Bank of Baroda to set up trust account for frozen Gupta-linked funds

28 February 2018 - 15:47 By Naledi Shange
A man walks past the Bank of Baroda headquarters. File photo.
A man walks past the Bank of Baroda headquarters. File photo.
Image: REUTERS/Danish Siddiqui/File Photo

As the Bank of Baroda prepares to withdraw from South Africa‚ it has shed light on what will become of the frozen Estina Dairy funds as well as the Optimum and Koornfontein rehabilitation funds.

The rehab funds which are required by law to be kept in a trust account‚ were frozen following a court order applied for by the Organisation Undoing Tax Abuse.(Outa). Preservation orders obtained by the Asset Forfeiture Unit further froze around R100-million kept in various Baroda bank accounts for Gupta companies.

In court papers filed in the Pretoria High Court in response to a new application by the Gupta family companies‚ Baroda says it will be setting up a trust account to keep the more than R2-billion from these accounts and unclaimed deposits which were made to the bank by other clients.

This was contained in an affidavit by CEO of Baroda‚ Manoj Jha in response to the urgent court application filed by 20 companies belonging to the Gupta family in an attempt to prevent the bank from shutting its South African operations.

The matter will be heard by the Pretoria High Court on Thursday.

The bank announced in January that it planned to close its branches in the country following a decision by its parent company in India to downscale global operations.

"The Branch is however setting up a trust account in terms of Section 78(2) A of the Attorney Act with [law firm] Tabacks and the Standard Bank of South Africa for the purposes of holding (i) all unclaimed deposits and (ii) the accounts required to be frozen in terms of the OUTA order and for such amounts that are required to be frozen in terms of the recent Estina Preservation Order (iii) the recovery [of] the balance of amounts owing to the branch by borrowers‚" Jha's affidavit read.

In September 2017‚ Outa launched an application against the trustees of both the Optimum and Kroonfontein Rehabilitation Trusts‚ both of which are Gupta-owned companies.

The company raised concerns about alleged mismanagement of the trust funds by the trustees‚ people linked to the Gupta family and Oakbay Investments director Ronica Ragavan.

They obtained an interim interdict‚ requiring that the Bank of Beroda continue to hold the trust funds in an interest-bearing account‚ pending further litigation.

Last month‚ the Estina preservation order was granted in the Bloemfontein High Court after Oakbay was charged with fraud‚ theft‚ conspiracy to commit fraud‚ theft‚ and contravening the Public Finance Management Act.

The order revealed how the Guptas and their business associates became beneficiaries of the lion’s share of R220-million paid by the Free State agriculture department to the Estina company in a project meant to benefit the poor.

"In terms of the Estina Preservation Order‚ the Branch has duly frozen those accounts‚" Jha said.