Zuma association has Guptas looking increasingly isolated in South Africa
The Gupta family are selling their assets in South Africa to little-known companies as their access to banking facilities dries up and allegations intensify that they used their friendship with the president Jacob Zuma to wield undue influence over his administration.
Last week they announced the sale of a coal business to a Swiss company that has no history in the commodities business, after saying that they plan to sell their media unit to a former government spokesman in a deal the family are funding themselves. They have said that without banking facilities they will not be able to pay workers.
“The Guptas allegedly use very elaborate structures to do their business and may be selling assets to circumvent their lack of access to banking facilities,” said Darias Jonker, an Africa analyst at risk advisory firm Eurasia Group. “I wouldn’t be surprised that as these deals progress and we take a closer look, we find that there’s been no real transfer of ownership.”
The family is facing a backlash from politicians and civil society groups over allegations they used a friendship with Mr Zuma and a business relationship with one of his sons to secure sweetheart deals from the government and state companies. The scandals put a spotlight on Mr Zuma’s dealings and opened fissures in the ruling African National Congress, with senior officials speaking out against what is locally termed “state capture”.
South Africa’s four biggest banks shut Gupta-controlled company accounts last year, citing reputational risk and regulatory concerns. India’s Bank of Baroda, the last lender to
continue doing business with them, is in the process of following suit.
The Guptas, who moved to South Africa from India in the 1990s, deny wrongdoing and claim they are being targeted by established white businessmen intent on protecting the profitability of the assets that they built up during apartheid. Mr Zuma dismisses accusations that he has been unduly influenced by the family or given them preferential treatment.
Gupta-controlled Oakbay Investments said last week it agreed to sell its Tegeta Exploration & Resources coal unit for 2.97 billion rand (Dh896.3 million) to the closely-held Charles King, a Swiss company, to save jobs.
Two days earlier, it announced it would lend Lodidox, a company whose sole director is Mr Zuma ally and former government spokesman Mzwanele Manyi, 450m rand to buy a newspaper and 24-hour television news station that run coverage supportive of the president and attack his opponents within the ANC. Mr Manyi became the director of the company, headquartered in a residential area of township of Soweto near Johannesburg, in June, according to company records.
The disposal of Tegeta, which includes the Optimum and Koornfontein coal mines and a stake in Africa’s biggest coal export terminal, is subject to conditions that are expected to be concluded in 12 months, Oakbay said. Oakbay and Mr Zuma’s son, Duduzane, bought Optimum through Tegeta for 2.15bn rand from Glencore in December 2015.
The Guptas became a household name in South Africa in 2013 after it emerged that they had used a military base near the capital, Pretoria, to land a chartered jet bringing guests from India to a family wedding. The use of the so-called national key point by civilians for private business is illegal.
Separate reports by the nation’s graft ombudsman in November, and the country’s main church organisation and a team of top academics in May alleged that they used their links to the president to secure contracts and deals from state companies including coal supply deals with the power utility Eskom.
“The Guptas have been exposed” and are becoming more vulnerable, says Mark Swilling, a professor at the Stellenbosch University who convened the academics’ study that implicated the family Guptas in the alleged looting of state funds. “They may be responding to the changing of the political landscape.”