JOHANNESBURG — It doesn’t rain; it pours, or so the saying goes. The rate at which international companies are finding themselves ensnared in the corrupt Gupta web is expanding at an astonishing speed. Most South African banks (as well as a Chinese bank) have steered clear of the Guptas, shuttering the controversial family’s bank accounts. However, question marks hang over India’s Bank of Baroda and the State Bank of India, and now OUTA is going after those banks to force them to comply with global banking laws. But OUTA has revealed another bombshell corruption scandal around the Guptas. The latest revelation is that these two Indian banks — for reasons unknown at this stage — gave the Guptas bonds on SA properties at 8.5-10 times the purchase price. The bizarre revelations pose serious questions about what the Guptas then did with the surplus funds. If these Indian banks don’t act soon, they could find themselves in the same pickle that McKinsey, KPMG and SAP are in… – Gareth van Zyl
The Organisation Undoing Tax Abuse (OUTA) is closing the taps on the Guptas’ finances by taking action against their banks, the Bank of Baroda and the State Bank of India, for failure to comply with the banking laws.
“We have compiled evidence to take action against these banks and handed it to the Registrar of Banks and the Financial Intelligence Centre (FIC),” says Ben Theron, Chief Operations Officer at OUTA.
“We want these authorities to act to ensure that the Bank of Baroda and the Bank of India cease all business with the Guptas, and revoke their licences to trade within South Africa.”
A copy of that letter is attached.
In August 2016, the FIC listed 72 suspicious transactions on Gupta-linked bank accounts, which took place from December 2012 to June 2016 and involved a total of R6.839 billion; various banks subsequently closed the Guptas bank accounts.
OUTA’s investigation found suspicious financial transactions predating that list, from 2002 and stretching over years.
“We found that the businesses linked to the Guptas bought properties over more than a decade for a total of R245 million – more than R50 million was paid in cash – but managed to get bonds on these properties totalling nearly R1 billion, an amount that far exceeds the value of these properties. The Bank of Baroda provided bonds valued at R811 million and the Bank of India provided bonds of R176 million; the remaining R11 million came from FirstRand. The transactions linked to the Bank of Baroda and the Bank of India are particularly problematic,” says Theron.
Some properties appear to have had massively inflated values.
For example, the Guptas’ company Islandsite 180 bought two Cape Town flats in 2006 for R2.8 million each and two years later the Bank of India generously provided bonds of R24 million on each flat. This is 8.5 times the purchase price.
In another instance, the Guptas’ company Confident Concept bought a farm in Mpumalanga for R40 million but a year later this was bonded by the Bank of Baroda for R426 million: more than 10 times the purchase price.
These bonds are apparently still active.
OUTA asked the financial authorities to investigate these deals.
OUTA is #ArrestingStateCapture by taking action against those who have deliberately aided or participated in the capture of the South African state.