News / South Africa

Ilse de Lange
2 minute read
9 Oct 2017
11:12 am

Gupta accounts to stay open

Ilse de Lange

Bank of Baroda has been ordered to keep the bank accounts of 20 Gupta-linked companies open and operational in the same manner as before.

Bank of Baroda

The Gupta companies have obtained an interim order allowing their bank accounts with the Bank of Baroda (BoB) to stay open pending further legal action.

Judge Tati Makgoka ordered BoB to keep the bank accounts of 20 Gupta-linked companies open and operational in the same manner as before pending further legal action they must institute within the next 15 days.

He also prohibited BoB from calling up the loans and overdrafts of four of the companies accounts open pending further legal action.

The order follows an earlier ruling by another judge in the same court, who dismissed a similar application by the 20 companies in the Guptas’ Oakbay group of companies to keep their accounts open and stop the bank’s demand to repay their loans by 30 September.

The Organisation Undoing Tax Abuse (Outa) thereafter obtained an interim interdict freezing R1.75 billion in the Gupta-owned Optimum and Koornfontein’s rehabilitation trust fund accounts with BoB.

The companies thereafter returned to court last week in a last ditch effort to keep them afloat.

The bank insisted the Gupta companies could make use of pay agents and an overseas bank account to pay their 7 500 employees, but the companies argued that this arrangement was not only impractical, but also illegal as pay agents could not perform the functions of a bank.

They argued that BoB was asking the court to bring the operation of 20 companies and the payment of all of their staff to an immediate standstill.

The companies maintained they needed at least two years to give them a chance to find an alternative bank, to restructure their affairs and to sell some of the companies if necessary.

They argued that BoB’s claim that they would suffer reputational harm if they kept on doing business with them was “a smoke and mirrors affair” as they had been doing business with them to the tune of billions of Rand for the past four years without apparent harm.

The companies maintained the Reserve Bank had put enormous and illegal pressure on BoB and other banks to close their bank accounts without a shred of proof that allegations of money laundering were true.

The National Union of Mineworkers has threatened mass strike action if the employees at the gold mines in the group were not paid.