Other lenders like First National Bank, Barclays Africa Group Limited, Standard Bank and Nedbank had earlier decided to stop banking services to Oakbay Group
Companies owned by the South Africa-based Gupta family plan to take legal action against the Bank of Baroda in India to stop it from closing their accounts. Banking services for the family have already been severed by four leading banks in the country.
Many companies that are a part of the Guptas’ Oakbay Group are involved in litigation against the Bank of Baroda over “its unlawful attempts” to close the companies’ accounts, and “particularly in light of the unreasonable notice period given”, Gary Naidoo, the company spokesman said in an email statement sent to the media. The bank has given additional time until September 30 for the closure of the accounts.
Read More: Guptas, Who ‘Captured South Africa’ in Less Than Two Decades
“This has not been afforded by the Bank of Baroda to enable these companies to transfer their banking facilities to a new bank, but rather has occurred in the context of the ongoing litigation between the parties,” Naidoo added.
Account Closure to Jeopardise Salaries
Pointing out that no other bank has agreed to offer them alternate banking services, Naidoo said that the closure of their accounts by the Bank of Baroda will effectively leave the firms without any other banking services available to them.
The Gupta family had told the Vadodara-based bank that they had found another company that was willing to offer them banking services, Bloomberg had reported earlier this week, citing a person familiar with the matter.
The news of Bank of Baroda cutting ties with the Guptas first emerged in March this year, leaving employees worried about their future in the Oakbay Group. The company had said that bank account closures could impede payment to about 7,000 employees.
Banks Cutting Ties
The woes of the family over its relationships with lenders began last year, after the controversies regarding the Guptas’ influence in South African government matters and state-owned companies became deeper. Four of the country’s leading banks – First National Bank, Barclays Africa Group Limited, Standard Bank and Nedbank – informed Oakbay in March 2016 that they were stopping their banking services to the group. The lenders cited the requirement on their part to comply with international banking rules while dealing with clients whose reputations are under shadow.
Other financial companies, such as Sasfin Capital and KPMG, decided to discontinue the association as well.
Controversies Around the Guptas
The family, with Atul Gupta at the helm of affairs, have risen to a position of enormous power in the country over the last two decades of their life in South Africa. Their close relationship with President Jacob Zuma has been under public and media scrutiny, with the two families been accused of colluding with each other for personal gains against the interests of the people and the state. The Guptas have been mired in several controversies, including alleged capture of vast stretches of land to influencing state institutions, Cabinet appointments and state-owned companies.
