State intervention? Cabinet meets Big Banks over Gupta cold shoulder.

In yet another twist to the Gupta scandal, government has now thrown its hat in the ring. Apparently they’re concerned of the knock-on affects on future foreign investment, following their refusal to do any business with the Gupta-owned businesses. Hence the need for a meeting with them all. The statement is quite bizarre given the four major banks, KPMG and Sasfin are said to have severed all ties after the family fled the country in the middle of the night. And with a host of allegations, including state capture still unresolved, many may question such a move by government. Especially as the banks must have their own best interests at heart, considering the potential fallout, if any of the allegations are deemed true. And one must ask who’s in a better place to know? As part of a fact finding mission, many can see no harm in the move, but given Minister Jeff Radebe’s rebuttal on why Gupta-ally mines minister Mosebenzi Zwane was part of the team, eyes are sure to widen. – Stuart Lowman

By Liesl Peyper

Cape Town – Jeff Radebe, Minister for Planning, Monitoring and Evaluation, opened a can of worms on Thursday when he said three cabinet ministers held meetings with South Africa’s four big banks to get reasons why they decided to close the bank account of the Gupta-owned Oakbay Investments.

Mines Minister Mosebenzi Zwane, Labour Minister Mildred Oliphant and Finance Minister Pravin Gordhan met with the banks to find out why they don’t want to have a certain company as their client, Radebe said.

Mosebenzi Zwane, South Africa's Minister of Mineral Resources, speaks at a media briefing at the Investing in African Mining Inbaba in Cape Town, February 8, 2016. South Africa's government wants the black economic empowerment legal battle settled outside the courts, Zwane said on Monday, to end uncertainty over a policy meant to spread economic wealth to the black majority. REUTERS/Mike Hutchings
Mosebenzi Zwane, South Africa’s Minister of Mineral Resources, speaks at a media briefing at the Investing in African Mining Inbaba in Cape Town, February 8, 2016. REUTERS/Mike Hutchings

He said Cabinet is concerned that this move could deter future investors who want to open South African bank accounts.

“Cabinet noted the actions by the four banks that gave notice to close the bank account of a company,” he said. “Whilst Cabinet appreciate the terms and conditions of the banks, the acts may deter future potential investors who may want to do business in South Africa.

“Cabinet has endorsed that the ministers of Finance, Labour and Mineral Resources should open a constructive engagement with the banks to find a lasting solution to this matter.”

The move comes as Oakbay announced it had found a new auditor – SizweNtsalubaGobodo – after KPMG cut ties with all Gupta-owned companies in April. KPMG was joined by the top four banks and Oakbay’s JSE sponsor Sasfin Capital, who revealed they were cutting ties or had given notice to do so in March. Oakbay Investments CEO Nazeem Howa told staff in the letter that the closure of its bank accounts “made it virtually impossible to continue to do business in South Africa”.

“Without bank accounts we may find ourselves in a position where we are unable to pay you‚ our valued employees,” he said. “We are doing everything in our power to ensure this does not happen.

“We find it totally unacceptable that you‚ our employees‚ and your families could potentially have to suffer as a result of the political campaign against us.”

Oakbay has been trying to keep the focus on the 7 500 jobs at risk at Oakbay, while their owners – the Guptas – resigned from all positions and jumped on a plane to Dubai with a plane filled with suitcases.

Read also: Azar Jammine: What Gupta move to Dubai means for Zuma. Must read.

In the meantime, Oakbay has managed get approval for its acquisition of Optimum coal mine from Glencore this month, paying R2.15bn to clear its debt.

During question time Radebe had to field a barrage of questions from journalists about the perceived “interference” of cabinet into the private sector.

One journalist asked Radebe how government could justify meddling in the affairs of banks, suggesting it came down to “bullying”. “Will you do the same for any other small business who has a problem with the banks?”

Another asked him if it’s “wise” to have Mines Minister Zwane as part of the delegation, given allegations of an untoward relationships with the Gupta family who owns Oakbay.

Radebe side-stepped the question about Zwane’s involvement, and merely said: “Yes, he is part of the delegation.”

As for cabinet’s perceived bullying of banks, he responded: “The banks are big boys and girls and there can never be any bullying where they are concerned.”

He maintained that the three ministers’ “interaction” with the four banks were “normal”.

“Government and the private sector meet all the time. There is nothing extraordinary about this.” – Fin24


South Africa seeks to limit damage of banks shunning Guptas’ Oakbay

By Wendell Roelf and Tiisetso Motsoeneng

CAPE TOWN/JOHANNESBURG April 21 (Reuters) – South Africa stepped in on Thursday to try to contain the damage from a stand-off between the country’s banks and Oakbay, a company owned by the Gupta family who are alleged to wield undue political influence.

The government had appointed a ministerial team to find a solution after the banks ditched Oakbay, a move which could deter future investment in South Africa, Minister in the Presidency Jeff Radebe said.

Earlier this month, several South African companies, including all four major banks, cut links with companies associated with the Guptas, a family of Indian-born businessmen who are also friends with President Jacob Zuma.

“Whilst cabinet appreciates the terms and conditions of the banks, the acts may deter future potential investors who may want to do business in South Africa,” Radebe told a news conference in Cape Town.

Although the Gupta’s relationship with Zuma has been a source of controversy for years, it burst into the open last month when senior figures went public to say the family had exerted undue sway, including offering cabinet positions

Zuma has acknowledged the Guptas are his friends, but denies anything improper. The Guptas, whose wide range of business interests include media and mining, have denied the allegations and say they are pawns in a plot to oust Zuma.

Oakbay Investments, a holding company for the family businesses, says it employs 7,500 people and it will not be able to pay their salaries if it is unable to restore the bank ties.

Read also: What “State Capture?” Gupta, Zuma defend friendship as “normal business”

The company and government’s taskforce have until at least the end of May, which is when the banks’ notice periods expire, to restore relations between the parties.

At least one of the four banks – Barclays Africa’s Absa, First National Bank, part of FirstRand, Standard Bank and Nedbank – that have ostracised Oakbay Investments has so far rejected attempts to patch up relations.

Oakbay Resources, a unit of Oakbay Investments, appointed SizweNtsalubaGobodo Inc, South Africa’s biggest black-owned accounting firm, as it new auditors after the local unit of KPMG ditched it earlier this month.

In a memo to staff, KPMG cited association risk as the reason for parting ways with the company.

SizweNtsalubaGobodo, which dates back to 1985, said it followed a stringent on-boarding process in accepting Oakbay Resources as a client.

“We are aware of our ethical responsibilities and reporting responsibilities to all stakeholders and are confident that we are in a position to fulfill these responsibilities,” it said in statement on Thursday.

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