Reserve Bank warned of ‘catastrophic’ impact if banks kept Gupta accounts open

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

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Tehillah Niselow
Tehillah Nieselow
Tehillah Nieselow is a Journalist at Power FM. She Covers labour issues, strikes, protests and general stories

Related stories

Advertising

Subscribers only

How smuggled gold destined for Dubai or Singapore has links...

Three Malagasy citizens were apprehended at OR Tambo International airport, but now the trail is found to connect to France and Mali

How lottery execs received dubious payments through a private company

The National Lottery Commission is being investigated by the SIU for alleged corruption and maladministration, including suspicious payments made to senior NLC employees between 2016 and 2017

More top stories

R2.3bn VBS trial expected to only begin in 2022

The state is expected to request a 16 week-long trial, as delays stymie progress in the saga.

Spy boss tells how agency was used to detain Zuma’s...

Day two of State Security Agency testimony at the Zondo commission birthed more revelations that point to the former head of state and agents breaking the law

Covax will take excess doses of Covid vaccines off the...

The global initiative plans to deliver two billion doses of Covid-19 vaccines to developing nations

Eastern Cape citizens don’t have to visit the labour department...

This measure, aimed at slowing the spread of Covid-19, may shortly be introduced in other regions.
Advertising

press releases

Loading latest Press Releases…