Rescue practitioners secure banking facilities for Gupta businesses
Standard Bank has agreed to provide banking facilities to eight embattled Gupta-linked entities which have been placed under the control of business rescue practitioners.
The business rescue practitioners, from Coronado Consulting Group, confirmed this to the Mail & Guardian on Monday night, “As practitioners, we were able to secure banking facilities to replace Bank of Baroda with Standard Bank, those accounts will be open this week,” said practitioner Louis Klopper.
The entities, including the Optimum and Koornfontein mines, Shiva Uranium and VR Laser, were placed into rescue under unusual circumstances, said Klopper. That is, they were not distressed but they would soon have been unable to make or receive payments.
On February 12 the Bank of Baroda announced its plan to withdraw from South Africa by the end of March. Baroda, a large bank in India with a very small footprint in South Africa, was the only bank in the country that would provide facilities to Gupta-linked companies after the four big banks closed their accounts in 2016 due to reputational risk.
The companies under rescue, along with 11 others linked to the controversial family, last week attempted to interdict Baroda from exiting the country. Judgment was reserved.
The directors at the eight companies applied to put the businesses in rescue on February 16. Klopper had last week said in a radio interview that if banking facilities could not be arranged, it would be “the end of the road” for the companies in question.
The Gupta-linked companies reportedly employ a reported 7 000 people. Last week mine employees downed tools when salaries went unpaid. Klopper said the payments were now up-to-date, including contract workers who would return to work on Tuesday.
“The condition is that those accounts will operate as long as the practitioners remain in control,” said Klopper with regards to the agreement with Standard Bank. “They trust the practitioners, they didn’t trust the prior management and executives.”
The business rescue team held the first meetings with creditors in Johannesburg on Monday and Tuesday.
Standard Bank could not be reached for comment.