23/12/2016 14:53 SAST | Updated 23/12/2016 14:54 SAST

This Is What Would Have Happened If Gordhan Helped the Guptas

The Guptas wanted Pravin Gordhan to intervene when the country's largest banks booted them as clients. If he had done that, the repercussions would have been severe.

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Atul Gupta at the launch of ANN7 news channel on August 21, 2013, in Johannesburg.

South African banks would have been hit hard had the minister of finance intervened in the banks' decision to stop providing the Guptas with banking services.

That is the contention of Yasmin Masithela, Absa Bank's head of compliance, in an affidavit lodged at the high court in Pretoria. Absa is a respondent in the application by Pravin Gordhan, Minister of Finance, for a declaratory order that he does not have the power to intervene in disputes between banks and private clients.

Masithela tells the court Absa is "deeply concerned" by the Guptas' Oakbay companies' efforts to persuade the minister to intervene. "Absa contends that these were attempts to persuade the minister to act unlawfully by intervening in private banking relationships. If the minister acceded to these requests the consequences would have been significant," she says.

The biggest of these consequences would have been:

  1. Gordhan would have exposed himself by acting outside the law;
  2. Domestic and international confidence in our banking sector – consistently rated as one of the best and most efficient in the world – would have been seriously undermined;
  3. It "would have raised the spectre" of state intervention in private, commercial banking relationships, illustrating that the state is willing to intercede arbitrarily and on behalf of a select few;
  4. A dangerous precedent would have been set, contrary to the public interest, and would have created confidentiality issues for clients; and
  5. It would have exposed Absa to international sanction because of international regulation, agreements and legislation.

Absa contends it supports the minister seeking a court order and argues even though there already are sufficient grounds, an order will bring certainty and clarity "whether public functionaries are entitled to intervene in the relationship between banks and their clients".

Masithela, damningly, attaches letters that confirm the Guptas declined to challenge Absa's decision "after taking legal advice".

She also adds that members of the leadership of the African National Congress (ANC) approached Maria Ramos, Absa's chief executive, "to explain the regulatory environment".

The ANC was concerned there may have been collusion between the four banks. During the meeting, attended by Gwede Mantashe, secretary general, and Enoch Godongwana, chairperson of the ANC's economic transformation committee, Ramos indicated that should there be fears about collusion the ANC was welcome to lodge complaints with the banking regulator.

Besides Absa, Standard Bank, FNB and Nedbank have lodged replying affadavits to the high court.