On Monday the High Court in Johannesburg issued an interim interdict in favour of 20 Gupta-linked companies against India’s Bank of Baroda, which will keep the companies’ bank accounts open with the bank – for now.
Bank of Baroda was also ordered to pay the costs of the application.
The judge made it clear he had not yet had to concern himself with the merits of the companies’ case, as he had only granted them 15 days to launch a final application against India’s Bank of Baroda’s decision to close the Gupta accounts.
This followed a similar decision by the big four banks in South Africa, Nedbank, Standard Bank, Absa and First National Bank, to stop doing business with the Gupta family due to “reputational risks”.
Bank of China has also closed Gupta accounts.
In March, Bank of Baroda gave the companies until the end of August – and then later September – to move their money elsewhere, but Judge Hans-Joachim Fabricius’s interdict against the bank means it may now not close any of the accounts, deactivate them or terminate the relationship with the Gupta companies.
Baroda was also interdicted from terminating certain loan agreements with some of the companies and will have to allow the accounts to continue to operate normally.
Among those companies requesting the interdict were Gupta holding company Oakbay Investments, VR Laser Services, Sahara Computers, Shiva Uranium, Tegeta Exploration and 15 others.
An affidavit from the bank’s acting CEO in South Africa, Manoj Kumar Jha, made it clear Bank of Baroda had no further interest in working with the Guptas after having earlier reported 45 suspicious transactions to the Financial Intelligence Centre. The transactions allegedly amounted to R4.2 billion between September 2016 and July 2017.
The bank referred to the recent “Gupta Leaks” email trove as having placed further pressure on them to terminate the relationship with all Gupta-owned companies due to the “volume and seriousness” of the “allegations of serious misconduct against the Gupta family”. The bank said it had already suffered serious reputational damage regardless of whether the accusations against the Guptas were true.
The bank explained that closely monitoring the Gupta accounts was an onerous task, but they could not take the risk of missing any “suspicious and unusual” transactions and then not reporting on them. The bank claims it has been facing an allegedly high risk of “severe fines”.
The bank also maintained it had given the companies sufficient notice.
The companies in their application submitted that the bank’s intention to close their accounts and terminate certain loan agreements was a violation of a number of contractual obligations.
The Gupta family has had to sell several businesses to keep them viable in South Africa. These include their media empire and Tegeta.
If the Guptas do not launch their final application within 15 days, the current interdict will lapse.