A South African business empire built up by members of the Gupta family is under pressure as they face a mounting backlash over allegations that they exploited their friendship with President Jacob Zuma to loot billions of rand from the state.<\/p>\n
Separate reports by the graft ombudsman in November, and the country\u2019s biggest church association and a team of top academics in May, all allege that Atul, Ajay and Rajesh Gupta used their links with Zuma to influence cabinet appointments and secure sweetheart contracts and deals from state companies.<\/p>\n
The Daily Maverick news website and the amaBhungane Centre for Investigative Journalism said on June 1 that they have been leaked hundreds of thousands of emails said to have been between the family and their employees and business associates that showed how the family and their allies allegedly benefited from undue influence over the government.<\/p>\n
Atul Gupta said in an Aug. 1 interview with BBC Radio 4 that the emails are \u201cnot authentic\u201d and that he was doing \u201ca very, very ethical job.\u201d Bloomberg hasn\u2019t had access to the emails or been able to verify their authenticity.<\/p>\n
South Africa\u2019s four biggest banks shut accounts operated by Gupta-controlled companies last year, due to the perceived risks of being associated with the family, who arrived from India in the 1990s.<\/p>\n
In April, the Mumbai-based Bank of Baroda said it would follow suit, potentially leaving the Guptas without banking facilities, according to three people familiar with the matter, and the Johannesburg-based Star reported on July 27 that the accounts would be closed in a month. Gupta-controlled Oakbay Resources and Energy Ltd. was forced to delist from the Johannesburg Stock Exchange last month after its sponsor and transfer secretary quit. The family says all its dealings were above board and that it\u2019s being victimized by established white business interests.<\/p>\n
\u2018Inappropriate\u2019 Work<\/strong><\/p>\n \u201cThe Guptas are being squeezed out of the country in a number of ways,\u201d Mpumelelo Mkhabela, a political analyst at the University of Pretoria\u2019s Center of Governance Innovation, said in an interview. \u201cThey have become untouchable in the sense that no one wants to do business with them now.\u201d<\/p>\n Bell Pottinger LLP, a British public-relations firm, said in April it no longer represents Oakbay Investments Ltd., and last month fired a partner and suspended three other employees after a probe exposed \u201cinappropriate and offensive\u201d activities related to their work for the family, including a social-media campaign.<\/p>\n On July 18, Vitol Group, the world\u2019s largest independent oil trader, walked away from a deal to buy a stake in Africa\u2019s biggest coal terminal from Tegeta Exploration and Resources Ltd., which is part-owned by the Guptas.<\/p>\n Vitol didn\u2019t provide reasons for calling off the acquisition. Calls to Tegeta\u2019s three listed numbers went unanswered. Oakbay referred queries to the Gupta-owned TNA Media unit, whose press office didn\u2019t answer calls or return an email requesting comment.<\/p>\n Zuma Vote<\/strong><\/p>\n With Zuma facing a parliamentary no-confidence vote by secret ballot on Tuesday and several high-ranking officials of the ruling African National Congress publicly calling on him to quit, the president\u2019s ability to provide the Guptas and their businesses with political cover is diminishing. The motion of no confidence gets under way from 2 p.m. in Cape Town. Zuma is due to step down as leader of the ANC in December.<\/p>\n In the face of mounting pressure from his own party to halt \u201cstate capture,\u201d a term that\u2019s widely used in South Africa to describe the undue influence of private business interests over government institutions, Zuma has pledged to appoint a commission of inquiry. Lawmakers are planning a separate, wider probe into state capture.<\/p>\n Gary Naidoo, a spokesman for the Guptas, didn\u2019t answer three calls to his mobile phone or respond to two voice messages requesting comment. Presidency spokesman Bongani Ngqulunga didn\u2019t answer three calls seeking comment.<\/p>\n The Guptas first established a computer business in South Africa in the 1990s before amassing stakes in uranium, gold and coal mines, a luxury game lodge, an engineering company, a newspaper and a 24-hour news TV station.<\/p>\n Zuma\u2019s son, Duduzane, has worked with the Guptas for 13 years, initially starting as a 22-year-old trainee at their Sahara Computers Ltd. business. Publicly available documents show that Duduzane and the Guptas have simultaneously served on the boards of at least 11 companies.<\/p>\n Coal Mine<\/strong><\/p>\n The favoritism the Guptas allegedly enjoyed from state entities was laid out in the graft ombudsman report last year that alleged Brian Molefe, formerly the chief executive officer of electricity utility Eskom Holdings SOC Ltd., helped them secure a deal to buy Optimum Coal Holdings Ltd. from Glencore Plc, and awarded them favorable coal contracts. M<\/p>\n olefe and Eskom have disputed the allegations, and Public Enterprises Minister Lynne Brown has ordered an investigation into Eskom contracts for the past 10 years. Molefe resigned as CEO soon after the November report was released, and was forced by the ANC to leave the company again in May after briefly being reappointed. Glencore has declined to comment on the claims.<\/p>\n The leaked emails suggest that a Gupta associate allegedly secured 5.3 billion rand ($400 million) in kickbacks from a contract to supply locomotives to the state rail operator Transnet SOC Ltd. A big slice of the government\u2019s advertising budget also goes toward the family\u2019s media outlets, according to the opposition Democratic Alliance.<\/p>\n \u2018No Future\u2019<\/strong><\/p>\n Zuma, his son and the Guptas have denied wrongdoing. While the Guptas said a year ago that they would exit their South African businesses by the end of 2016, \u201cin the best interests of our business, the country and our colleagues\u201d they haven\u2019t followed through.<\/p>\n That announcement was part of a public-relations exercise and \u201cin no way sincere,\u201d said Darias Jonker, an analyst at Eurasia Group. However, \u201cthe email leaks and other circumstantial evidence show that the family has indeed been divesting, in the sense that large sums of money have been moved offshore,\u201d he said.<\/p>\n The Guptas could eventually leave South Africa, said Andre Duvenhage, a politics professor at North-West University in Potchefstroom, west of Johannesburg.<\/p>\n \u201cThe position of the Guptas is extremely difficult,\u201d Duvenhage said. \u201cThe tide is constantly going against them. There\u2019s no future for them here.\u201d<\/p>\n
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