Absa was concerned about ‘risky’ Gupta accounts

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JOHANNESBURG, September 18 – Absa began reviewing the Gupta-owned business bank accounts as early as 2014 as explosive media reports on the controversial family increased, and did a risk assessment of the accounts, the state capture commission heard on Tuesday.

Absa’s Yasmin Masithela told the commission that as a then subsidiary of Barclays PLC, Absa had to adhere to the AML (Anti-Money Laundering) policy which required that high risk and politically exposed customers undergo enhanced due diligence every year.

“In November 2014, Absa’s PEP committee [politically exposed persons committee] took a decision that we would exit the company [Oakbay] and related parties. The reasons forwarded by the committee was that Oakbay was not using Absa as its primary bank or dual bank, and Oakbay was apparently moving their banking accounts elsewhere. So Absa was therefor limited in its ability to monitoring the accounts,” said Masithela.

She said there was evidence of large unexplained transfer of funds by Oakbay to other banks. Absa could not account for these transfers, and the revenues the bank received from Oakbay portfolio decreased over the years, said Masithela.

“There was also adverse media reports regarding Oakbay company, which increased the reputation and conduct risk arising from [the] continued relationship. It was on this basis that the committee having reviewed the accounts and a due diligence took a decision to terminate the accounts.”

Absa cut off banking ties with the Guptas in December 2015. FNB, Standard Bank and Nedbank followed suit in 2016.

Similarly to FNB and Standard Bank, Absa was requested by the governing party to meet and discuss the Gupta accounts. Maithela said Absa met with then African National Congress (ANC) secretary general Gwede Mantashe, as well as Enoch Godongwana, Jessie Duarte and Krish Naidoo.

The bank made it clear that the bank-client relationship would not be discussed, leading to the meeting discussing bank regulations and rules.

A request later for a meeting by the inter-ministerial committee, chaired by then minerals minister Mosebenzi Zwane was turned down. Masithela said her bank decided not to meet with Zwane and his committee as repeated attempts to get information from the committee secretary on the agenda and who would be at the meeting were never answered.

Nedbank will give testimony on Wednesday.

African National Congress (ANC) leaderĀ Enoch Godongwana contacted FNB two years ago to meet and discuss the closing of Gupta-linked business accounts, the bank’s former chief executive Johan Burger told the judicial commission of inquiry into state capture.

Burger’s tenure as FNB CEO ended in August. He said he found it unusual to receive a call from the ANC requesting a meeting over clients’ bank accounts.

”I received a phone call from Mr Enoch Godongwana to attend a meeting with the secretary general of the ANC [then Gwede Mantashe] at Luthuli House, over the closing of the [Gupta] bank accounts. It was an unexpected call, I did not understand why I was invited to the meeting with the ANC. I informed him I was out of town and would be back in a few days. In my 32 years in the banking industry, it was the first time I received a request from a political party or the inter-ministerial committee to meet and discuss client bank relations.”

A series of SMSes were sent between Burger and Godongwana. Burger said Godongwana then told him he was no longer required to meet with Mantashe, and that was the last time the two communicated.

In 2016, FNB shut down accounts belonging to Sahara Computers, Island site, TNA Media and Tegeta, all Gupta entities. Burger said the reputation and banking risk became too high as it continued banking relations with Gupta companies.

”If one does not comply with the regulatory framework of the country in which one operates, there will be reputation risk associated with non-compliance. There will also be a reputation risk if a bank conducts activities regarded by stakeholders as immoral, illegal and unethical. It will suffer reputation risk if its clients are involved.”

Burger said his bank followed the Financial Intelligence Centre (FIC) act and reported suspicious Gupta activities as required by law. The reasonable notice was given to the account holders before the accounts were shut down, he said. Then Oakbay CEO Nazeem Howa wrote to FNB requesting reasons for the accounts closures.

”We received written response from Oakbay CEO asking for reasons for the termination of accounts. We provided reasons through a letter, that the decision was due to associated reputation and banking risk. We also responded to Oakbay over their request to access the information we submitted to FICA, we told them we are not allowed to provide such information on suspicious transactions to a third party, only to FICA,” said Burger.

South Africa’s leading banks – FNB, Standard Bank, Nedbank and Absa closed the Gupta-linked accounts as a dark cloud gathered over the controversial family and their associates. Absa led the pack by shutting down the family business accounts in December 2015.

– African News Agency (ANA)