Baroda can close Gupta accounts

COURT RULES: REPUTATIONAL DAMAGE, PENALTY RISKS

Family firms go to court to try to force bank to keep their accounts open.

The India-based Bank of Baroda (BoB) was fully entitled to end its banking relationship with the Gupta family and their companies and could not be forced to keep on doing business with them, according to a high court judge.

Judge Hans Fabricius yesterday dismissed an application by 20 of the Guptas’ companies for an “interim interim” interdict to ensure their BoB bank accounts stayed open and to stop a demand for the repayment of loans pending their application for an interim interdict to the same effect, which will only be heard in December.

He said South Africa’s laws did not recognise “interim interim” relief, there was a slim chance of success with future litigation and the balance of convenience weighed heavily in favour of a party which sought to uphold and preserve the integrity of the established financial system and the rule of law.

BoB gave formal notice to the companies in July that their relationship would be terminated at the end of September because of the reputational damage it was suffering and the risk of penalties as a result of ongoing allegations of corruption, fraud and money-laundering against the Guptas and their companies.

South Africa’s four major banks have also closed their accounts and the companies said they faced collapse, because they were unlikely to find another bank.

BoB has reported 46 suspicious transactions, involving over R4.25 billion against the Guptas and their companies, to the Financial Intelligence Centre and said the transactions appeared to be on the increase. The bank has refused to open any new accounts for the Guptas since June 2016 and recovered R1.2 billion by calling up loans. –