South Africa’s “big four” banks could have been locked out of the international payments system with “absolutely catastrophic” results if they had kept the Gupta family’s bank accounts open in 2016, according to South African Reserve Bank deputy governor Kuben Naidoo.
Reserve Bank governor Lesetja Kganyago echoed this sentiment, explaining that, if South African banks had been banned from the international financial network, large scale job losses would have occurred.
There were pleas by Cosatu in 2016 to the banks to keep the Gupta-linked business accounts open in order to pay employees and concern from the Inter-Ministerial Task Team established to deal with the issue.
Kganyago and other senior officials at the Reserve Bank held a media lunch in Johannesburg on Friday, the same week that the “big four” banks testified before the Zondo Commission of Inquiry into state capture about the government and the ANC’s attempts to keep the Gupta’s bank accounts open.
Laws passed by politicians
The Reserve Bank is responsible for the regulation of banks and Kganyago said the financial institutions are highly regulated by laws “passed by the same politicians”.
He explained there is no legislation which stops banks from doing business with “politically exposed persons” (PEP) adding that his position places him in this category, but, should the institutions pick up suspicious transactions and a not act on them, they will be removed from the international banking system.
The banks did not disclose their reasons for cutting ties with the Guptas in 2016, citing the confidential client-bank relationship, but several representatives told the Zondo Commission last week they took the decision due to reputational and business risks associated with the family’s operations.
The Zondo Commission, which is probing allegations of state capture, heard testimony from Standard Bank of being summoned to the ANC’s headquarters, Luthuli House, to explain why the Gupta accounts were closed.
FNB and ABSA banks declined to meet government representatives about the issue, while Nedbank testified that former minister of mineral resources Mosebenzi Zwane threatened the company’s banking licence if it refused to reverse its decision. — Fin 24