South Africa’s finance minister has challenged the Guptas, the business family with ties to President Jacob Zuma, to reveal information on their finances by telling a court that 6.8bn rand ($475m) in alleged suspicious transactions may have led banks to cut ties with them.
Pravin Gordhan detailed the transactions in a filing made on Friday — the day that a public ombudsman was meant to publish a report into ‘state capture’, allegations that the Guptas, who own a conglomerate with interests from coal mines to computers, used political influence to swing contracts and government appointments in their favour.
Mr Gordhan’s filing will be seen as a bold move to force information about the Guptas into the public domain, after Mr Zuma blocked the report’s release saying he should be able to question its witnesses first. The allegations against Mr Zuma, who is friends with the family, and the Guptas have never been proven and both deny them.
Mr Gordhan is already fighting for his political survival after last week being charged with fraud for approving a colleague’s early retirement when he was head of the tax authority. Critics of the president say the charges were politically motivated and that Mr Zuma was trying to undermine opponents within the government and ruling African National Congress.
Lenders including Standard Bank and Nedbank terminated all of their relationships with Gupta-owned companies in April. The reasons have never been fully publicly disclosed, with banks citing client confidentiality.
Oakbay, the Guptas’ corporate holding company, has said that it is being victimised and that the decision by the banks put thousands of jobs at risk.
“The continued public assertions that registered banks within the regulatory environment of South Africa acted for no adequate reason … are harmful to the reputation for integrity of South Africa’s financial and banking sectors,” Mr Gordhan said in the court filing, adding that Oakbay had repeatedly asked him to intervene with the banks.
Mr Gordhan is seeking a declaration from the court that he is not legally empowered to intervene. Oakbay could have gone to the courts itself to compel banks to explain their reasons, he said, while the lenders would now be free to disclose suspicious transaction reports when answering his application.
His affidavit refers to 72 transactions over four years involving Gupta-owned companies which were reported as suspicious to South Africa’s anti-money laundering regulator.
Mr Gordhan pointed in particular to an apparent attempt to transfer 1.3bn rand from a mine clean-up trust fund set up at Optimum, a coal mining operation which a Gupta-owned company, Tegeta, bought from Glencore. It is not known if the transfer succeeded. Mr Zuma’s son, Duduzane, is also a large shareholder in Tegeta.
South Africa’s mining ministry apparently approved the transfer, Mr Gordhan said. Mosebenzi Zwane, the mining minister, has been one of the critics of the banks’ cutting ties, wrongly suggesting last month that Mr Zuma’s cabinet would propose a judicial inquiry into the matter. He allegedly also went with the Guptas to negotiate the deal with Glencore in Switzerland.
Mr Gordhan said that the alleged transfer attempt “reflects the increasingly serious state of affairs which has arisen.” Payments to such mining rehabilitation funds are tax-deductible and the funds themselves are tax-exempt.
“If those funds from the mining trust were to be spent on anything other than genuine mining rehabilitation, it will expose the fiscus not only to the loss of tax revenue and also put the burden of mining rehabilitation on the fiscus,” Mr Gordhan said.
Oakbay declined to comment. But people close to the company said that it would welcome the chance to clear its name, and that it did not believe there was anything wrong with any of the transactions.