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The Gupta-owned companies blame job losses on the banks closure of their accounts. But as is a ‘custom’ in South Africa, especially government, accountability is kicked down the road like a can. And it’s this close link with government that comes to the fore, the more one digs. Pity ANC general secretary Gwede Mantashe doesn’t agree.
And with cabinet sticking their noses in the banks business again it just highlights the very influence the family, that snuck off in the middle of the night, has in government has in government. But let’s not speculate as financial journalist Allan Greenblo explores the legalities behind the banks’ decision as well as Cabinet’s response.
And the fine print shows that the banks were well in their rights to stop business, based merely on suspicion, written in the statutes created by the very cabinet that tried to influence the banks otherwise.
In fact Greenblo digs a little deeper and shows that Cabinet actually contravened its own statutes by trying to influence the banks. Just goes to show what money can buy in government. And like a fine Mont Blanc, Greenblo pens the below response. Well worth a read. – Stuart Lowman
By Allan Greenblo*
It sounds rather rich for the Guptas, stretching the limits of even their own considerable chutspah, to accuse SA banks of having caused job losses in Gupta-owned companies by closure of their accounts. It assumes that the Guptas have no bank accounts abroad from which operations can proceed and staff can be paid. How money might have landed in those foreign accounts, if it has, is a topic for another day.
Richer still are the Gupta allegations against the banks, without apparent evidence, of political motivation and anti-competitive collusion. Yet richer is the Guptas’ attempts at persuading the cabinet of Jacob Zuma to take the allegations seriously. Were cabinet ministers to pressurise the banks, for the Gupta accounts to be reopened, they’d effectively be pressuring the banks to contravene statutes endorsed by this same cabinet:
• The Prevention of Organised Crime Act (POCA) makes it a crime for any person to receive property that he or she suspects is the proceeds of a crime. “Any person” obviously includes banks;
• The Prevention & Combating of Corrupt Activities Act (PRECCA) makes it a crime for any person to process any payments that he or she ought to suspect are part of a corrupt activity.
Note that these Acts place the responsibility on the person not to prove, not to be convinced, but simply to suspect. Compliance clearly requires that banks avoid contraventions by declining services to people or companies who are assessed – by means of the “know your customer” provisions of the Financial Intelligence Act – possibly to benefit from crimes generally and corruption particularly.
Under POCA, repeated wrongdoing could amount to racketeering. That it can attract a fine of R100m and life imprisonment illustrates its gravity. Now consider this chain of circumstances:
• Official findings of an inter-ministerial inquiry into the Guptas’ use of the Waterkloof Air Base concluded that the Guptas had induced various public officials into unlawful acts that warranted criminal prosecutions. This could suggest prima facie evidence of a crime under PRECCA, and payments by the Guptas to those officials being the proceeds of crime under POCA;
• It’s been reported by City Press that Zuma’s fourth wife is trustee of the Sinqumo Trust, established for the benefit of her son with Zuma.
Further, Bank of Baroda granted the trust a R3,8m mortgage (repayable at R8 000 per month) to buy a house in Pretoria; Ronica Govender (a director of several Gupta companies) was a witness to the fourth wife’s signature for power of attorney to register the mortgage bond (confirmed by a copy in the Deeds Office); JIC Mining, a Gupta company, resolved in a board meeting to guarantee repayment of the mortgage (a requirement of Bank of Baroda which was sending monthly bond statements to Govender at JIC Mining).
This could suggest prima facie evidence of crimes under both POCA and PRECCA;
•The written statement of deputy finance minister Mcebisi Jonas, published on the National Treasury website, is to the effect that the Guptas had offered him the job of finance minister. This could amount prima facie to a statement by the ministry responsible for oversight of the banks that the Guptas have committed a crime under PRECCA;
•There are also the widely-reported statements in the public domain of former government spokesperson Themba Maseko, former cabinet minister Barbara Hogan and former ANC MP Vytjie Mentor of improper offers to each of them individually by the Guptas. These too could suggest prima facie evidence of crimes under POCA.
If all this hasn’t provided the banks with reasonable suspicion, for them to comply with POCA and PRECCA, nothing will. No responsible SA bank could continue dealing with the Guptas, directly or indirectly, under such circumstances. There’s more.
First, it might be argued that the Gupta request to the ANC and then the cabinet – that they coerce the banks into providing services for Gupta companies – is itself a contravention by the Guptas of PRECCA.
Second, the Competition Act makes it a crime for competitors to collude. Thus, in response to the banks’ closing of Gupta accounts, the Guptas publicly accused the banks of criminal collusion. They offered neither justification nor evidence.
There must be consequences, even for the Guptas.
• Allan Greenblo is editorial director of Today’s Trustee (totrust.co.za), a quarterly magazine mainly for principal officers and trustees of retirement funds.
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