How Bank of Baroda was overwhelmed by suspicious Gupta-linked accounts
Pretoria court hears the bank was unable to cope, flagging about 36 suspicious transactions valued at R4.2bn
The Bank of Baroda flagged about 36 suspicious transactions on Gupta-linked accounts in 10 months, valued at R4.2bn, the High Court in Pretoria heard on Friday.
The bank was unable to cope with the work as it had to review every transaction with a small staff and could face legal liabilities if it failed to monitor the accounts, said senior counsel for the bank, Dennis Fine.
The Gupta family filed an urgent application to prevent Baroda from closing its accounts at the end of September. This is pending its main application to overturn the decision by the bank to terminate dealings with the family due to be heard on December 7. Baroda has been closely linked to the family even after four local and two international banks, including the Bank of China, had cut ties, and has also been accused of helping the family to launder money.
The Bank of Baroda issued notice of its intention to close the accounts by the end of August and gave the family an additional month after it had complained that the notice period was not sufficient.
Baroda is already in hot water over its ties to the family — Moneyweb says it flouted anti graft and money-laundering laws to help the Guptas buy the Optimum coal mine in 2016.
The Organisation Undoing Tax Abuse also highlighted allegations on Baroda and the State Bank of India had actively helping the Guptas launder money.
Gupta family senior counsel Phillip Daniels hit back, saying only five transactions were flagged as suspicious in 2017, the remaining 67 being from 2016 and before. He questioned the bank for being "happy" to maintain the relationship in 2016, but finding it problematic now.
The high court had previously dismissed an application by former finance minister Pravin Gordhan for a declaratory order that ministers could not intervene in a relationship between a bank and its client on a technical point — the court made it clear this was the case in law already and an order was not required.
In that application, Gordhan told the court that 72 transactions totalling about R6.8bn had been reported as suspicious, between 2012 and 2016.
Judge Hans-Joachim Fabricius had asked the Gupta lawyers whether the fact that six banks, four local and two international, had turned the family away was of any relevance.
Judgment will be handed down on September 21.