Gupta-linked VR Laser mum on bank account closures

2017-02-03 14:59
Businesses associated with the Gupta family are under increasing pressure to find financial institutions that are willing to facilitate and process their banking transactions. 

The Bank of China severed ties with Johannesburg headquartered VR Laser just three weeks after the company opened bank accounts with the institution in September last year. 

The bank is majority owned by the Chinese government and is the third largest financial institution in China.

VR Laser CEO Pieter van der Merwe on Friday declined to comment on the closure of the company's bank accounts, except to say to Fin24 that the process is currently under litigation.

He was also not willing to divulge who the company is currently banking with. 

BusinessLive reported on Friday that VR Laser, of which Ajay Gupta’s eldest son Kamal Kant Singhala (24) is a director, approached the Bank of China after Nedbank and Standard Bank closed the company’s accounts last year, citing reputational risk.

The Bank of China, which is 64% owned by the Chinese government, demanded that VR Laser restructure its business to exclude shareholding by the Gupta family before it would continue doing business with it. 

According to papers van der Merwe filed in Tshwane's North Gauteng High Court in January, an official from the Bank of China said in a letter that the company’s accounts had to be closed in terms of the bank’s internal rules and risk appetite. 

VR Laser, which supplies steel products to South African state-owned steel maker Denel, has been the subject of controversy since January last year when it emerged that the company registered a controversial joint venture with Denel Asia in Hong Kong.

National Treasury subsequently declared the agreement illegal because it hadn’t been authorised by Finance Minister Pravin Gordhan. 

In 2013, VR Laser landed a lucrative contract from Denel for 238 Badger vehicles to the value of R10 billion, City Press reported in April 2016.

Oakbay Investments, owned by the Guptas, has recently laid into Gordhan as well as South Africa’s four big banks in a lengthy affidavit with accusations of attempts to discredit the family. 

Oakbay's acting chief executive, Ronica Ragavan, said the company's bank accounts present low risk for money-laundering activities or use of the financial system to further corruption.

Ragavan was the first respondent in Oakbay’s responding affidavit to Gordhan’s court bid to prevent him from intervening with banks on behalf of the Gupta family. 

Ragavan said the overwhelming majority of the banking services used by the Oakbay-affiliated companies were used for payroll and other business transactions that were ordinary and customary, and that Oakbay had “no complex treasury functions such as currency trading, hedging or complex loans”.

Last year, South Africa's four biggest banks - Absa, FNB, Standard Bank and Nedbank - severed ties with Oakbay Investments owned by the Guptas.

At the time the banks did not provide any reasons for their action, but in separate affidavits submitted later, the banks cited reputational risks and fears of money-laundering as considerations.

December 8 2019