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Gupta firms roasted in bank court bid

There was a “well-founded suspicion”, on uncontested facts, that Gupta-linked companies had “subverted the integrity of the financial system, to put it gently”, Judge Hans Fabricius said in a judgment on Thursday.

Fabricius took just five minutes to dismiss the attempt by companies in the Gupta family’s stable to keep their last local bank accounts open. But his 74-page written judgment was littered with scathing comments about the companies and their conduct.

The 20 companies, all vehicles for the Gupta family or its close associates, had argued that closing their bank accounts would put them out of business, would leave them unable to pay salaries to thousands of employees and would infringe on their rights in a number of ways.

The Bank of Baroda, owned by the Indian state, plans to close the accounts at the end of September. All other local banks had already closed their accounts, the companies said, during a period when the auditors and the sponsor for the Guptas’ once-listed Oakbay vehicle also quit.

The Gupta companies include Sahara Computers, a major distributor of information technology; VR Laser, a partner of state-owned arms company Denel; and a number of Eskom coal suppliers.

They had argued that Baroda should not be allowed to close their accounts until at least July next year, and must prove objectively that the Gupta family had done wrong before shutting them down.

Fabricius disagreed on every count. He added that the Gupta companies had, in a manner that was “highly objectionable”, failed to disclose that they did have the means to pay salaries and that some companies in the group already had new arrangements in place.

Gupta companies — and an apparently unrelated but vocal group of social media users — had warned that acting against them would bring harm to their employees. But the small Baroda bank had never directly paid salaries, Fabricius found, and does not have the infrastructure to do so.

Baroda had only paid a lump sum to a third-party payment agent, which had paid out the money in turn. Such a payment agent can be paid using a foreign bank account, Fabricius said, or the debtors of the various companies can make payment to the agent. Either way, the companies “will be perfectly capable of paying their employees and suppliers”, he said.

Fabricius also found that, whereas the companies had argued that their constitutional rights would be infringed it their accounts were closed, their own unusual legal tactics sought to infringe on Baroda’s rights. The Gupta companies had attempted to introduce an entirely new line of legal argument on the day the matter was heard, which would in effect deny Baroda the right to have a fair hearing.

Fabricius said the Gupta companies had asked for an “interim-interim” interdict against the closing of their accounts so that they could argue for a proper interdict in December.

Then they still wanted to argue for a final interdict in 2018. This, they suggested, meant their evidence should not be considered at the “interim-interim” stage, because a ruling against them would deny them access to the court for an interim hearing.

South African law does not make provision for an “interim-interim” interdict, Fabricius said.

He added: “A bank, and not a court, must decide to which extent it will allow its reputation to be tarnished by allegations of criminal activities made in the media which refer to its client and the fact that it is such a client’s banker.”

He also held that “the balance of convenience weighs heavily in favour of a party that seeks to uphold and preserve the integrity of the established financial system and the rule of law”.

Baroda had not proven that allegations of state capture against Gupta-linked companies were true, he noted, and did not need to — but those allegations were of grave concern.

“When reading details of the various allegations … I could not help to wonder whether, unbeknown to me, democracy and the rule of law had somehow been suspended.

“Could it be possible that the future, so bright in 1994, was now only history? Do the constitutional obligations imposed upon the prosecuting authority … still exist? Do the various investigating bodies of the police service … still remember their constitutional duty to combat and investigate crime? I cannot give an answer in these proceedings for obvious reasons, but the mere fact that the questions arise [should] gravely concern each and every one of us.”

On Wednesday, and on Thursday morning before the judgment was delivered, a group of social media accounts rallying around the flag of “white monopoly capital” started accusing Fabricius of racial bias in previous judgments and being part of a “WMC lobby”.

Similar claims were repeated on the previously Gupta-owned 24-hour news channel ANN7, which reported the judgment under banners including “Plea to save jobs dismissed”.

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Phillip De Wet
Guest Author

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