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Bank of Baroda rids itself of the Guptas

Feb 18 2018 07:58
Dewald Van Rensburg

The Bank of Baroda seems to have found a way to distance itself from the Gupta family, despite two separate court orders forcing it to keep Gupta-linked accounts open.

The SA Reserve Bank this week confirmed reports that the bank was closing up shop in the country.

The Reserve Bank promised that depositors would be protected as far as possible, but otherwise shed little light on how this withdrawal would work.

By law, the Bank of Baroda will have to transfer all deposits to another bank before it is allowed to close down. At the same time, no other bank in the country is willing to take on the Guptas’ business.

The Bank of Baroda reportedly aims to be out of the country by the end of next month, despite the court orders forcing it to maintain accounts.

One interim order stems from the Guptas’ companies’ application against the bank closing their accounts in July. The other stems from a case brought later by the Organisation for Undoing Tax Abuse (Outa) to freeze the two coal mine rehabilitation funds the Guptas were forced to deposit at the Bank of Baroda in 2016.

The organisation is consulting lawyers to find out what happens if the bank leaves the country, said chief operating officer Ben Theron.

As things stand, Outa was meant to meet the Guptas and the Bank of Baroda in court in May about getting new trustees appointed to the rehabilitation funds.

With several Gupta companies facing claims from the Asset Forfeiture Unit, the state might solve the Bank of Baroda’s problem by taking over the deposits it still has in the name of the country’s most infamous family.

Another interested party would be the Industrial Development Corporation (IDC), which is claiming almost R300 million from the Guptas’ Oakbay Resources and Energy in court.

The IDC told City Press it is not worried about the bank’s announcement as its exposure is secured by bonds over assets and properties.

For the Indian-headquartered Bank of Baroda, the South African operations are inconsequential, however, for the issue of state capture in South Africa, the bank is central.

In court papers, Oakbay CEO Ronica Ragavan previously confirmed that the bank had been the group’s “main bank” since at least 2012.

It was a Bank or Baroda account that received the money from the infamous Vrede dairy project that was allegedly stolen from the Free State department of agriculture between 2013 and 2016.

It channelled the billions used to buy the Optimum mine and now has the Optimum rehabilitation fund as the major chunk of the deposits on its books.

An analysis of the Bank of Baroda’s filings to the Reserve Bank shows how it, in effect, became the Guptas’ bank even before it was the “last one standing” that would do business with the family.

Credit facilities provided to Gupta companies evidently made up most of the Bank of Baroda’s local loan portfolio.

Using the deeds office to track the bank’s bonds on Gupta property and notarial bonds on the movable assets of their companies, City Press found credit facilities worth more than R1 billion between 2011 and 2015.

This appears to be most of the lending the bank did in the period. Its credit facilities to all customers totalled only R417 million in 2011 and rose fivefold to more than R2 billion by October 2016, when the company started pressuring the Gupta companies to settle and leave. The bank’s total loan book immediately started to fall at this time.

Deposits from the Guptas were obviously the majority of deposits kept at the bank, especially after the infamous family got shunned by the rest of the banking sector in 2016.

The travails of the Gupta family can almost be read in the Bank of Baroda’s local financial data.

Former Public Protector Thuli Madonsela’s State of Capture report identified the way the bank served as the conduit for the Guptas’ acquisition of the Optimum coal mine.

She called the bank’s conduct “highly suspicious” after it received almost R2.5 billion in deposits from a variety of Gupta-linked entities into the account it held for Tegeta, the Guptas’ mining company.

These deposits came between December 2015 and April 2016 – just as all the major banks in South Africa were closing Gupta accounts.

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bank of baroda  |  gupta family  |  banks  |  looting
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