Reserve Bank investigating Gupta-associated VR Laser over forex control

The Reserve Bank was conducting an inquiry into an alleged contravention of foreign exchange control regulations by Gupta-associated company VR Laser, an official at the bank confirmed on Wednesday.

Andre Malherbe, a manager in the Reserve Bank’s financial surveillance department, said in reply to a question by DA finance spokesman David Maynier that the inquiry was not yet finalised. Correspondence had been taking place between the bank and VR Laser’s lawyers, Malherbe said, adding that when the investigation was finalised a decision would be taken on the merits of the case on how to take the matter further.

The question arose during an engagement among three parliamentary committees — finance; trade and industry; and mineral resources — with state departments and agencies on what was being done to curb illicit financial flows, base erosion and profit shifting.

VR Laser was one of the Gupta-owned and associated companies that had its bank accounts closed by major banks, including Standard Bank.

This came in the wake of 72 allegedly suspicious transactions worth R6.8bn being reported to the Financial Intelligence Centre. Gupta associate Salim Aziz Essa is a director of the company.

In a letter to Finance Minister Pravin Gordhan dated August, registrar of banks Kuben Naidoo said that Standard Bank had alerted the Reserve Bank’s financial surveillance department to possible foreign exchange contraventions by VR Laser, an Oakbay associated firm. Oakbay Investments is owned by the Guptas.

VR Laser, which supplies steel products to arms maker Denel, entered into a joint venture with Denel called Denel Asia. The Treasury has still not given its permission for the establishment of Denel Asia.

In January, VR Laser said in papers filed in the High Court in Pretoria that the Bank of China had closed its accounts three weeks after they were opened because of the perceived political risk related to the Guptas’ involvement in the company.