Gupta firms facing bleak outlook

THE future of at least 12 Gupta-linked companies, including Oakbay Investments, looks bleak when the Bank of Baroda closes its business operations in South Africa this month.

The bank told the SA Reserve Bank (Sarb) that it would be winding down its businesses in South Africa on March 31.

That prompted these Gupta-linked businesses, including seven others on a business rescue, to file urgent papers in the North Gauteng High Court yesterday to block Baroda’s exodus.

Through their counsel, advocate Owen Cook SC, the Gupta-linked companies asked the court to block Baroda’s move, saying it would cause irreparable harm to their businesses and would place at risk the job security of thousands of employees.

They also argued that the move was premature because a previous high court judgment last October had prevented Baroda from closing the Guptas business accounts. The court then ordered Baroda not to cancel the Gupta bank accounts and also not to force them to repay their loans immediately pending a full hearing on the termination of service.

Last year, Baroda wrote letters to the Guptas indicating its intention to terminate their services, citing, among other things, the Gupta leaks and reputational damage to their brand.

Cook said that despite the judgment in October last year, Baroda continued with its plans to terminate his clients banking services, arguing that this was in contempt of court.

“In mid-January this year, the representatives of Baroda in India arrived in South Africa for a meeting with the board members. In that meeting a decision was again taken to terminate the services of my client,” Cook said.

He also said the situation worsened when on February 1, Nedbank terminated its banking clearing services for Baroda.

Cook said Baroda should have asked Nedbank to delay their decision until a high court had made a ruling on the dispute between Baroda and the Guptas.

Baroda, through its counsel advocate Azhar Bham, said the decision to terminate was “commercial” and had nothing to do with Gupta leaks.

Bham expressed surprise at the Guptas’ legal challenge, saying they failed to take similar action against the country’s four major banks when they terminated their services to them.

“The decision to close business was taken by the majority shareholder which is the State of India. They took a decision to rationalise its operations throughout the world. They came to the conclusion to close its South African operations for lack of profit-making,” Bham said.

Judgment was reserved.