Lawyers advised Pravin against ‘mediation’ effort
FINANCE Minister Pravin Gordhan would have broken the law had he agreed to help Gupta-owned Oakbay Investments by mediating on its behalf with the banks.
Gordhan obtained two legal opinions after the family put pressure on him to intervene.
Senior counsel Jeremy Gauntlett advised that the government should not fight the Guptas’ battles with the banks.
The legal opinions were among papers filed by Gordhan in the High Court in Pretoria on Friday when he sought a declaratory order from the court that he could not intervene on behalf of the Guptas with the banks.
Gordhan first sought legal advice after the cabinet decided that three members of the cabinet — himself, Labour Minister Mildred Oliphant and Mineral Resources Minister Mosebenzi Zwane — engage the banks on behalf of Oakbay.
After meeting representatives of Oakbay, Gordhan obtained further legal advice to clarify whether banks were obliged to provide Oakbay with reasons for closing its accounts and whether a minister could ask the banks for their reasons for doing so.
Gordhan did not participate in meetings of the cabinet committee tasked with helping the Gupta family following the legal advice.
The first opinion, on April 25, stated that it would be “unlawful” for Gordhan to intervene.
“The mooted ministerial meeting is not authorised by legislation governing the financial sector,” the advice said.
Despite this advice, Zwane still met with the banks, but they would not reverse their decisions.
“We conclude that the contemplated meeting is not authorised by law,” the legal advice read.
The legal advice explained at length why nobody could intervene in a relationship between banks and their clients.
“It is that save to the extent that this is authorised by law, no cabinet member or cabinet collectively has any power to intervene in the banker-client relationship,” it said.
Gordhan was informed that the government’s attempt to extract information or an explanation from the banks on why they closed the Gupta bank accounts was unlawful and unenforceable.
“Banks do not only have a contractual entitlement but also a legal obligation to choose their customers carefully,” the advice read.
Interestingly, the Gauntlettled advice said that if the government intervened to help the Guptas, it would expose itself to criticism of inconsistent conduct because the claim by Deputy Finance Minister Mcebisi Jonas that the Gupta family had offered him the job of finance minister had not been dealt with.
“If it is correct that significant owners of Oakbay presented themselves as people with power to offer ministerial position, they then qualify as PEPs [politically exposed persons].
“In that event, banks’ perception that Oakbay presents business and reputational risks to themselves and to their other customers cannot be secondguessed, especially not by government.”
The second legal opinion, submitted to the National Treasury on May 29, noted that it would not be permissible for the minister to approach the banks to request reasons for the closure of the accounts, and the banks would not be obliged to give that information to the minister.
“The regulatory system does not provide a mechanism through which the minister may intervene at the instance of Oakbay.”
Banks do not only have a contractual entitlement but also a legal obligation to choose their customers carefully