OUTA Takes on the Guptas' Banks

“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 the Organisation Undoing Tax Abuse (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 the letter can be read here, and the spreadsheet that went with it, here.

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 warooi70

 nicols 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.

UPDATE: 28 August 2017

We’re stopping the Guptas from taking mining rehabilitation funds out country when the Bank of Baroda shuts their accounts. Those funds belong to South Africa.

WHY IS OUTA TARGETING GUPTA MINE FUNDS?

The Guptas used their business Tegeta Exploration and Resources to buy Optimum Coal Holdings from Glencore in December 2015. Optimum owns Optimum Coal Mine, Optimum Coal Terminal and Koornfontein Mines. The Optimum and Koornfontein mines each have a mine rehabilitation fund, which is legally required. The Public Protector has reported that the two rehabilitation funds were together worth R1.75 billion before they illegally disappeared into a Bank of Baroda account. These funds are meant to be held in trust to ensure that the costs of rehabilitating the mines are covered. OUTA wants those funds secured for the public benefit.

WHAT IS OUTA DOING?

On 25 August, OUTA wrote to Mineral Resources Minister Mosebenzi Zwane asking him to seize those funds, as the Minister is responsible for the security of these funds. If the Minister does nothing, then OUTA will bring an urgent interdict in court to secure the funds.