The Financial Intelligence Centre (FIC) may be in possession of a long list of suspect transactions in Gupta and Oakbay-related bank accounts but it has not referred the matter to the Hawks.
The list, consisting of 72 transactions and amounting to R6.8-billion, linked to the politically connected family and its Oakbay group of companies, is included in court papers lodged by Minister of Finance Pravin Gordhan last week.
These had been flagged by the major banks and reported to the FIC, but whether the centre has handed the matter over — and to whom — for investigation is something it cannot legally disclose.
The Directorate for Priority Crime Investigation (aka the Hawks) has said it has not received a suspicious transaction report from the FIC relating to any of the transactions.
Any indication of criminal activity is likely to have been referred to the Hawks, although, if the transactions involve tax issues, the matter may be handed to the South African Revenue Services (Sars) for investigation.
Sars would not say if it had received information from the FIC. It said it cannot comment on the affairs of taxpayers.
Sars head Tom Moyane recently came under fire for sitting on a FIC report for months which showed R1-million in unusual payments to the account of Sars tax chief, Jonas Mkwakwa and his partner.
The Financial Intelligence Centre Act (Fica) requires the FIC to operate under strict confidentiality, although a provision in the Act allows the centre to disclose information when it is required for use in a legal case. On these grounds, Gordhan requested and received the list of the flagged transactions from the FIC.
The list then came to light when a court application was filed last Friday seeking a declaratory order stipulating that the finance minister cannot interfere in the closure of Gupta family and business bank accounts.
The application means the banks can now submit full reports explaining why they closed the accounts, which will place this information in the public domain.
On Tuesday, the Guptas and Oakbay welcomed the application, expressing “delight” at the opportunity to clear their names. But, on Wednesday, Gupta lawyers issued a letter offering the minister the opportunity to withdraw his application, with costs, by that afternoon. He reportedly declined.
The JSE, on which Oakbay is listed, is investigating the matter.
The Industrial Development Corp-oration, which lent Oakbay the money to buy the Shiva uranium mine (named in some of the larger FIC-listed transactions), this week said it was seriously concerned about the reports and would approach Oakbay about the matter.
Fica came into effect in early 2002. The centre is established as an institution outside the public service but within the public administration.
Fica obliges the reporting of suspicious transactions to the centre. This pertains to “accountable institutions” such as banks. It also applies to a long list of others, including attorneys and real estate agents.
The FIC said it analyses transactions reported to it, along with other data and in terms of other laws, to establish a hypothesis about what an individual or a company is doing.
“It’s like someone with some symptoms of an illness,” said Edward James, the senior forensics manager of ENSafrica. “You first have to go to the doctor, who will diagnose the symptoms as an illness or not.” A list of suspicious and unusual transactions doesn’t necessarily mean they will always be diagnosed as being criminal in nature, he said.
The FIC’s Panna Kassan said the centre could share or refer the results of its analysis with a state institution that could take further action.
Asked if it had referred its analysis of the Gupta transactions to any such institution, the centre said the FIC Act prohibited it from disclosing whether it had made any information available for investigation.
Even in disclosing information for the purposes of court proceedings, as the FIC has done, it is obliged to protect the identity of the reporter.
Speaking through his lawyer this week, Ajay Gupta said “each and every” transaction in the minister’s application will be dealt with in full and their initial analysis of the transactions listed suggests nothing untoward. “None of the transactions related to Oakbay or the Gupta family, which are over a five-year period, was flagged to the FIC as suspicious.”
But the FIC said the certificate produced in terms of Gordhan’s legal action “is a list of suspicious -transaction reports submitted to the FIC in terms of section 29 of the FIC Act, which obliges all business, -including financial institutions, to submit reports on transactions which they deem suspicious or unusual to the FIC. The confusion seems to arise from a misunderstanding by parties making comments in the media about the Act and what the details on the certificate represent,” the FIC said.
In its 2015-2016 annual report released this week, the FIC stated that banks had submitted 98 054 suspicious transaction reports, indicating the possibility of illegally generated funds, in that financial year. It said about 89% of all reports received by the FIC are filed by banks.
Gupta said not one of the listed transactions was stopped by the FIC, which is empowered by the Act to block transactions.
James said, although the centre can block a transaction, in general, the information would reach the FIC too long after the fact.
Although Fica requires institutions to comply with an FIC order, it’s not clear that the FIC would request banks to close an account.
“Any one of these banks is subject to international legislation. And, if it’s quite clear to them the conduct of an individual or a company is at risk of behaving unlawfully, it’s likely the bank is going to choose to divorce itself from the individual,” James said. “Banks go through their own processes before being told to shut an account and would consider international exposure and avoiding unnecessary risk.”
This week the Guptas pointed out that the Reserve Bank, in a letter signed by the bank’s deputy governor and registrar, Kuben Naidoo and attached to Gordhan’s application, had acknowledged that all transactions were approved.
The letter, dated August 12 2016, said the office of the registrar of banks had not received reports from banks regarding these transactions, although it added that the information provided by the banks to the FIC is generally not forwarded to the registrar’s office.
Naidoo said he had been informed about a foreign exchange transaction involving Oakbay-associated VR Laser Asia that could form the basis of an exchange -control investigation by the bank’s financial surveillance department, which is concerned with exchange control.