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Bank of Baroda ordered to keep Gupta accounts open for now

Oct 09 2017 11:12
Fin24

Johannesburg – The high court ordered the Bank of Baroda on Monday to keep the accounts of Gupta-linked companies open, pending a final application which must be launched in 15 days.

Pretoria high court judge Tati Makgoka granted the requested interdict against the bank, prohibiting the bank from deactivating or closing the banking accounts of the Gupta businesses, or from terminating the banker-customer relationship.

The matter pertains to an application the companies made against the Indian-based bank. Baroda wants to join four major banks in South Africa - ABSA, Standard Bank, Nedbank and FNB - in closing Gupta-linked accounts. The Bank of China previously also closed Gupta-linked accounts.

Bank of Baroda notified the companies in March that their accounts would be closed from the end of August, and later the deadline was extended to the end of September. After losing an interim-interim order application in September, the companies brought a new last minute application in front of Makgoka. 

The businesses' main application was only scheduled to be heard in December. In the meantime the accounts, including loans, will stay open and the businesses should not be treated with prejudice by Baroda, the judge ruled.

But the businesses had to submit a fresh application.

"The interim order shall lapse if the applicants [Gupta-companies] fail to launch the application in the timeframe stipulated," Makgoka ruled.

Lifeline

After giving the companies until the end of September to remove their money from the bank accounts, the businesses were given a lifeline when Makgoka reserved judgment after hearing arguments that if the matter was heard after the accounts had been shut down, the court would not be in a position to grant an effective remedy.

The judgment will buy the businesses some time before the main application to keep their accounts open is heard, possibly in December.

The companies who lodged the application include Annex Distribution, Confident Concepts, Sahara Computers, VR Laser Services, Islandsite Investments 188, Koornfontein Mines, Oakbay Investments, Optimum coal mine, Shiva Uranium, Tegeta Exploration, Westdawn Investments, Idwala Coal, and Mabengela Investments.

Suspicious transactions

The bank reported 45 suspicious transactions amounting to R4.2bn to the Financial Intelligence Centre between September 16 2016 and July 14 2017, its acting CEO in South Africa Manoj Kumar Jha revealed in an answering affidavit.

His affidavit confirmed that the bank simply did not want to do business with the Guptas any more.

Gupta-owned Oakbay Investments has also resorted to selling its businesses. This includes Tegeta Exploration and Resources, which was sold to Swiss-based Charles King SA for R2.97bn.

In addition, Oakbay sold its media assets, broadcaster ANN7 and The New Age newspaper to a firm, Lodidox, owned by Mzwanele Manyi. Lodidox bought ANN7 (Infinity Media) for R300m and The New Age (TNA Media) for R150m.

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bank of baroda  |  gupta family  |  banking
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