Series of red flags was raised for bank

STANDARD Bank’s former general counsel, Ian Sinton, yesterday detailed how the banking giant closed the account of one of the Gupta-owned companies after they demanded money that was being held in a mine rehabilitation trust.

Sinton told the commission of inquiry into state capture that soon after the Guptas took over the Optimum Coal mine in Mpumalanga from mining giant Glencore in 2016, Oakbay Investments chief executive Ronica Ragavan told Standard Bank to transfer the R1.7million in a rehabilitation trust for the mine to the company.

He said the bank refused and Ragavan again asked for the funds to be transferred to the Bank of Baroda, but the request was also refused.

According to Sinton, Standard Bank wanted permission from the trustees but the Guptas changed the trustees and they gave the bank the green light. But Standard Bank still refused and asked for the Guptas to get permission from then Mineral Resources Minister Mosebenzi Zwane as he was the trust’s custodian, and the ANC national executive committee member then wrote a formal letter to the bank.

The bank then closed the accounts of Optimum Coal and the Optimum Mine Rehabilitation Trust. Standard Bank closed the Guptas’ accounts after Absa had terminated accounts of several companies owned or linked to the controversial family in 2015.

Professional services firm KPMG followed Absa and withdrew as Oakbay’s sponsor on the Johannesburg Stock Exchange, citing reputational risks. Sinton said this raised red flags for Standard Bank. He also testified that in 2014, millions of rands were paid by troubled state-owned freight and rail transport company Transnet to Regiments Capital, which described itself as an integrated investment banking and advisory firm.

Regiments Capital received payments of about R210m from Transnet, which was shared between its directors, Gupta associate Salim Essa and businessman Kuben Moodley. Essa initially nominated Chivita Trading to receive the money but later put forward letterbox company Homix.

Chivita was paid over R80m in a few months while Homix got about R95m from Regiments Capital. Over two days in April 2014, R40m was paid to Chivita and another R5m the following month. In July that year, Chivita received over R23m from Regiments Capital while Homix received R16.5m in November. Sinton said Regiments Capital directors Niven Pillay and Litha Nyhonyha would each take large amounts – R2m at a time.

Moodley’s company, Albatime, was paid almost R1.5m. The directors of Regiments Capital said Moodley looked for opportunities for the company in the public sector. Regiments Capital was brought into the Transnet deal by global management consulting firm McKinsey as its supplier development partner.

McKinsey would pay 30% of its fees to Regiments Capital, which then would pay 30% of its share to Essa, whose share was raised to 50%.

Sinton said Regiments Capital paid exorbitant fees and he found their explanations implausible, hence the banking giant terminated its relationship with the company.