Gupta Firms Sue Bank of Baroda to Try Stop Account ClosuresBy and
Bank of Baroda to close their S. African accounts Sept. 30
Gupta family spokesman says family has no alternative bank
Companies controlled by the Gupta family, whose accounts are being closed down by Bank of Baroda, said they’re taking legal action against the lender to try and stop the termination, which comes after South Africa’s four biggest lenders cut banking services for the family that’s in business with a son of President Jacob Zuma.
A number of companies forming part of the Gupta-controlled Oakbay Group “are presently involved in litigation against the Bank of Baroda concerning its unlawful attempts to close the companies’ accounts, and particularly in light of the unreasonable notice period given,” Gary Naidoo, a spokesman for the family and their companies, said in an emailed statement on Wednesday. The deadline for the closure of the accounts has been extended to the end of September, he said. Naidoo didn’t answer a call made to his mobile phone seeking further information.
“This has not been afforded by the Bank of Baroda to enable these companies to transfer their banking facilities to a new bank, but rather has occurred in the context of the ongoing litigation between the parties,” Naidoo said. “No other bank has agreed to offer them alternative banking services.”
Bloomberg on Tuesday reported that the family had told the Vadodara, India-based bank that they’ve found another company willing to offer them banking services, citing a person familiar with the matter who asked not to be identified because the matter was confidential.
A Mumbai-based spokesman for Bank of Baroda didn’t immediately respond to an email and two calls to his office on Thursday.
Mines, TV News
The Gupta family controls businesses in South Africa ranging from coal mines to newspapers, a computer business and a 24-hour news channel and have previously said bank account closures could affect their ability to pay about 7,000 employees.
The family’s businesses lost their other South African banking relationships after lenders including Barclays Africa Group Ltd. and Standard Bank Group Ltd. said they risked falling foul of regulators and the law by continuing to offer services to the family and their companies.
The Bank of Baroda has significantly wound down activities related to the family, P.S. Jayakumar, chief executive officer of the Indian-based lender, told reporters in Mumbai last week. Bank of Baroda has explained to South African regulators that “banking transactions were bona fide,” he said.
The Guptas were last year named in a probe by the country’s former graft ombudsman into government-linked bribery and corruption. The former ombudsman said her findings weren’t conclusive and instructed Zuma to set up a judicial inquiry. Zuma and the Guptas have denied any wrongdoing.