The Banking Association of South Africa (Basa) says that the decision by financial groups in the country to drop the Gupta-owned Oakbay Investment from their books was made “separately and independently”.
The association was responding to speculation pushed by the Gupta family that there was a political conspiracy against them, and that the banks had colluded to to drop their businesses out of these political motivations.
According to Basa, South African banks are heavily regulated, and always under intense scrutiny,
“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,” Basa said.
“These regulations make it incumbent on banks to conduct a detailed due diligence on clients‚ particularly those of a substantive nature and those that are in the public domain.”
“Such due diligence is conducted on an ongoing basis to ensure the bank is aware of any significant changes in the affairs of the client‚ particularly to satisfy itself that a client is abiding by Fica regulations and anti-money laundering regulations.”
The group said that banks will take these matters into account when considering ongoing relationships with clients‚ and will take appropriate action‚ based on the circumstances.
“Each bank will also consider its own business model‚ risk models and other matters specific to that bank’s business in making such decisions,” Basa said.
House of cards
Over the past month, financial groups including Absa, FNB, Nedbank, Sasfin and auditors KPMG have all cut ties with the Gupta family businesses, amid a scandal in which it has been alleged that the family was exerting undue influence over politicians and manipulating Cabinet positions behind the scenes.
The banks, at large, cited reputational concerns as the primary reason for moving away from the Gupta family businesses, though most remained tight-lipped, saying it was a confidential matter.
The Guptas and Oakbay have denied all of the allegations against them, claiming that they are victims to political in-fighting within the ANC.
“It is very disappointing that FNB (and Absa) have allowed themselves to be dragged into the political in-fighting by the campaign’s orchestrators,” Oakbay said in a statement at the time of FNB closing their accounts.
Oakbay Investments CEO Nazeem Howa said the closure of the company’s bank accounts made it virtually impossible to continue to do business in South Africa, and put thousands of jobs at risk.
Howa is currently trying to mend relationships with SA banks, after the Guptas and president Zuma’s son, Duduzane, resigned from all associated companies (though they remain shareholders), and allegedly fled to Dubai.