Gupta companies get another bank account reprieve

The Bank of Baroda on Monday learnt the price of being the last institution to try to end their relationship with the Gupta family: at least another two weeks of doing business with Gupta companies, and every prospect of being locked into the relationship for months more.

High court judge Tati Makgoka on Monday temporarily interdicted Baroda from “in any way limiting the manner in which the banking accounts are operated” by a long list of Gupta-owned companies, and also barred the bank from calling up outstanding loans.

Baroda has been trying to end its relationship with the companies since July.

The Gupta companies had to launch a final application on the attempted closure of its accounts within 15 days, Makgoka ruled, or the interim interdict would fall away.

Should the companies indeed launch such an application, the ban on closing their accounts is expected to remain in force for the duration of those proceedings — which both sides expect to stretch well into 2018.

Makgoka awarded costs against Baroda for the main part of the Gupta companies’ application, for a total of seven advocates the companies used in the matter.

The Gupta companies have argued that they would be put out of business if Baroda closed their bank accounts. They have also argued they would be unable to pay their employees without access to banking services.

In a previous court case in the matter, in which the companies asked for what they described as an “interim-interim order” against Baroda, high court judge Hans Fabricius found that the Indian state-owned Baroda did not have the footprint in South Africa to make salary payments. The Gupta companies could continue to pay salaries using pay agents that were handling that function already, Fabricius said.

The Gupta companies have claimed throughout proceedings that Baroda is the last bank with which any of them held accounts, after all major banks ended relations and all other banks refused to take on their business.

It is neither clear how the Gupta companies paid their September salaries, nor how they intend to make such payments in October. It had originally appeared that pay agent Terbium had handled the September salaries, distributing cash paid to it via the Bank of Baroda. However, Terbium last week insisted it had ended all its services to the companies at the end of August. 

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Phillip De Wet
Guest Author

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