16/01/2017 09:56 SAST | Updated 16/01/2017 10:08 SAST

Competition Commission Approves Bid By Gupta Associate To Buy Habib Overseas Bank

Salim Essa has clear links to the controversial Gupta family, who are close to President Jacob Zuma and central in the allegations of state capture.

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An old fashioned 'Bank' sign on a building exterior.

The Competition Commission has approved a bid by Salim Essa, a known Gupta associate, businessperson Hamza Farooqui to buy a little-known bank with assets only just exceeding R1,1-billion.

Business Day reported on Monday the Competition Commission has determined the merger between a joint venture by Essa and Farooqui and Habib Overseas Bank — with its headquarters at the Oriental Plaza in Fordsburg, Johannesburg — won't substantially affect competition in the sector, nor are there any issues of public concern.

Essa has clear links to the controversial Gupta family, who are close to President Jacob Zuma and central figures in allegations of state capture. Essa serves as director at VR Laser Services that is part of the Gupta's Oakbay group of companies.

South Africa's four major commercial banks cut ties with the Guptas in April 2016 citing concerns about the legality of transactions by Oakbay and related entities. The Guptas have since allegedly tried to enlist political influence to convince the banks to change their decision. Finance Minister Pravin Gordhan also launched an application to obtain a declaratory order from the high court saying he could not interfere in the operations of a private entity.

The Mail & Guardian first reported in November 2016 about the effort by Farooqui to buy Habib Overseas Bank. According to the newspaper, the bank was fined R1-million by the South African Reserve Bank because of "inadequate reporting of suspicious and unusual transactions". It, however, did not relate to money-laundering or financing of terrorism, but to inadequate control measures.

Farooqui told Business Day he lost business because of his joint venture with Essa, including a relationship with Old Mutual, with which he helped launch an Islamic unit trust.

There is "a wider smear campaign by some members of South Africa's business establishment, who cannot bear the thought of any competition or new entrant in the financial services sector and one particularly that is black owned", Farooqui said.