Johannesburg - The Organisation Undoing Tax Abuse (OUTA) appears to have uncovered that the Guptas were massively inflating the value of the properties they owned - receiving bonds of nearly R1bn for properties totalling R245m.
In a press statement, OUTA said they were taking action against two of the banks which appear to have supplied the majority of these bonds - the Banks of Baroda and the State Bank of India, for failure to comply with banking laws.
"We have compiled evidence to take action against these banks and handed it to the Registrar of Banks and the Financial Intelligence Centre (FIC)," OUTA chief operating officer Ben Theron said on Thursday.
"We want these authorities to act to ensure that the Bank of Baroda and the Bank of India cease all business with the Guptas, and revoke their licences to trade within South Africa."
In a letter sent to the South African Reserve Bank and the FIC, the civil organisation said the banks had provided many of the Gupta businesses with bonds which far exceeded the value of the properties, and the bonds were often registered years after the purchase date of the properties.
"As an accounting authority, a bank has a duty to satisfactorily and in the best interest of the public carry on the business of a bank and to combat activities which have, or are likely to have, the effect of concealing or disguising the nature, source, location, disposition or movement of the proceeds of unlawful activities or any interest which anyone has in such proceeds i.e money laundering," the letter said.
It added that, in a spreadsheet of the properties supplied with the letter, it was obvious that loans were granted against inadequate security.
This was contrary to the principles of good governance and the standards of practice banks had to adhere to.
72 suspicious transactions
OUTA has asked that the Registrar of Banks consider issuing a directive that the banks cease all business with the Guptas' businesses, that they appoint an inspector, impose a financial penalty of R10m in respect of natural persons and R50m in respect of legal persons, and that they lodge an application with a competent court for an order cancelling or suspending the registration of the banks.
They ask that the FIC help identify unlawful activities, money laundering, and the financing of terrorism. These are general concerns when large sums of money are moved around.
In August 2016, the FIC listed 72 suspicious transactions on Gupta-linked bank accounts. These took place between December 2012 and June 2016 and involved a total of R6.8bn.
Various South African banks subsequently closed the Guptas’ bank accounts.
OUTA said they found suspicious financial transactions beginning in 2002 and stretching over many years.
"We found that the businesses linked to the Guptas bought properties over more than a decade for a total of R245m – more than R50m was paid in cash – but managed to get bonds on these properties totaling nearly R1bn, an amount that far exceeds the value of these properties," Theron said.
'Particularly problematic'
The Bank of Baroda provided bonds valued at R811m and the Bank of India R176m. The remaining R11m came from FirstRand.
"The transactions linked to the Bank of Baroda and the Bank of India are particularly problematic," said Theron.
OUTA said some of the properties appeared to have had massively inflated values.
The Guptas’ company, Islandsite 180, bought two Cape Town flats in 2006 for R2.8m each. Two years later the Bank of India generously provided bonds of R24m on each flat. This was 8.5 times the purchase price, OUTA said.
In another instance, the Guptas’ company, Confident Concept, bought a farm in Mpumalanga for R40m. A year later the Bank of Baroda bonded it for R426m - more than 10 times the purchase price.
The spreadsheet provided by OUTA shows a list of 24 properties, most of them valued in the millions. They are properties linked to businesses - like the TNA and ANN7 offices, which were bought for R30m with a bond of R37.5m.
Sahara’s head office was bought for R7.7m and has a current estimated value of R33m, according to information provided by OUTA.
