#StateCaptureReport: Bank of Baroda's conduct appears highly suspicious | Fin24
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#StateCaptureReport: Bank of Baroda's conduct appears highly suspicious

Nov 02 2016 19:46
Matthew le Cordeur

Cape Town – The Bank of Baroda’s processing of Gupta-owned Tegeta’s R2.15bn acquisition of Optimum Coal Mine from Glencore “appears highly suspicious”.

This is the finding of former public protector Thuli Madonsela’s state capture report released on Wednesday.

Madonsela questioned former Oakbay CEO Nazeem Howa, who she said “created the impression that Tegeta’s accounts were closed”.

“However, account holder information confirms that at the time of the Tegeta deal, Tegeta held accounts with Nedbank and First National Bank. The accounts were active and were used for transaction purposes.”

READ: Zuma may have 'conflict of interest' in Gupta bank saga

“In December 2015, the loan consortium requested Tegeta to provide proof of funding to consider its offer,” she said. “Despite, at the time, having an existing established banking relationship with two of the biggest banks in SA, Tegeta decided to use the Bank of Baroda as its partner to execute the payment required to purchase OCH (Optimum Coal Holdings).”

On 4 March 2016, the Bank of Beroda issued an untitled letter to FirstRand Bank setting out that Tegeta was its client and that it would affect payment, said Madonsela.

READ: Nene thought talk of his removal was ‘just a bluff’

“Financial analysis confirms that the Bank of Baroda did not grant a loan to the value of R2.15bn to Tegeta to purchase OCH,” she said. “Tegeta raised the funds to pay the loan consortium from various sources.

“All funds were deposited via at 32 electronic funds transfers (ETFs) between 9 December 2015 and 14 April 2016 into the Bank of Baroda,” she said. “The Bank of Baroda then effected payment on behalf of Tegeta on 14 April 2016 into the escrow account held by Werksmans.”

The deposits into the business account originated from the following individuals and entities. (Graph: State of Capture report)

READ: Madonsela nails Eskom over Gupta coal tender

“The conduct of the Bank of Baroda appears highly suspicious in light of the wording of their letter and their tacit agreement for Tegeta to receive more than R2.15bn into its account in at least 32 EFTs over four months without raising suspicion or concern on the part of the bank.

“Accordingly, it is safe to say that the frequency and amounts deposited should have attracted attention and an investigation by other financial institutions anti-money laundering departments due to money laundering risks based on the Financial Intelligence Centre’s (FIC) guidance note concerning the reporting of suspicious and unusual financial transactions."

The FIC and Reserve Bank had requested the bank to provide documents on deposits into accounts by the Guptas after fears they were illegally moving cash offshore, a report revealed in June.

A source told the Sunday Times in June: "What you see is money going into their bank, but we don't see money coming out. In one instance, one company, you see it deposit money into the Bank of Baroda but you don't see them withdrawing the money."

Whether that money was going offshore, or whether it was moved to Nedbank, as per the report, is not clear.

“In order to conduct the business of a bank, the Bank of Baroda utilises Nedbank’s banking platform and infrastructure to offer banking services to its clients," explained Madonsela. "The Bank of Baroda uses a portfolio of domestic treasury accounts, business accounts and investment accounts all held in the name of the Bank of Baroda to execute its operations.

“To give effect to its undertaking in the letter to make payments on behalf of Tegeta in the purchasing of OCH, the Bank of Baroda utilised at least 14 of its own accounts to structure the management of their service and effect final payment.

“Between 11 December 2015 and 14 April 2016, this (the Bank of Baroda’s main Nedbank account) account received 32 deposits amounting to R 2 478 639 309 for the benefit of Tegeta."

She said that on 14 April 2016, about R2bn was transferred from the business account to Werksmans to settle the Tegeta portion payable to the loan consortium. “This payment resulted in the loan consortium releasing all securities held to enable transfer of ownership to take place.”

The transactions including how the total Glencore/OCH payment was structured is illustrated in detail below. (Graph: State of Capture report)

Read Fin24's top stories trending on Twitter:

optimum  |  tegeta  |  oakbay  |  gupta family


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