Don’t push us around, Reserve Bank tells Gupta allies

"Vardospan, in its application lodged on Monday, claimed the Reserve Bank, the registrar and the finance minister had unreasonably delayed taking a decision on two applications it had submitted." (Gallo)

"Vardospan, in its application lodged on Monday, claimed the Reserve Bank, the registrar and the finance minister had unreasonably delayed taking a decision on two applications it had submitted." (Gallo)

The Reserve Bank and the registrar of banks said they cannot be strong-armed into approving an application for a Gupta business associate to acquire a bank.

In an attempt to force a decision from the Reserve Bank, the registrar of banks and the finance minister, Salim Essa’s Vardospan Limited lodged an urgent application with the high court in Pretoria this week.

An answering affidavit deposed on Thursday morning, on behalf of the Reserve Bank and the registrar of banks, said the urgency had been “self-created” and that key information about how the bank would be funded, and where the funding would come from, had not yet been provided.

They had also asked for the financial statements of several controversial companies — Tegeta, Trillian and VR Laser — but these were still to be provided.

Vardospan is owned by two entities, the one wholly owned by Vardospan director Hamza Farooqui and the other wholly owned by Gupta associate Essa. Essa is a shareholder in Tegeta Resources and Trillian Capital Partners and owns 100% of VR Laser Services.

All three companies have been associated with controversial deals that indicate the undue influence the Gupta family has on the state and were implicated in the State of Capture report by former public protector Thuli Madonsela.

Vardospan made its bid to purchase the Habib Overseas Bank in August last year, shortly after the Gupta’s family and business accounts were closed by South Africa’s big four banks.

The Guptas have continued to bank through the Indian state-owned Bank of Baroda, but last month it was reported that the bank had begun closing their accounts. The Guptas have said this is false.

Farooqui has denied that the bid for the bank has anything to do with the Guptas.

Vardospan, in its application lodged on Monday, claimed the Reserve Bank, the registrar and the finance minister had unreasonably delayed taking a decision on two applications it had submitted. The approval of both applications is required for Vardospan to acquire the majority shareholding in the little-known Habib Overseas Bank.

Vardospan and the seller, Pitcairns Finance SA, had agreed on a deadline of March 31 for the applications to be approved or the deal would fall away. Vardospan asked the court to force a decision on the applications by Friday.

But the Reserve Bank and the registrar said the deadline was self-created and that the Banks Act stipulated no timeframe in which such applications must be processed.

The central bank respondents said they could not be “strong-armed” into making a decision before they had given the application careful consideration.

“The report by the independent auditors referred only to the availability and source of funds from one shareholder, namely Mr Salim Essa. No mention was made of the availability and source of funds of the other key shareholder, namely Mr Hamza Farooqui,” according to the answering affidavit.

“In addition, the latest audited financial statements of Tegeta Resources, Trillion Capital Partner and VR Laser Services had not been provided.”

The registrar argued that, even if it had all the information it required, a considered decision could not be made in 24 hours. It noted the deadline agreed to between Vardospan and Pitcairns had been extended once before, and so surely could be extended again.

See Business Page 1, “Urgency is self-created, says Reserve Bank”

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

Client Media Releases

Different routes for tackling matric through distance learning
UKZN specialist all set for US study trip
IIE Distance/Online learning at Rosebank College