Banks may still not touch New Age accounts

21 August 2017 - 14:44 By Katharine Child
Local banks refuse to host accounts for Ajay and Atul Gupta's companies.
Local banks refuse to host accounts for Ajay and Atul Gupta's companies.

Banks may still be cautious about allowing The New Age or ANN7 to open bank accounts for businesses purposes‚ even after the Guptas have sold these companies‚ say analysts.

The Guptas’ company Oakbay has sold two thirds of the New Age newspaper and all of ANN7 TV station to their friend Mzwanele Manyi in a vendor-financed deal‚ according to a statement Oakbay released on Monday morning.

A vendor-financed deal is when the company gives or lends the money to a person to buy their goods or their company. In other words‚ they lend the money needed for the purchase.

Mzwanele Manyi's Lodidox company was listed in 2012 and its business registration address is house in a residential area in Soweto. Manyi tweets in support of the Guptas daily.

It appears that by allowing their friend Manyi to buy their media company‚ the Guptas can access new bank accounts to keep the companies running.

Analysts said the new bank accounts would still be scrutinised under the Financial Intelligence Centre Act.

The Guptas‚ due to appearances of money laundering‚ have had their local bank accounts closed and have learned that the Indian Bank of Baroda plans to close their banks accounts by the end of August. This would make paying staff at ANN7 and The New Age very difficult.

Oakbay has also been delisted from the Johannesburg Stock Exchange‚ impeding its ability to raise money through issuing shares.

Oakbay was forced to be delisted after it lost its sponsor company‚ which is legally required to be listed. It also lost auditors KPMG‚ a requirement for listing. Economist Dawie Roodt said if he had a client that wanted to invest money with him‚ but he believed the money to be acquired through ill-gotten gains‚ he could not take the money.

But if this client's friend came to him a few days later with the same amount of money‚ he would still be suspicious and ask questions.

"I have to know my clients [banks have to know theirs]‚” he said‚ speaking of his obligations required by the Financial Intelligence Centre Act.

"Banks ain't going to touch this. It is obvious to a blind man what is going on."

Professor Alex Van Den Heever‚ Chair of Social Security Systems Administration and Management Studies at the Wits School of Governance said the banks will still scrutinise the bank accounts of the new company‚ Lodidox.

"If this is an attempt to circumvent the closure of bank accounts‚ the possibility exist the banks may look into this. It doesn’t really appear as a legitimate transaction."

He said that an investigation of the company buying the newspaper and TV station was needed.

"We must ask what kind of company this is. If it is not trading and it didn't have a clear business purposes until this transaction‚ then it also raises all sorts of questions."