Billions in shady Gupta deals laid bare
Billions of rands in dodgy bank transactions by the Gupta family business empire have come to light in a dramatic court application by Finance Minister Pravin Gordhan, showing for the first time why the banks shut the accounts.
The banks' actions earlier this year - when they did not go public with their reasons because of confidentiality - sparked a furious row between Gordhan and the influential family, which has close ties to President Jacob Zuma and his sons.
The transactions lie at the heart of the titanic battle being waged for control of the National Treasury.
Gordhan's move - away from the glare of publicity surrounding fraud charges brought against him by the National Prosecuting Authority this week - is seen as a masterstroke by the minister.
A declaratory order such as he seeks would in effect mean that even if he is removed as finance minister, any incumbent would find it impossible to intervene in the dispute between the Guptas and the banks.
It also means the banks, respondents in the matter, would be compelled to reveal further details around the transactions. They had not yet filed responding papers.
Gordhan has been under pressure from several quarters, including the family, some cabinet ministers, the ANC's women and youth leagues and Umkhonto weSizwe veterans, to intervene to have the banks' decisions overturned.
In April, all of South Africa's major banks, as well as auditors KPMG, confirmed a decision to terminate all business relationships with Zuma's friends.
The Sunday Times can reveal that the move was precipitated by the continued flagging of suspicious transactions totalling R6.8-billion in more than 70 bank accounts belonging to members of the family, their associates and companies.
According to a top banking source, the frequency of the movement of money to and from Gupta bank accounts during this period raisedsuspicions of money laundering.
"The banks were concerned with the speed with which monies were moved from their different accounts, the unusual amounts of money coming into and going out of the accounts to and from beneficiaries or depositors that could not be explained.
"And when that happens, banks are required by law to report this to the [Financial Intelligence Centre] as this is viewed as money laundering," the source said.
By law, and in line with international banking best practice, banks are obliged to report any suspicious transactions - failing which they could be seen as aiding unlawful activities such as money laundering or financing terrorism.
The Guptas' suspicious transactions are contained in a certificate issued by the Financial Intelligence Centre to assist Gordhan in his court action. They include:
• R1.3-billion movement in an account belonging to Optimum Mine in April this year;
• R1.2-billion movement in an account belonging to Koorfontein Mines also in April;
• At least seven separate transactions totalling R98-million done by Atul Gupta between 2013 and this year; and
• R10-million movement in an account belonging to Mabengela Investments, which is partly owned by Zuma's son Duduzane.
The certificate also reveals movement in an account holding R1.5-billion of Optimum Mine's rehabilitation fund, which was apparently moved with consent from Mineral Resources Minister Mosebenzi Zwane.
This is established by a letter from Werksmans Attorneys to the South African Reserve Bank's registrar, confirming that Zwane had given consent for the monies to be moved to the Bank of Baroda - India's international bank, which has two branches in South Africa - provided it was registered with the Reserve Bank.
A close study of the certificate reveals that the Guptas were at their busiest between the end of February and early April, making multiple transfers between their business and personal accounts. It does not show where the monies came from, or to whom they were paid.
In June the Sunday Times reported that the Reserve Bank and the Financial Intelligence Centre had requested the Bank of Baroda to provide documents related to deposits into Gupta accounts.
A source at the time said there were suspicions that monies were being moved offshore.
In his affidavit before the court Gordhan reveals that he had several interactions with Nazeem Howa, the CEO of Oakbay, over the account closures.
He speaks of how, despite two legal opinions (filed as annexures) stating that the cabinet had no power to intervene in a private relationship between a bank and a client, Howa insisted that he do so.
Gordhan is one of three ministers appointed by the cabinet to talk to the banks and the family to find a solution.
However, he says in the papers, he was uneasy about his power to compel the banks to reverse their decision, which the Guptas labelled "anti-competitive, politically motivated, and designed to marginalise their business".
"I stressed that the minister of finance can not act in any way that undermines the regulatory authorities," he said. "I encouraged Oakbay to achieve a determination of its contentions by approaching a court. I finally requested Oakbay to desist from its attacks on the National Treasury in the public interest."
Howa's response to Gordhan was that the company had been legally advised that it had no prospects of success in court "given the contractual rights the banks have".
The opinions Gordhan received included those of Jeremy Gauntlett and a warning from Reserve Bank governor Lesetja Kganyago on April 26 that continued intervention by the cabinet could be seen as "undue political interference in banks' operations, and could introduce heightened levels of uncertainty and pose a risk to South Africa's financial stability".
Gauntlett advised that cabinet members had no legal authority to intervene in the private bank-client relationship.
This means Zwane's intervention on behalf of the Guptas, without any sanctioning from the cabinet, was unlawful.
Last month the cabinet and the Presidency distanced themselves from a statement by Zwane calling for an inquiry into the banks' actions.
Zwane this week refused to be drawn on the matter, saying it was now a cabinet issue.
Between February 29 and April 6, the banks submitted 25 reports to the Financial Intelligence Centre reporting multiple transactions. In this period the family was coming under intense political pressure.
In March the Sunday Times reported that Deputy Finance Minister Mcebisi Jonas had been offered the finance portfolio last December by the Guptas. A week later former government spokesman Themba Maseko went public with allegations of Gupta influence on the state, followed by former MP Vytjie Mentor.
Oakbay spokesman Howa said yesterday: "Oakbay Investments has never been involved in money-laundering and no charges have ever been brought against us.
"It is clear that these documents have been leaked by the ministry of finance as part of a politically motivated campaign against us. It would not be appropriate to comment further on an ongoing legal process."