Gupta family-owned Oakbay Investments should challenge the banks in court if they are “clean”, Black Business Council (BBC) president, Ndaba Ntsele said on Tuesday, adding that banks too have a responsibility to escalate any suspected illegal activity.
“It is in their [Oakbay’s] and their employees’ interest to take this matter to court and they’ve got a lot of money to do this. If there is something that makes them not take it to court, it raises a lot of question marks,” Ntsele, who is executive chairman of the Pamodzi Group, said on the sidelines of a BBC press event.
He said that if there is any suspected illegal activity underway, the banks are responsible for laying charges or reporting such behaviour to the South African Reserve Bank (Sarb) or Treasury.
“I still put the ball in Oakbay’s court: go to court and challenge the banks if you are clean,” Ntsele said.
Oakbay did not respond to a request for comment on why it has not taken banks to court.
The BBC has urged that a solution be found for the “Oakbay matter” – while adhering to regulations and privacy requirements in the financial sector – in order to protect jobs.
“Although unverified, it has been reported that more than 16 000 jobs are directly impacted by the move by the banks, as Oakbay is unable to transact and pay wages and salaries,” BBC CEO, Mohale M Ralebitso said at Tuesday’s press event.
“The emphasis is not so much on the company-level issues as much as on protecting much-needed jobs in this country in light of its high unemployment rate and the multiplier effect, in terms of how many lives each job supports,” Ralebitso noted.
Oakbay Investments’ chief executive officer, Nazeem Howa has said the company would not be able to pay its workers from June 7 if it cannot restore banking relations, according to Reuters.
KPMG, FNB and Absa are among a number of institutions that have withdrawn services from Oakbay and its subsidiaries. While banks have declined to comment on the reasons for these withdrawals, citing client confidentiality, KPMG withdrew due to “association risk”, Oakbay Resources said in a stock exchange filing.
Days after the KPMG announcement, it emerged that FNB had closed accounts with certain of Oakbay’s subsidiaries, a move that Absa had taken in December 2015.
“We find the timing of FNB’s decision staggering given Oakbay’s accounts are in excellent financial health and we have been a loyal and profitable customer for many years,” the company said in a statement at the time, noting that a “major Asian bank with a presence in South Africa”, which did not want to be named, was servicing the group.
Following the withdrawal of financial services to the group, the Gupta family elected to resign from all directorships in Oakbay Investments.
“By stepping down… we hope to save the livelihoods of tens of thousands of people in our great rainbow nations of employees and to de-politicise my participation in business (sic),” Oakbay said at the time.
Oakbay has since launched an advertising campaign requesting Absa, FNB, Standard Bank and Nedbank to “save 7 500 Oakbay jobs by restoring banking services to the business”.
On Tuesday, Oakbay Resources named Jacques Roux, previous CEO of JIC Mining Services, its new CEO.
Collusion allegations should be investigated
Xolani Kubeka, secretary general of the BBC, said the council would like assurance from the banks that the rights of Oakbay employees will be safeguarded.
Stating that while there was not necessarily collusion between banks in withdrawing services from Oakbay, the BBC nonetheless sensed that “banks acted simultaneously” and that, from a business perspective, “we wouldn’t wish to see such precedents”, Kubeka said.
He suggested that the Sarb could have at least communicated to the market that it was aware of the banks’ actions.
“The banks should have applied their minds to save peoples’ jobs… [they] could have done it differently,” Ntsele said, adding that possible collusion between banks should be investigated.
The Sarb, meanwhile, has said that it is not in a position to get involved in differences between banks and their clients. This seems to suggest that the banks may not have informed the regulator about their decisions to withdraw services.
“As a prudential regulator, the Sarb regulates and supervises the prudential requirements of commercial banks. Market misconduct and consumer disputes can be referred to the National Consumer Commission or the Banking Ombudsman,” Bulelwa Boqwana, chief of staff at the Sarb, told Moneyweb.
According to reports, a team of ministers has been tasked to resolve the disputes between the banks and Oakbay. So far, only Standard Bank has met with the ministers, while Barclays Africa has declined a meeting, according to Business Dayand Reuters.
According to its website, Oakbay Investments has invested more than R10 billion in South Africa. “This strong performance has come almost entirely via successful activity in the private sector, with less than 1% of the Group’s revenue coming from government contracts,” it says.
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