The Bank of Baroda has indicated that it would close the accounts of the controversial Gupta family at the end of August, but the family is said to intend interdicting the bank from doing so.
Four major banks in SA closed the family’s accounts in 2016, with the Bank of China following suit mainly because it viewed the family as politically exposed.
In an affidavit filed in October 2016, former finance minister Pravin Gordhan disclosed that R7bn in "suspicious and unusual transactions" had gone through Gupta-linked accounts and were reported to the Financial Intelligence Centre.
Complicating the closure of the Gupta accounts by Baroda is the extent of the loans it has made to the family. The initial closure was meant to take place at the end of March. It has been closing its transactional accounts but the difficulty has been the large loan accounts.
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Business Day understands that Baroda has written to the family to indicate that it will close its accounts at the end of August. The Star reported on a meeting on Tuesday between staff and management of Gupta-owned media assets The New Age newspaper and ANN7 in which concerned employees said they were informed the accounts would be closed soon.
The staff was asked by management at the meeting to sign a petition appealing to the bank to rethink the decision. Management told staff to tell the bank they had nothing to do with the Gupta family’s antics and they "just want to feed their families".
Gupta lawyer Gert van der Merwe referred all questions to family spokesman Gary Naidoo, who could not be reached for comment and did not reply to SMSes.
The Reserve Bank has written to the Organisation Undoing Tax Abuse (Outa), indicating it would "deal with" the Baroda matter "accordingly". Outa wrote to it in June, detailing allegations of misconduct against Baroda and the State Bank of India regarding Gupta accounts.
In its response to Outa dated July 25, the Bank said its office of banks was vested with powers and responsibilities to be exercised according to the Constitution. Signed by registrar of banks Kuben Naidoo, the letter said the office tried to ensure it delivered administrative services "impartially, fairly, equitably and without bias" and to achieve this, it would consider "all information relevant to its function, duties and responsibilities".
However, it said, "insofar as your [Outa’s] letter served as a directive to the registrar and the office of banks on how the matter should be dealt with, compliance with such directive would not be in accordance with requirements of valid public administration".
Outa says in its letter that investigations revealed that the banks provided Gupta businesses with bonds that "far exceed" the value of properties in respect of which they were granted. The bonds were often registered years after the purchase date of the property.
It is understood the Gupta loans form a considerable chunk of Baroda’s loan book.
Ben Theron, Outa chief operations officer, on Wednesday said the problem with Baroda was that it had bonded properties worth about R200m "with a debt of a billion rand".
Theron said there were less than 40 banks in the country, but anyone who "touched the Guptas will have a huge bulls-eye on their back".
While Outa had sympathy for employees who were concerned about how they would be paid, the Gupta family and its bank "should have considered their situation before involving themselves in behaviour that appears to flout financial laws and possibly involves money laundering".
With Genevieve Quintal
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