The South African government is intervening on behalf of the Gupta family company, Oakbay Investments, after four leading banks in South Africa severed relations with the company. The family is under investigation for alleged undue influence on President Jacob Zuma.
ABSA, FNB, Nedbank and Standard Bank as well as Safin and auditing firm KPMG, have stopped services to Oakbay investments, which holds assets for the family including the New Age newspaper, TV channel ANN7 and Sahara computers, EyewitnessNews reported.
The country’s biggest banks decided to cut ties with the company over potential “reputational risk.”
Their action may deter potential investors wanting to do business in South Africa, said Jeff Radebe, Minister in the Presidency.
Radebe dismissed suggestions that the move could be seen as an attempt by the government to bully the banks into submission over their decision not to do business with controversial Gupta family, EyewitnessNews reported.
The government will not be conducting an investigation, but “a normal interaction” where ministers meet with the banks’ representatives to get information, Radebe said, according to a report in News24.
Three South African ministers including Finance Minister Pravin Gordhan, Labour Minister Mildred Oliphant and Mineral Resources Minister Mosebenzi Zwane will open “constructive engagement” with the banks to find a lasting solution, he said.
At stake are 7,500 jobs at Oakbay, BusinessTech reported.
The government needs to find out why the banks don’t want to have a certain company as their client, Radebe said.
Oakbay Investments CEO Nazeem Howa told staff in a letter that the closure of its bank accounts “made it virtually impossible to continue to do business in South Africa,” BusinessTech reported.
Redebe didn’t address questions about government interference, or whether it could justify negotiating on behalf of a private company, or whether the government had done the same for other private businesses, News24 reported.