Gupta firms lose bid to have Bank of Baroda remain in South Africa

The building of Baroda bank limited

A group of almost 20 South African companies linked to the Gupta family have lost a court bid which sought to have India’s Bank of Baroda, the last lender doing business with the firms, maintain operations in the country, court documents showed yesterday.

Baroda’s South African division was thrust into the spotlight two years ago when it agreed to take on the Guptas after South Africa’s major banks turned their back on the family’s businesses.

Baroda said a month ago that it had pulled the plug on its South African business, citing a strategic decision to slim down in international markets.

The Guptas, a trio of India-born brothers, have been accused by the South African public anti-graft watchdog of using their friendship with former president Jacob Zuma to influence policy decisions.

Zuma and the Guptas deny any wrongdoing.

In his ruling, Judge Ntendeya Mavundla said Bank of Baroda’s right to trade or not to trade supersedes whatever right, if any, the applicants might have, a copy of the judgment obtained by Reuters showed.

“Consequently, I refrain to exercise my discretion in favour of the applicants and accordingly decline to grant them the relief sought,” the judgment said, dismissing the application with costs.

Coal mine

This will make it all but impossible for the companies to operate in South Africa.

Some of their assets such as the Optimum coal mine, are currently in business rescue proceedingsOfficial documents showed last month that at least eight companies owned by the wealthy Gupta family had filed for protection from creditors.

Officials from the Gupta companies and Baroda could not be reached for immediate comment.

The country’s chief prosecutor last month declared Ajay Gupta a “fugitive from justice” after he failed to hand himself in to police, who are conducting an investigation on the family.

Pressure has been mounting on the Guptas since Zuma was forced from office last month by the ruling African National Congress party.

His resignation came just hours after police raided the luxury home of the Gupta family.

Indian tax inspectors last week raided premises of the Gupta family. Amrendra Kumar, a senior income tax official in India’s Uttar Pradesh state, told Reuters that the Guptabrothers were suspected of finding ways to bring “illicit money” they had earned abroad into India.

Meanwhile, South African small lender VBS Mutual Bank has been placed under curatorship because of liquidity issues, Reserve Bank Governor Lesetja Kganyago told a televised news conference on Sunday.

Curatorship means the central bank can appoint an administrator or curator to run the bank, which was thrust into the spotlight in 2016 when it provided a 7.8 million rand ($660,000) loan to former president Jacob Zuma to reimburse the state for upgrades to his personal home.

According to its 2016 annual report, its total assets were around 1 billion rand ($85 million), and any failure would not pose a systemic risk to the wider economy.

“VBS experienced increasing liquidity challenges over the last 18 months,” Kganyago said.

Business
Premium Ruto's food security hopes facing storm amid fake fertiliser scam
Real Estate
Premium Affordable housing: Will State's data-backed action now pay off?
Business
Premium Nairobi business community plans protest as over 700 containers held at port
Sci & Tech
UK-based fintech PayAngel eyes Kenyan market with secure diaspora remittance solutions