How Gordhan lifted lid on dodgy Gupta dealings

Finance Minister Pravin Gordhan has lifted the lid on billions of rands in suspicious Gupta banking transactions.

The minister has outsmarted the Zuma-linked family with an application to the high court.

Gordhan's move lays bare the reasons why the banks suspended the Gupta companies' accounts.

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It also shows the extent of the controversial family's intricate financial dealings.

The disclosures are a response to the Guptas' insistence that the banks closed the accounts unlawfully.

In papers filed in the High Court in Pretoria on Friday, Gordhan seeks a declaratory order to show that he cannot intervene in the Guptas' dispute with the four major banks.

The court application came three days after the National Prosecuting Authority charged Gordhan with fraud.

Gordhan has received overwhelming support following the NPA's decision. His backers have claimed that it was a pretext to get rid of him as finance minister.

In his explosive affidavit, Gordhan:

• Reveals how South African banks became alarmed over transactions regarding the Guptas. The Guptas have been closely linked to President Jacob Zuma, his family and to several members of his cabinet;

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• Reveals how Nazeem Howa, CEO of Gupta company Oakbay, tried to get the minister to intervene. Howa allegedly wanted Gordhan to persuade the banks to unfreeze the accounts "in the national interest";

• Provides a platform to the banks, Reserve Bank governor Lesetja Kganyago, registrar of banks Kuben Naidoo and director of the Financial Intelligence centre Murray Michel to reveal details of suspicious Oakbay transactions totalling billions of rands, by citing them as respondents in the case;

• Points out how agreeing to Oakbay's requests for intervention would have opened up the highly regarded South African banking sector and its clients to huge international fines;

• Details transactions benefiting members of the Zuma and Gupta families to the value of billions of rands, including information on the controversial Optimum coal deal;

• States how the actions Oakbay pressured him to take would have imperilled the South African economy; and

• Provides insight into the massive pressures at play and fortunes at stake in the current "state capture" saga.

Gordhan's court action seems set to wrong-foot his opponents.

By asking for a declaratory order on his powers to intervene (or not) between bank and client, he has placed much information in the public domain.

And, by citing Absa, First National Bank, Standard Bank and Nedbank as respondents, he has freed them to legally disclose suspicious Gupta transactions without breaking the law on bank-to-client privilege and confidentiality.

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University of South Africa legal expert Marinus Wiechers said that because he is acting in his ministerial capacity, if Gordhan were to be removed as minister, his successor would not necessarily be able to retract the application.

"He acts ex officio (in terms of the office he holds), which is well within his rights because as a minister he is a legal person as such, in addition to his personal juristic personality," Wiechers said.

"Because of how Gordhan framed it, the banks are bound to share the requested information and a court can only deny the application if it lacks substance, is brought mala fides (with malicious intent/in bad faith), prejudices an ongoing investigation, or if Gordhan acted outside his statutory mandate, the last of which he certainly has not.

"A successor cannot retract an application without returning to court.

"Furthermore, because this is not a criminal case, the National Prosecuting Authority will not have a role in this process unless it can prove the application interferes with its work," said Wiechers.

In the court papers, 14 Gupta-controlled companies are named, including Sahara Computers, news channel ANN7, the New Age newspaper, Jet Airlines, a mansion in Saxonwold and VR Laser Services.

VR Laser recently landed a huge and controversial contract with state-owned arms dealer Denel.

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Gordhan said the dispute "has arisen in circumstances which have considerable importance for the operation of the banking sector of the South African economy, and its regulation by government".

He has also brought the ministerial task team into the scope of the case by stating the public interest, nationally and internationally, in the controversy.

Gordhan was appointed as part of a three-member cabinet team, which includes Mildred Oliphant (labour) and Mosebenzi Zwane (mineral resources), to look into the banks matter.

Gordhan revealed the direct representations to him by Howa and Sahara Computers.

They alleged vendettas by the banks and asked him to intervene on their behalf "in the national interest" - to avoid thousands of job losses for Gupta companies.

They also asked Gordhan for "any possible assistance" he was able to offer them "in these trying times".

Gordhan detailed a meeting he had with Howa in May. The minister said he clearly set out how he was legally and constitutionally limited in his permitted actions.

Gordhan said that if the Guptas and Oakbay felt they had been disadvantaged, they were allowed by law to lay the details of their dealings before the court.

"Similarly, I am advised that it is open to the banks, in answering this application, to disclose such reports in terms of the same provisions," said Gordhan in his affidavit.

sub_head_start Oakbay and the banks -- how it unfolded sub_head_end

APRIL 2016: Banks announce that they have closed the accounts of companies that are part of the Oakbay group, controlled by the Gupta family.

• April 8: Oakbay CEO Nazeem Howa writes to Finance Minister Pravin Gordhan complaining of the banks' decision to close Oakbay bank accounts. He claims this is part of an anticompetitive and politically motivated campaign designed to marginalise Oakbay.

• April 17: Howa writes to Gordhan tendering an apology for publicly criticising the minister.

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• April 21: The cabinet establishes an interministerial committee to investigate the banks' decision to close Oakbay's accounts.

• April 25: Gordhan receives a legal opinion on whether or not he can intervene in the matter. The legal opinion says it would be unlawful for him to do so.

• April 26: The governor of the Reserve Bank writes to the finance minister raising concerns about the deleterious effect on the banking sector of the contentious allegations made by Oakbay.

• May 24: Gordhan and other National Treasury officials meet Oakbay executives.

• May 24: Gordhan writes to Howa saying the minister of finance cannot act in any way that undermines the regulatory authorities.

• May 24:Oakbay tells Gordhan its own legal advice is that any legal approach by it challenging the closure of the accounts or the basis on which this had been effected may be stillborn.

• May 29: Gordhan receives a second legal opinion which states that banks are not legally obliged to provide Oakbay with reasons for closing its accounts and that the finance minister cannot approach the banks and intervene on behalf of Oakbay.

• June 19: Howa reveals on current affairs television show Carte Blanche that one of the banks closed Oakbay's accounts because various laws prevented it from "having dealings with any person or entity who a reasonable diligent (and vigilant) person would suspect that such dealings could directly or indirectly make us a party to or accessory to contraventions of the law".

• June 28: The CEO of Sahara writes to Gordhan apologising for public statements and pressing him to serve the national purpose.

• July 25: Howa writes to Gordhan saying the banks did not give Oakbay any examples of it transgressing the law.

• July 28: Gordhan writes to the registrar of banks and the Financial Intelligence Centre asking whether the FIC had received any reports from the banks in connection with Oakbay accounts and what the nature of the complaints was.

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• August 4: The director of the FIC writes to Gordhan giving details of suspicious transactions detected in Oakbay accounts, which led to their closure.

• August 10: Gordhan writes to Howa asking why the Oakbay CEO has not yet provided all the information about the banks' decision to close the Gupta-controlled group's accounts.

• August 12: The deputy governor of the Reserve Bank writes to Gordhan noting that a complaint from Standard Bank regarding an Oakbay company had formed the basis of an investigation.

• August 17: Howa tells Gordhan he is out of the country.

• September 9: Howa asks to meet Gordhan to consider a full file of correspondence from the bank. The meeting is not granted.

• September 2: Mineral Resources Minister Mosebenzi Zwane says the cabinet has decided that a commission of inquiry be set up to investigate why the banks closed Oakbay's accounts. This is later denied by the government.

• October 14: Gordhan files papers in the High Court in Pretoria seeking a declaratory order that he cannot intervene on behalf of the Guptas in the banking matter.

- additional reporting by Qaanitah Hunter

joubertj@sundaytimes.co.za