Standard bank denies business rescue for Gupta companies

Standard Bank said a decision to terminate all dealings with the Gupta family and all entities controlled by it was taken with effect from June 2016 and still stands. (Reuters)

Standard Bank said a decision to terminate all dealings with the Gupta family and all entities controlled by it was taken with effect from June 2016 and still stands. (Reuters)

Standard Bank South Africa has denied there is a formal agreement in place to provide banking facilities to eight embattled Gupta-linked entities which are now under the control of business rescue practitioners.

The rescuers, from Coronado Consulting Group, had told the Mail & Guardian on Monday night they had secured banking facilities with Standard Bank. “Those accounts will be opened this week,” said practitioner Louis Klopper.

READ MORE: BEE commission to probe Gupta-linked firms for allegedly faking certificates

In a response issued on Tuesday morning however, Standard Bank said a decision to terminate all dealings with the Gupta family and all entities controlled by it was taken with effect from June 2016 and still stands.

“Any impression created to the contrary was created by an employee that was acting out of mandate. Communication between the employee and the business rescue practitioner was not authorised and did not follow the internal processes of the bank.  Disciplinary procedures are currently underway,” Standard Bank said.

The directors at the eight companies, including Optimum and Koornfontein mines, Shiva Uranium and VR Laser, applied to put the businesses in rescue on February 16.
They 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.

Business Rescue: How to keep the Gupta empire afloat

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.

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 business rescue team held the first meetings with creditors in Johannesburg on Monday and Tuesday.

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

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