevent involvement in money laundering and other lawful activities.
Although Burger did not mention specific transactions, he said FirstRand had terminated its business relations with the Guptas due to “associated reputational and business risk”, the Sunday Times quoted him as saying.
Burger’s affidavit followed after Finance Minister Pravin Gordhan in October had filed an application for the court to declare that the government does not have the authority to intervene in the decision by Standard Bank, FNB, Absa and Nedbank to cut business relations with the Guptas.
In Gordhan’s affidavit submitted he cited 72 suspicious transactions totalling R6.8bn made by the Gupta family and their business associates.
Since Gordhan’s application to the court, President Jacob Zuma has heavily criticised the banks’ action against the Guptas, accusing them of “collusion”.
In a parliamentary question and answer session in November, Zuma said Government cannot sit by and watch banks "close people’s accounts willy nilly”.
Zuma at the time said the fact that the banks “acted simultaneously” suggested something sinister was going on.
In March this year, FNB, Absa, Standard Bank and Nedbank notified Oakbay earlier this year 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.
Government hit back shortly thereafter when Minister in Presidency responsible for planning and monitoring said at a post-cabinet media briefing that an inter-ministerial task team would investigate what prompted to take this step.
In September, Zwane also sparked controversy when he claimed that Cabinet would launch a judicial commission of inquiry into the banks amid the closing of the Gupta’s bank accounts.
But the Presidency quickly denied Zwane’s claim and said it was not reflective of Cabinet’s position.
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.Read Fin24's top stories trending on Twitter: Fin24’s top stories