16:00 In the afternoon session, and bowling for the Guptas, Advocate Daniels representing applicants 1-4 attacks the basis on which the Bank of Baroda terminated the relationship with the Guptas and sought the repayment of the loans.
“The provisions in the term loan are invalid, and the notice to terminate the term loans were invalid. The confusion came in when the respondent notified us of the termination on the loans using powers we do not think they possess. It was an invalid termination of the contract.”
Daniels says the facility agreements contain clauses that were completely nonsensical like if you default, they can terminate the relationship on seven days’ notice. But if you operate your account in good order, you are not faced with any such sanction.
14:30 Advocate Fine for the Bank of Baroda begins by citing the applicant’s affidavit that challenges the lawfulness of the termination of the bank accounts on the basis there was inadequate time for the applicants to secure banking facilities with another bank. “But they failed to tell the court that they signed agreements with pay agents to pay their employees in July.”
Fine goes on to emphasise that the first four applicants (Annex Distribution, Confident Concepts, Sahara Computers, Vr Laser Services) are bound by what is set in the terms and conditions of the documents BOB provided them when they opened the accounts. “The only requirement in law is that the right to demand the repayment of the loans is done on a reasonable basis, giving the client a reasonable notice period to repay the loan.”
Fine then goes on to describe how continuing to deal with the Guptas increases the risk and reputational damage of the bank. “With respect to the suspicious transactions report to the FIC, there were 36 totalling R4.2 billion up to July 2017. Given the substantial number of STRs generated, it could expose the bank to risk of legal liability. It has increased substantially as a result of the other banks closing their accounts. So how can my learned friends stand up and say it is speculation whether or not the bank is suffering irreparable harm?” says Fine.
In addition, monitoring the Guptas has imposed more costs on the bank. “Because they are considered high risk clients, we have to virtually monitor every transaction and there are as many as 150 – 200 per week which is taking up to 8 hours a day of senior executives’ time.”
13:40 Fresh back from lunch, and the applicants (the Guptas) have finished their submissions. The strength of their case – in my opinion – will rest on the basis that the Judge agrees they have a reasonable chance of winning the argument in December (when the matter is considered by the Court). If he does, the one point that appears to strengthen the Guptas hand, is that there is no other avenue of relief open to them, should the Bank of Baroda close their accounts. They will, for all intents and purposes, suffer irreparable harm as they cannot operate a business inside of the country without operating a bank account. And the Bank of Baroda is the last bank to which they have access to banking services. Soit the last stop for them.
11:37 Just a reminder about what is at stake today. The Guptas in this application are seeking an interdict order, effectively seeking to keep the status quo in place (their bank accounts open) until the merits of their case are heard in December. So today the points of law being argued relate to rights of access to justice and rights to effective remedy.
Prior to a short recess, Judge Fabricius asked Advocate Bhana to what extend the Bank of Baroda (BOB) could rely on the Public Protector’s State of Capture report in assessing the reputational damage the bank might suffer from dealing with the Guptas.
Bhana counterpunches by pointing to the fine the Bank of Baroda received for its contraventions relating to the Financial Intelligence Centre (Fic) act. He refers to the Section 7 findings (that Moneyweb earlier reported on), in which the South African Reserve Bank (Sarb) found the bank wanting in respect of a number of banking regulations. “Their integrity has been damaged by their own lackadaisical approach to managing their own affairs,” says Bhana.
11:02 Judge Fabricius is verbally sparring with Advocate Bhana (representing the Guptas) over whether the Court has the power to rule on the Bank of Baroda’s (BOB) assertion that its reputation is being damaged through its continued dealing with the Guptas. The judge is clearly skeptical the Court has the power to do as much and asks Bhana how he should go about doing this.
10:05 The Guptas have filed an urgent application in the North Gauteng High Court to keep the bank accounts of their various companies open for an interim period, until its case is heard in December.
The Bank of Baroda – hot on the heels of receiving a fine of R11 million in July for contraventions of the Financial Intelligence Centre (Fic) Act, relating to the Guptas’ purchase of the Optimum Coal Mine – is opposing the motion. It has given the Guptas notice that it intends to close their accounts at the end of September.
The South African branch of Bank of Baroda – India’s second largest bank – is the last bank in South Africa to provide the Guptas with banking services. It gave the Guptas notice on July 6 2017 that it would close their accounts on September 30, effectively providing them with three months’ notice.
The Bank of Baroda states that for the Gupta companies in the ten months to July, the bank reported 36 suspicious transactions totalling R4.2 billion to the Fic.
The Gupta companies seeking the interim interdict:
Annex Distribution (PTY) LTD – First applicant
Confident Concepts (PTY) LTD – Second applicant
Sahara Computers (PTY) LTD – Third applicant
Vr Laser Services (PTY) LTD – Fourth applicant
Sahara Consumables (PTY) LTD – Fifth applicant
Infinity Media Networks (PTY) LTD – Sixth applicant
Islandsite Investments One Hundred and Eighty (PTY) LTD – Seventh applicant
Koornfontein Mines (PTY) LTD – Eighth applicant
Oakbay Investments (PTY) LTD – Ninth applicant
Oakbay Resources & Energy (PTY) LTD – Tenth applicant
Optimum Coal Mine (PTY) LTD – Eleventh applicant
Shiva Uranium (PTY) LTD – Twelfth applicant
Tegeta Exploration And Resources (PTY) LTD – Thirteenth applicant
Westdawn Investments (PTY) LTD – Fourteenth applicant
Idwala Coal (PTY) LTD – Fifteenth applicant
Tegeta Resources (PTY) LTD – Sixteenth applicant
Mabengela Investments (PTY) LTD – Seventeenth applicant
Mabengela Resources And Energy (PTY) LTD – Eighteenth applicant
Koornfontein Rehabilitation Trust – Nineteenth applicant
Optimum Mine Rehabilitation Trust – Twentieth applicant