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D-day for Gupta/Gordhan banks case: 10 things you should know

Mar 28 2017 06:13
Matthew le Cordeur, Fin24

Cape Town – Finance Minister Pravin Gordhan’s legal team will on Tuesday face off with 14 Gupta-owned companies over the blacklisting of their bank accounts by South Africa’s top four banks.

These are the 10 things that you should know as the court hearing begins…

1. Where it all began

Let’s rewind. Before there was Gordhan there was Nene. Nhlanhla Nene. He was fired as Finance Minister on 9 December 2015 and replaced by Des van Rooyen, an unknown MP who was accused of being a Gupta appointment. It was at this stage that the name “Gupta” and phrase “state capture” became household words in South Africa.

2. What Gordhan’s return meant

Gordhan, who was “demoted” from his role as Finance Minister in 2014 to Local Government Minister, was brought back after the markets plunged and the rand weakened substantially. Ever since then, he has allegedly clashed with President Jacob Zuma, a close friend of the wealthy Gupta brothers, over the reform of state-owned entities, as well as his stance on the Guptas’ bank closure matter.

3. Gordhan did not blacklist the Guptas’ bank accounts

Gordhan has no jurisdiction of South Africa’s top four banks. Standard Bank, Nedbank, First National Bank and Absa blacklisted the bank accounts of the 14 companies between 2015 and 2016. Gordhan brought the application to the North Gauteng High Court on 14 October 2016 seeking a declaratory order to show he is legally not allowed to interfere with the decision by the banks. This followed months of letters and phone calls by executives of the Gupta companies to Gordhan asking for such action.

4. Banks forced to provide reasons for blacklisting Guptas

As Gordhan listed the banks as respondents in the case, they were forced to list their reasons for closing the bank accounts of Oakbay and its subsidiaries. When they filed their papers on separate occasions in 2016, they listed concerns about the Guptas, ranging from risks of money-laundering and suspicious transactions to the family being politically exposed persons. As part of strict financial regulations, the banks are legally required to close bank accounts, but only as a last resort.

5. Gupta response turns argument on its head

When Oakbay responded to Gordhan’s application three months later, it conceded that Gordhan could not intervene on their behalf. However, it refused to grant the relief and accused Gordhan of orchestrating the closure of their bank accounts. It claimed Gordhan told business leaders in late February to “clip the wings” of the Gupta family. “The minister’s statement resulted in a sudden refusal of many South African companies to conduct business with any entity who is linked to the Gupta family," said Oakbay acting CEO Ronica Ravagan.

6. Gordhan accuses Guptas of launching organised campaign against Treasury

Gordhan responded in court papers in late January 2017 that the Guptas had used the court application to launch an organised campaign against National Treasury and himself. "Had Oakbay honestly considered that I have orchestrated a concerted campaign against it, Oakbay would of course not have approached me for assistance,” he said.

7. No formal investigation after Guptas accused of state capture and corruption

Deputy minister of Finance Mcebisi Jonas and former ANC MP Vytjie Mentor have both accused the Guptas of offering them Cabinet posts (the idea being they could get tenders) through their close proximity to President Jacob Zuma. In addition, the Public Protector’s State of Capture report said Zuma needed to launch an inquiry into the Guptas’ purchase of Optimum Coal Mine. However, the Hawks and the National Prosecuting Authority have not announced any formal investigations into the matter, while Zuma has asked a court to set aside the public protector’s recommendation.

8. Media campaign to change state capture narrative

Bell Pottinger, the UK public relations firm contracted to Oakbay and the Guptas, has an important role to play in the war between Treasury and the Guptas. The Sunday Times reported in March that the firm played a major role in portraying the Gupta family as victims of a conspiracy that involves “white monopoly capital”. Bell Pottinger director Victoria Geoghegan’s response to the paper was: “Our role is to correct misrepresentations of Oakbay and communicate the company's belief that its competitive, disruptive, job-creating philosophy is what South Africa needs to achieve a genuine transformation”.

9. Zuma joins court battle, but to take on Standard Bank

President Jacob Zuma made two bold moves on Monday. Firstly, he called Gordhan back from his London trip on Monday resulting in a 3% decline in the rand’s value against the dollar. Then he joined the court case as an interested party, after Standard Bank’s responding affidavit sought protection from interference from the president or his ministers. Zuma, represented by the state attorney, wants the bank’s motion struck off the roll, as he believes the matter does not involve him.

10. Sahara questions Gordhan’s use of state attorney

While Sahara Computers is owned by Oakbay, it is being represented by a separate lawyer to the main investment body. On Monday it sought court intervention to ask the state attorney on whose authority it is representing Gordhan, following a few rounds of arguments over the matter. It apparently doesn’t understand why taxpayers must fund Gordhan. However, Gordhan’s application was in his role as Finance Minister and not in his personal capacity. Sahara also wants Gordhan to pay personally for the costs of the court case.

What to expect from Day 1 of the hearings:

The matters brought forward on Monday by Zuma and Sahara will likely delay court proceedings into the heart of the matter. Then to the main court battle, where Gordhan is seeking legal finality on the banks matter and the Guptas are seeking the dismissal of the application with costs.

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