The Gupta family has demonstrated its resilience in the face of business challenges yet again. After South Africa’s large commercial banks closed their doors to Gupta-controlled company Oakbay, Gupta friend Salim Essa set about opening another banking door – by buying a Luxembourg-based company. South Africa’s Competition Commission, apparently impervious to allegations in the public domain of suspicious financial transactions and widespread irregularity in connection with Gupta-linked entities, has given Essa the nod of approval for a merger between his company and Habib Overseas Bank. With patronage another characteristic of business deals linked to the Gupta network, it is unsurprising to learn that a key individual – Hamza Farooqui – involved in the transaction has family connections to a former manager at the bank. The Competition Commission, according to Fin24, says there are no public interest concerns with the transaction. It may not have received formal notification of these concerns, but it’s not plausible that Competition Commission decision-makers have no knowledge of the widespread allegations of state capture, suspicions of money-laundering and other financial controversies swirling around the Gupta and Essa activities. The Guptas have friends everywhere, it seems. – Jackie Cameron
By Matthew le Cordeur
Cape Town – The Guptas, blacklisted by South Africa’s top four banks, could be one step closer to solving their dilemma after the Competition Commission approved a merger between Habib Overseas Bank and a company set up by allies Salim Aziz Essa and Hamza Farooqui.
The commission said it approved the intermediate merger without conditions “whereby Vardospan intends to acquire Habib Overseas Bank”, it said in a statement on Sunday.
Vardospan, the company set up by Essa and Farooqui, paid the bank R450m for the merger to take place, a report shows.
The Guptas hope to prove in court papers this week that there is a conspiracy against its businesses in South Africa, when it files its responding affidavit to Finance Minister Pravin Gordhan’s High Court application to protect him from intervening on behalf of the Guptas.
Gordhan’s application in October 2016 revealed that the Gupta family is under investigation by the Financial Intelligence Centre for more than 70 banking transactions involving almost R7bn.
Gordhan’s application also forced the banks to reveal why they cut ties with the Guptas, which they revealed in responding papers: the main reason being linked to politically exposed people reviews, reputational and business risk and the identification of suspicious transactions.
The Guptas – who are still trying to sell their businesses – have been using the Bank of Beroda to conduct business, but the Indian bank has come under pressure and was mentioned several times in the Public Protector’s State of Capture report in 2016.
The Guptas now want to buy Habib Overseas Bank to enable seamless money laundering and racketeering activities.
— IG: ConceptSixty5 (@Sentletse) November 11, 2016
The latest bid to create a new bank emerged in November 2016, when a report in the Mail & Guardian exposed the details of the plan.
Now, the Competition Commission approval has confirmed the report.
“Vardospan was recently established for the purpose of the proposed transaction and does not conduct any business,” the commission said.
“Vardospan is jointly controlled by Cinq Holdings … and Pearl Capital Group Holdings Limited …
“Cinq Holdings and Pearl Capital are also recently established entities, which are separately controlled by two individuals.”
According to the Companies and Intellectual Property Commission, those two individuals are Essa (Cinq Holdings) and Farooqui (Pearl Capital).
The two are allegedly buying the bank for R450m, according to the report in the Mail & Guardian.
Insiders told the weekly paper that “an application for a banking licence is currently before the regulator, but the Reserve Bank would not confirm this”.
Currently, the Habib Bank is controlled by Pitcairns, a company registered in Luxembourg. “Pitcairns is a registered banking institution which provides a range of banking products and services,” said the commission.
“The commission therefore found no overlap in the activities of the merging parties,” it said.
Habib Bank “is involved in banking services and Vardospan is newly created for the purposes of the proposed transaction”.
“The individual (Essa) that controls Cinq Holdings is involved in property, business and management consulting, metal processing, coal prospecting and mining,” said the commission.
He also “holds a stake in the Gupta-linked VR Laser Services as well as in Tegeta Exploration and Resources, which controversially bought Optimum Coal”, the Mail & Guardian reported.
“The individual (Farooqui) that controls Pearl Capital is involved in hotel and tourism, property and venture capital,” the commission said.
“Coincidentally, Farooqui is also the son of a former manager at the bank,” said the Mail & Guardian.
The commission signed off the merger, saying: “The proposed transaction is unlikely to substantially prevent or lessen competition in any market. Further, there are no public interest concerns arising as a result of the proposed transaction.” – Fin24