Banks set to explain severing Gupta ties to state capture inquiry

Banks set to explain severing Gupta ties to state capture inquiry

- The country’s commercial banks will via representatives explain to the state capture inquiry what led to their decision to end business relations with the Gupta family

- Absa was the first of the big four banks to cut ties with the family and their business empire in December 2015. FNB, Nedbank and Standard Bank quickly followed suit

- The banks previously stated reputational risk and the need to comply with banking regulations as reasons for cutting ties with the Gupta empire

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The country’s commercial banks will through various representatives explain to Chief Justice Raymond Zondo’s Judicial Commission of Inquiry into State Capture what led to their decisions to end all business and personal relations with the controversial Gupta family and their business empire.

Absa was the first of the big four banks to close accounts linked to the Gupta’s and their businesses in December 2015 and were quickly followed by FNB, Nedbank and Standard Bank. At the time all four of the banks gave the same reasons for ending their relationships with the family and their businesses.

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The banks said they had serious concerns about possible reputational damage and could also not guarantee complying with banking regulations if they continued to provide services to the Gupta’s and their businesses. gathered that the final nail in the coffin for the Gupta business empire was when the Bank of Baroda closed all Gupta-linked accounts in January this year. reported that the Bank of Baroda said it was concerned by allegations which had surfaced of possible money laundering perpetrated by its employees on behalf of the Gupta family.

Mail and Guardian reported that despite claims to the contrary from supporters of former president Jacob Zuma and the Gupta family, all of the South African commercial banks had reached their decisions to cut ties with the Gupta family independently.

The Banking Association of South Africa released a statement in which it noted that the banks had upon completing due diligence reports and investigations all raised serious concerns about the Gupta business empire and had independently decided it would be in their own best interests not to have any business or personal connections with the Guptas.

The South African finance sector is one of the most highly regulated sectors in the world and banks have to continually conduct due diligence investigations into clients to ensure the accounts comply with the Financial Intelligence Centre Act (FICA).

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South African banks universally raised suspicion about various multi-billion rand transactions related to the Guptas and with possible ties to the Zuma family.

This week those suspicions will come under the microscope when representatives from the banks testify at the commission of inquiry.

Meanwhile, the Gupta brothers were not granted permission to cross-examine witnesses who have levelled allegations against them because the brothers were only willing to deliver their own testimony via remote link from a location outside of South Africa.

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