Bank Of Baroda Played Key Role in Gupta’s ‘State Capture,’ Says Report

The Bank of Baroda played a key role in allowing the Gupta family, accused of “state capture” in South Africa, to move hundreds of millions of dollars linked to alleged backroom deals into offshore accounts as far flung as Hong Kong, UK, and the U.S, according to an investigation by the Organized Crime and Corruption Reporting Project (OCCRP) and the Hindu.

While the bank’s headquarters in India denies any wrongdoing, the Hindu reported on Feb. 27 that its reporters got access to interviews and documents that show that the bank’s South African branch issued unapproved loan guarantees, nipped internal compliance efforts in the bud, and prevented regulators from learning about suspicious transactions, which ultimately benefited the Gupta empire.

The report says that the bank, whose account the Guptas used since 2005, hosted numerous suspicious transactions with their real companies and shell companies controlled by the family, such as back-to-back loans and transfers with no apparent legal or commercial purpose. The investigators suspect that were used to disguise the origin of the money.

The transactions of Gupta accounts dominated the entire Bank of Baroda branch in Johannesburg, and 4.5 billion rand (about $532 million) was transferred among the companies between 2007 and 2017. Zuma’s son Duduzane and one of his wives, who has a position in the family’s company, were beneficiaries of numerous dodgy transactions, the report added.

The documents state that while bank employees filed alerts about irregularities, the bank managers used their authority to suppress them and to mark these transactions as “genuine.” Reports of suspicious activity never reached the South African Financial Intelligence Centre, the state body in charge of reviewing and acting on them.

The Hindu reported quoting a senior Indian government official that the bank asked the Central Vigilance Commission to initiate penalty proceedings against two officials — one of them being the South African branch’s head Sanjiv Gupta, who may face disciplinary action or dismissal over the bank’s functioning in the country. The bank announced on Feb. 12 that it is shutting down its South African branch.

The Bank of Baroda in a response to the Hindu-OCCRP questions, stated: “The South African operations of the Bank have always been, and continue to be conducted in accordance with the laws and regulations of the home and host country regulators.”

The Indian state-owned bank came under probe as it emerged in April 2016 that it was the only bank willing to do business with the Gupta brothers. The Guptas came under public heat after details of their dealings were made public in the 2016 report, State of Capture, by former public protector Thuli Madonsela.

The Gupta brothers, who are currently on the run, are accused of influence peddling and state capture along with former South African President Jacob Zuma, who resigned on Feb. 14 under pressure from the ruling party African National Congress. South African elite police unit Hawks also raided the family’s mansion in Saxonworld, Johannesburg, froze their assets, and issued an arrest warrant for Ajay Gupta. The former president’s son Duduzane, who has been pointed out as key beneficiary in Gupta’s financial dealings, is also believed to be on the run. The family and Duduzane are said to be in Dubai.