South Africa’s cabinet seeks inquiry on banks’ treatment of Zuma friends – Reuters

JOHANNESBURG The South African cabinet has asked President Jacob Zuma to launch a judicial inquiry into why the country’s top banks cut ties with a company owned by the wealthy Gupta family, who have been accused of holding undue political sway over Zuma.

The prominent business family is accused by the opposition of being behind Zuma’s abrupt sacking of former finance minister Nhlanhla Nene in December, a move that rattled investor confidence and triggered calls for the president’s resignation.

The Guptas, whose businesses stretch from media to mining, have denied using their friendship with Zuma to influence his decisions, including cabinet appointments, or advance their business interests. The president has acknowledged the Guptas are his friends but denies anything improper.

The proposed inquiry could trigger further political turmoil after markets were rocked by a police investigation of Finance Minister Pravin Gordhan. A large South African asset manager said on Wednesday it would no longer lend to state firms because of the political uncertainty.

An inter-ministerial team, set up by the cabinet in April to look into the reason for the account closures, said in a statement late on Thursday that it had received the cabinet’s backing for its proposal to set up a judicial inquiry to consider legal action against the banks for closing the accounts of the Guptas’ company, Oakbay Investments.

It said the banks were influenced by “innuendo and potentially reckless media statements” about the Guptas.

As part of its recommendations, the cabinet also urged Zuma to set up a state bank and called for new banking licenses to be issued to end the “oligopoly” in the industry.


The team, led by Mineral Resources Minister Mosebenzi Zwane, said that although Gordhan was one of its members, he did not take part in its meetings.

A finance ministry spokeswoman was unavailable to comment on the non-involvement of Gordhan, who is embroiled in an entirely separate investigation into whether he used a tax service unit to spy on other politicians, something he denies.

The main opposition party, Democratic Alliance (DA), said the call for an inquiry was “a political hit sponsored by the Guptas” and that it would petition Zuma not to establish the judicial team to look into the matter.

Bongani Ngqulunga, spokesman at the presidency, said he could not immediately comment. The South African banking association said it would await Zuma’s response before taking any further action.

Several banks and companies had cut ties with Oakbay, including South Africa’s top four: Standard Bank, Nedbank, Barclays Africa’s Absa and First National Bank (FNB), part of FirstRand.

In April, Oakbay approached government departments including the presidency to express “deep disappointment” over the account closures, saying this made it “virtually impossible” to do business in South Africa.

“I think it’s extraordinary… I can’t think of a previous case in South Africa where government judicial inquiry have been ordered on the basis of complaints of a single family,” NKC African Economics analyst Gary van Staden said.

A family spokesman for the Indian-born businessmen, who moved to South Africa in the early 1990s, said the inquiry would not change plans announced on Saturday for Oakbay to exit its South African businesses this year.

Although the Guptas’ relationship with Zuma has been a source of controversy for years, it burst into the open in March when senior figures went public to say the family had exerted undue sway, including offering cabinet positions.

(Editing by Mark Trevelyan)


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