Banks 'got it right' by cutting ties with Guptas

The Banking Association of SA yesterday said the decisions by the big four banks to stop doing business with companies owned by the Gupta family were well considered.

Basa managing director, Cas Coovadia, said banks frequently conducted due diligence checks on their clients' affairs to satisfy themselves that regulations were being followed - especially those relating to money-laundering.

There has been intense speculation surrounding the decisions by Absa, Standard Bank, Nedbank and FNB to close the accounts of Gupta-owned businesses following weeks of allegations about the family's ability to influence appointments to President Jacob Zuma's cabinet.

The EFF has claimed that the Guptas used a recent visit to Dubai by Zuma to move R6-billion out of the country without complying with exchange-control regulations.

The Guptas' Oakbay Resources and Energy announced about a week ago that its non-executive chairman, Atul Gupta, and CEO Varun Gupta, had resigned "with immediate effect" because of the banks' decisions.

In a letter to employees, Oakbay Investments CEO Nazeem Howa said "the closure of our bank accounts has made it virtually impossible to continue to do business in SA" but "we are confident that, through the family's decision to distance themselves from the business, banking relationships will soon be restored".

Basa stressed yesterday that the decisions were "taken separately and independently by some banks to terminate their business relationships with Oakbay ". He said it was "incumbent on Basa to make the following points, [among Lothers] to stop ... speculation":

• Each bank acted "with total respect for client confidentiality and all relevant regulations";
• "Banks are [among] ... the most stringently regulated businesses in the country because they hold public deposits in trust and must conduct business in a manner that does not introduce risks into the economy;
• "Among the array of regulations banks must be governed by are those related to the current Financial Intelligence Centre Act and anti-money-laundering regulations;
• "Clients of banks must also follow regulations related to these aspects, and it is incumbent on a bank to ensure that its clients do abide by these regulations;
• "These regulations make it incumbent on banks to conduct a detailed due diligence on clients, particularly those of a substantive nature and those that are in the public domain.
• "A bank will take these matters into account when considering relationships with clients, and will take appropriate action, based on the circumstances."