Once Standard Bank informed their Gupta clients of its decision to sever ties due to money laundering and corruption concerns, the bank’s CEO, Sim Tshabalala was “invited” to a meeting with then ANC Secretary General, Gwede Mantashe and his deputy, Jesse Duarte as well as Enoch Godongwana, head of the party’s economic transformation desk.

The details of this meeting at Luthuli House, one of two that executives of the bank had to attend in the wake of its 2016 decision, were recorded in a follow-up letter to ANC officials and the content was never disputed.

At the State Capture inquiry on Monday, Ian Sinton, the bank’s now retired head of legal risk, testified to this meeting as well as another, involving former mining minister Mosebenzi Zwane and labour minister, Mildred Oliphant where officials allegedly sought to strong-arm the bank into reviewing its decision to terminate the Gupta accounts.

“I was told it was to discuss the notice of closure relating to the Gupta accounts. When it started, we made it clear to the ANC representatives that we were not in a position, legally, to discuss the affairs of our customers and in particular, not the Gupta/Oakbay companies.”

“We thought it inappropriate, but nevertheless attended (the meeting),” said Sinton, the bank’s now retired head of legal and compliance.

He revealed details of the meeting as part of his testimony before the Commission which is investigation allegations of State Capture involving the Gupta family, former President Jacob Zuma and his son, Duduzane, is also tasked with examining unlawful efforts to help the Guptas cling to their banking facilities once the country’s major banks ditched them in 2016

The bank is one of three scheduled to testify this week about how it came to close the Gupta company accounts when information in the media triggered extensive internal checks that ultimately had these financial institutions conclude that they were high risk.

This decision resulted in a massive fallout with some members of the executive strong-arming the banks while Gupta executives sought to put pressure on former finance minister Pravin Gordhan to intervene.

Gordhan eventually approached the High Court in Pretoria for a declaratory order – in the process revealing in excess of R6-billion in suspicious Gupta-linked transactions – that it would be unlawful for the minister to intervene and a decision handed down last year, confirmed as much.

At the Luthuli House meeting, Sinton said, he and Tshabalala explained their policies on closing accounts against local and international regulations and flagged a case involving one of its overseas offices which had had to pay $38-million in fines and penalties for having employed a politically exposed partner in Tanzania.

In that case, Sinton said, the UK authorities found that the bank’s staff ought to have foreseen the possibility that its then local partner would be sharing a fee paid with people in government.

As a result of this case, the bank was therefore very sensitive to dealing with people who would be engaging with gratification of any sort.

It’s decision to scrutinise the Gupta accounts as part of a notice to shut them down, was informed by a variety of media articles, including claims by former deputy finance minister, Mcebisi Jonas that one of the Gupta brothers had offered him a bribe and a promotion in exchange for favours.

Although they had told the ANC officials that they could not discuss the Gupta accounts, the meeting did go on to talk about it and a “perception” that the bank was part of White Monopoly Capital seeking to oppress black business.

“We were asked to comment on reports that we are taking instructions from people in Stellenbosch. This was the first time I saw my boss (Tshabalala) get really angry,” Sinton said.

He said the ANC officials raised concern about the effect of their bank accounts being closed on their ability to pay the salaries of affected staff.

“Our answer at the time was that we were complying with the law and taking the necessary steps to protect the bank. And, that our staff are equally important and that we can’t do anything that exposes us to international sanction.

“We thought it appropriate to summarise what had come out of the meeting and sent a letter to the ANC,” he said.

Sinton then also provided details of a second meeting he and Tshabalala had with former mining minister, Mosebenzi Zwane who had introduced himself as the chairman of an inter-ministerial sub-committee of Cabinet tasked with investigating the closure of the Gupta accounts.

“This meeting was an attempt by two Cabinet ministers, on behalf of Cabinet, to persuade us to retract our decision to shut the Gupta accounts. There was no other reason for that meeting,” Sinton said.

In this meeting, attended by Zwane and then Cabinet colleague, Mildred Oliphant as well as Mzwanele Manyi (described to them as the ministers’ adviser), Sinton said he and Tshabalala would be warned by Zwane that he had the ability to get the law changed whereby it would be illegal for banks to close accounts in the manner in which they had gone about closing Gupta accounts.

Zwane also reminded them that the bank operated under a licence from the government and that they should, therefore, be more “responsive” to government’s concerns in the Gupta case, Sinton said.

One of the two ministers (he could not remember whether this was Zwane or Oliphant) even went as far as asking them whether compliance with the law was more important than the well-being of employees of the Gupta companies likely to be affected by their inability to pay salaries once their accounts were closed.

“Our response was that we do no more than complying with very onerous laws. We were very concerned about people being affected but (said) it is really the conduct of the owners and managers of those businesses who are responsible,” Sinton told the Commission.

Asked during the meeting why the bank didn’t shut the accounts of construction cartels involved in collusion, Sinton said they told the meeting that “collusion” was quite different from money laundering and corruption.

This meeting too was recorded by the bank executives in a follow-up letter to Zwane and Oliphant, the content thereof, Sinton said, has never been disputed either.

Sinton ended off by saying as far as he was aware, there was no constitutional provision that would entitle the executive to interfere with a bank/client relationship.

“I certainly am not aware of any statute or law that allows for this. I would assume that the provisions of the executive members ethics act which prevents them from abusing their powers, may prohibit such.” Sinton said.

Earlier on, Sinton highlighted various factors that convinced the bank to terminate the Gupta accounts. Those included discussions during another meeting, this time with Gupta company executives, when they were asked about their decision to move R1.4-billion from the Optimum Coal Mine rehabilitation fund from Standard Bank to the Guptas’ banker of choice, the Bank of Baroda.

Team Gupta said they would get a more favourable interest rate at Baroda.

“We didn’t believe their story about a better interest rate at Baroda,” Sinton said.

Similarly, the bank was concerned when, after they told Gupta executive, Ronica Ragavan that only the trustees of the rehab fund could issue an instruction for the movement of the cash, the trustees were hurriedly changed some 48 hours later.

The Commission resumes on Tuesday. DM

From Daily Maverick Archives: https://www.dailymaverick.co.za/article/2018-08-08-moyane-dossier-part-3-how-moyanes-sars-illegally-paid-r420m-in-vat-refunds-to-the-guptas/