• Government concerned about deterring investment: Radebe
  • Oakbay is controlled by family friends of President Zuma

South Africa’s government said three cabinet ministers will contact banks that closed accounts belonging a company controlled by members of the Gupta family, who’re friends of President Jacob Zuma, to determine the reasons for their actions.

Oakbay Investments Ltd. has been dropped as a client by Barclays Plc’s Absa unit and FirstRand Ltd.’s First National Bank, while other lenders, including Standard Bank Group Ltd. and Nedbank Group Ltd., notified the company that its accounts will be shut at the end of next month.

“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,” Jeff Radebe, a minister in the presidency, told reporters in Cape Town on Thursday. The ministers of finance, Pravin Gordhan, labor, Mildred Oliphant and mineral resources, Mosebenzi Zwane, “should open a constructive engagement with the banks to find a lasting solution to this matter,” he said.

Calling the decision “just normal interaction between government and the private sector,” Radebe didn’t say whether the ministers would seek meetings with the bank’s management.

Legal Compliance

The Banking Association South Africa said the banks had to ensure their clients complied with the law, and that they acted independently of each other when they closed Oakbay’s accounts.

Each of the lenders acted “with total respect for client confidentiality and all relevant regulations,” the industry body said in an e-mailed statement on April 14. “Banks are one of the most stringently regulated businesses in the country because they hold public deposits in trust and must conduct business in a manner that does not introduce risks into the economy.”

Zuma has faced allegations by senior officials of the ruling African National Congress that the Guptas, who are in business with Zuma’s son, offered them cabinet posts in exchange for business concessions. Both the president and the Gupta family deny any wrongdoing.

It’s “unprecedented” for four major South African banks to close a company’s accounts, Oakbay’s chief executive officer, Nazeem Howa, said in a April 11 interview with Bloomberg Television in Johannesburg. The institutions took the decision, which threatens 7,500 jobs, even though no charges had been proved against the company or the Guptas, he said.

The Guptas announced this month their resignations from management positions in the companies they control in South Africa.

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