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Gupta companies 'bit of a spider web'

Mar 04 2018 06:00
Dewald Van Rensburg

It will take time to figure out the interrelationships between the various companies in the Gupta family’s crumbling empire.

The business rescue practitioners appointed to run seven Gupta companies will have their first meetings with creditors this week.

Practitioners Louis Klopper and Kurt Knoop have taken control of the Gupta family’s Optimum Coal, Koornfontein, Brakfontein and Shiva Uranium mines. The two “property companies” within the family’s network, Islandsite Investments 180 and Confident Concepts, are also under their control.

It will take a while to untangle the “spider web” of intercompany transactions between the different Gupta companies, said Klopper.

“We have to unwind the spider web a little ... it will take more than 10 days. The law is clear: If we find anything untoward, we have to report it to the relevant authorities.”

In the meantime, a new report on how the Bank of Baroda seemingly knowingly contrived to help the Guptas and their associates carry out dodgy money transfers has been released.

The report by the Organised Crime and Corruption Reporting Project, a consortium of investigative centres, media and journalists operating in eastern Europe, and Indian newspaper The Hindu highlighted the complexity of the supposed intercompany loans that saw millions moving between different Gupta companies in apparent attempts to launder money.

The seven applications for business rescue were triggered by the Bank of Baroda’s decision to try to leave the country by the end of this month. A court order in October forced the bank to keep its accounts open to protect its almost 7 000 employees.

Klopper hopes the simple fact that he and Knoop are now in charge will convince South Africa’s commercial banks to renew ties with the companies.

“We want to make a case to say that the landscape has changed; that control has changed ... we are now in charge,” he said.

One of the major creditors the business rescuers will be meeting is the Industrial Development Corporation, which had been pursuing the Guptas for almost R300 million in the Johannesburg High Court – the first major step taken against the family by an agency of the South African state.

Eskom will also probably be a major interested party, said Klopper.

This week, Seriti, the new black-owned mining group taking over Anglo American’s Eskom-tied mines, said it might be interested in buying the Optimum colliery.

The seven companies under business rescue are a subset of the 19 Gupta companies that have been squaring off against the Bank of Baroda in court since last year to keep their accounts open.

The reliance on the Bank of Baroda for day-to-day transactions had, however, already been unsustainable, said Klopper.

The bank has a tiny presence in South Africa, and has a correspondence relationship with Nedbank and it uses the local bank’s infrastructure to deal with transactions, including ones for the Guptas.

This causes delays in everyday transactions, said Klopper.

“To rescue the businesses, they need a normal local bank. Baroda was a niche bank and was never going to be a long-term solution.”

Data from the SA Reserve Bank show how large deposits by the Gupta-owned mines made up most of Baroda’s otherwise tiny depositor base in South Africa during 2016 and last year.

Nedbank gave Bank of Baroda notice at the end of January that it intended to end its relationship within three months.

On Friday, Nedbank CEO Mike Brown said: “What you have got to understand is the series of relationships that play out here ... [Bank of Baroda’s local branch] includes a number of Gupta companies. That branch requires banking facilities and transactional facilities, and they use Nedbank for those. Bank of Baroda is a client of Nedbank and the Guptas are a client of the Bank of Baroda.

“For us, we looked at the reputational issues to Nedbank for continuing with that client relationship with Bank of Baroda and decided to terminate that relationship.”

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bank of baroda  |  gupta family  |  state capture
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