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OUTA claims Indian banks gave Guptas inflated bonds on properties

Jul 13 2017 13:28

Cape Town - The Organisation Undoing Tax Abuse (OUTA) is taking action against the Bank of Baroda and the State Bank of India, for what it claims to be a failure to comply with banking laws.

“We have compiled evidence to take action against these banks and handed it to the Registrar of Banks and the Financial Intelligence Centre (FIC),” said OUTA chief operations officer Ben Theron.

“We want these authorities to act to ensure that the Bank of Baroda and the Bank of India cease all business with the Guptas, and revoke their licences to trade within SA.”

OUTA points out that in August 2016, the FIC listed 72 suspicious transactions regarding Gupta-linked bank accounts, which took place from December 2012 to June 2016. It involved a total of R6.839bn. Various banks subsequently closed Gupta-linked bank accounts.

OUTA claims its investigation has found "suspicious financial transactions" predating that list - from 2002 - and stretching over years.

READ: Bank of Baroda SA ‘closing’ Gupta accounts

“We found that the businesses linked to the Guptas bought properties over more than a decade for a total of R245m - more than R50m was paid in cash - but managed to get bonds on these properties totalling nearly R1bn - an amount that far exceeds the value of these properties," OUTA said in a statement on Thursday.

"The Bank of Baroda provided bonds valued at R811m and the Bank of India provided bonds of R176m. The remaining R11m came from FirstRand."

For Theron, the transactions linked to the Bank of Baroda and the Bank of India are "particularly problematic".

He said some properties appear to have had "massively inflated values".

For example, the Guptas’ company Islandsite 180 bought two Cape Town flats in 2006 for R2.8m each and two years later the Bank of India provided bonds of R24m on each flat. This is 8.5 times the purchase price.

In another instance, the Guptas’ company Confident Concept bought a farm in Mpumalanga for R40m, but a year later this was bonded by the Bank of Baroda for R426m - more than 10 times the purchase price.

These bonds are apparently still active, according to Outa.

OUTA has, therefore, asked the financial authorities to investigate these deals.

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bank of baroda  |  outa  |  gupta family  |  banking  |  sa economy

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