NEWS
04/09/2017 12:47 SAST | Updated 04/09/2017 17:25 SAST

Gupta-Owned Company VR Laser Battles To Pay Employees On Time And Workers Fear The Worst

There are fears the Guptas will "skip the country" with employees' money.

A Denel Rooivalk attack helicopter manifactured by South African Denel flies by during the Africa Aerospace and Defence 2016 fair.
AFP/Getty Images
A Denel Rooivalk attack helicopter manifactured by South African Denel flies by during the Africa Aerospace and Defence 2016 fair.

Ajay Gupta's eldest son, Kamal Kant Singhala, on Monday spoke to workers at the embattled VR Laser steel company, where he gave an explanation about the company's failure to pay weekly wages on time.

Singhala (24), a director at the Boksburg-based company, assured workers that their jobs were secure.

According to National Union of Metal Workers of SA (Numsa) shop steward Lucky Nuleya, workers are anxious because the company is struggling to pay the weekly wages of about 200 people.

"We don't get our salaries on time; if these guys [the Guptas] don't have bank accounts, we fear they will skip the country with our money," Nuleya said.

Nuleya said there have been inconsistencies regarding the payment of weekly payments since March when the controversial family's bank accounts were frozen.

State-owned arms maker Denel cancelled its partnership with Gupta-linked company VR Laser Asia, citing reputational damage, reported EWN.

Worse since Bank Of Baroda severs ties
Nuleya said it had become worse since India's Bank of Baroda (BOB) severed its ties with the family. Nuleya said workers were addressed by chief executive officer Pieter van der Merwe shortly after it was reported that South African banks were cutting ties with the Gupta family. This is where he claims Van der Merwe assured workers that they would not be affected by this.

"What they told us was that we were going to be paid through agents with money coming from Bank of Baroda," said Nuleya.

The bank has had a longstanding relationship with the Guptas and made headlines after being slapped with an R11 million fine for assisting them in their acquisition of the Optimum coal mine from Glencore last year.

'Logistical problem'
The company's spokesperson, Wikus Weber, said they had never made any promises.

Weber also slammed accusations that this has been a long-term problem at the company. He said payments had been made on time, with the exception of this past week.

"We are still trying to get answers on why wage payments were not made timeously. There has been a logistical problem between the pay agent and the bank, but management is trying its utmost best to resolve the issues," he said.

Weber said their pleas for assistance have fallen on deaf ears simply because of their association with the Gupta family.

"Unfortunately, all stakeholders ignored the plight of management and workers. This resulted in the situation we find ourselves in today," he said.

Government and trade unions said they could not interfere in the banking relationship between a client and a bank.

"It would have been different if the banks found irregularities in VR Laser's conduct, but we were informed accounts were closed because of the 'Gupta link,'" he said.

The Bank of China severed ties with the company just three weeks after the it opened bank accounts there in September last year.

The bank demanded that VR Laser restructure its business to exclude shareholding by the Gupta family before it would continue doing business with it.

Weber believes "innocent people" have been affected by people trying to "achieve political goals".

VR Laser 'not broke'

The company said Its financial troubles are not because it isn't making enough money.

"VR Laser's projections are of such a nature that it will sustain its growth," according to Weber.

"Other similar companies have either cut their working shifts or retrenched people. We have not. Obviously having experiencing problems, which are caused by banking problems outside our control, makes it difficult."

The company believes it can overcome this hurdle through its skillfull and capable labour force.

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

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