PREMIUM FREE TRIAL

Nedbank cites reputational risk in severing Gupta-ties – despite Zwane’s plea

Mosebenzi Zwane, South Africa's Minister of Mineral Resources. REUTERS/Mike Hutchings
Mosebenzi Zwane

Why would our Mines Minister, Mosebenzi Zwane, urge Nedbank to reconsider severing ties with the Gupta family, as now revealed in court papers filed by CEO Mike Brown? Well, they are major stakeholders in our economy and refusing to handle their money could damage us all, Zwane would probably argue. He was just doing his job, which is to protect the interests of ordinary citizens who don’t have the power to launch such interventions. But there’s the small problem of Oakbay Investments (Pty) Ltd, the Gupta family’s holding company, in which Zuma’s son has a significant stake and with which his now infamous father, our fearless leader President Jacob Zuma, has very close ties and a strong friendship. Need we reprise the litany of State Capture (‘Gupture’) woes that this resulted in? From appointing a more Gupta-friendly Finance Minister, to rigging Eskom provider deals, to abusing the prosecutorial system to get rid of Gupta enemies – to name just a few. The overwhelming circumstantial weight of evidence is unfortunately against Zwane doing his patriotic duty. The truth has a way of wriggling free, unlike the Gupta acolytes in government, who believe they’ve wriggled themselves free after the ANC effectively closed ranks behind their leader, regardless of long-term consequences. For them, patriotism begins with protecting the chief – who has generously forsaken his and his fellow executive’s salary increases next year – almost certainly out of love for what our country can do for him and his loyalists. – Chris Bateman

by Colin McClelland

(Bloomberg) — Nedbank Group Ltd. said South African Mines Minister Mosebenzi Zwane urged the lender to reconsider its decision to sever ties with companies tied to the Gupta family, who are friends of President Jacob Zuma and in business with his son.

Nedbank, in a letter to Oakbay Investments (Pty) Ltd. dated April 7, said a continued relationship with the Gupta-controlled company would “create material business risks that could pose significant reputational risks,” according to an affidavit filed in the Pretoria High Court by Chief Executive Officer Mike Brown on Monday. It gave the company 30 days to find alternative bankers.

Nedbank_building

After the country’s four biggest banks closed their accounts earlier this year, the Guptas asked Finance Minister Pravin Gordhan to intervene. Gordhan went to court in October seeking an order stating that he can’t prevent banks from cutting clients. The lenders, including Standard Bank Group Ltd., Barclays Africa Group Ltd. and FirstRand Ltd., have said they agree with Gordhan’s stance. Nedbank has to consider international banking rules on anti-money laundering, bribery and corruption when dealing with customers, Brown said in the court papers.

Terminate Accounts

Brown agreed to meet Zwane in May as the minister had been appointed to head an inter-ministerial committee that also included Gordhan and Labour Minister Mildred Oliphant to probe why the banks stopped doing business with the Guptas. Zwane told Brown that the finance and labor ministers were aware of the meeting and had mandated him to proceed in their absence.

The meeting included Communications Minister Faith Muthambi and Mzwanele Manyi, an adviser to Muthambi and a former government spokesman, according to an e-mail from the committee secretary that was attached to the affidavit. The e-mail also claimed that Oliphant attended the meeting when she hadn’t, Brown said.

“The overall impression I came away with was that the purpose of the meeting was to determine whether there was a co-ordinated decision among the major South African banks to terminate the accounts of persons affiliated with the Gupta family,” Brown said, “and whether Nedbank would consider engaging with the relevant entities as their primary banker.”

Zwane’s spokesman didn’t immediately respond to a phone call and e-mail seeking comment.

Zuma “reprimanded” Zwane after the minister issued a statement in September that the cabinet had decided to set up a judicial investigation into the country’s banking industry following the decision to close the Guptas’ accounts. The presidency said on Sept. 2 the statement was issued in Zwane’s personal capacity and didn’t reflect the views of the cabinet.

Make Better Decisions. Start your Biznews Premium FREE TRIAL today.