A fifth South African bank has closed the accounts of the controversial Gupta family.
The Venda Building Society (VBS) Mutual Bank is the latest to decline to do business with the Guptas, closing two of the family’s accounts.
VBS is the same bank that granted President Jacob Zuma a loan of R7.8m so that he could repay the state for his portion of the bill for security upgrades to his Nkandla home, as ordered by former Public Protector Thuli Madonsela.
The two accounts – both business accounts – were terminated in January following deliberations by the bank’s bosses.
The bank sent a terse letter, dated March 9, addressed to Ronica Ragavan, acting chief executive of Oakbay Investments, the holding company for the Gupta family’s businesses in South Africa.
The letter reads: “Please be advised that VBS Mutual Bank, in line with our risk appetite framework, has declined your request for new accounts applied for and [your] continued relationship with the bank.”
The letter goes on to explain that the Guptas’ accounts would remain open until May 22, “after which your existing accounts will be deactivated”.
“Please provide the bank with bank account details [of another financial institution] to which funds from all you accounts will be transferred,” the letter reads.
VBS spokesperson Ndivhuwo Khangale declined to provide further details, saying: “We’re guided by the bank-client confidentiality clause and cannot comment on those issues.”
City Press, however, understands that the VBS board declined the Guptas’ reapplication for new accounts after its automated financial security risk system was activated in January and kicked them out for being “politically exposed”.
“The risk office picked up that these guys opened two accounts with the Johannesburg branch when the system warned that they were a risk. When a bank has such clients, it is more work to track their transactions,” said a source close to VBS.
“It’s not a lot of money they had deposited and they were not the bank’s top clients. The issue is that, unlike a single transaction like the president’s bond, they would have a lot of transactions,” the source added.
It is unclear exactly when last year the Guptas opened the accounts.
The Guptas’ banking woes started last year when all four of the country’s major banks declined to do business with the family’s companies, without providing reasons.
The family’s audit firm, KPMG, also terminated the relationship with the Guptas’ companies.
The Guptas and their lieutenants, including former Oakbay chief executive officer Nazeem Howa, tried to pressure former finance minister Pravin Gordhan to intervene in their banking crisis, and Gordhan was forced to approach the Pretoria High Court for a declaratory order confirming that, legally, he was not able to do so.
Mining Minister Mosebenzi Zwane, who is thought to be a Gupta deployee in Cabinet, also tried to intervene on the family’s behalf.
Attached to Gordhan’s court papers was a certificate from the Financial Intelligence Centre detailing 72 suspicious transactions totalling R7bn that the Guptas and their companies had allegedly made, indicating why they could have problems with the banks.
Their banking troubles forced the Guptas to try to buy their own bank through their business associate, Salim Essa.
The bid failed, however, because Essa’s company, Vardospan, failed in its court bid to force Treasury and the SA Reserve Bank to make a decision on their application to buy the bank in a R450m deal.