The bank’s retired head of legal also said they were following Absa’s lead, amid concern that the family was up to no good.
Standard Bank’s retired head of legal Ian Sinton testified on Monday before the Commission of Inquiry into State Capture on Monday about why his bank decided to shut down business accounts linked to the controversial Gupta family.
Sinton reportedly retired in June 2018.
Sinton testified that banks are obliged by the Financial Intelligence Centre Act to report suspicious transactions, with the failure to do so being a criminal offence.
He added that the Prevention of Organised Crime Act means banks cannot benefit from the proceeds of crime and that the Prevention of Combating of Corrupt Activities Act means banks cannot be used for corrupt transactions.
The consequences of failing to comply with South African and international regulations pertaining to suspicious transactions could result in fines and imprisonment for banks and their employees, Sinton testified.
Standard Bank, according to Sinton, kept an eye on media reports about suspicious transactions and a decision was taken to terminate the relationship with the client.
South Africa’s four major banks – Absa, FNB, Standard Bank and Nedbank – cut ties with the controversial Gupta family, citing reputation risk and a possible breach of the banking rules.
Sinton cited several media reports about the Gupta family that he said were concerning and caused suspicion for the bank.
These included former deputy minister of finance Mcebisi Jonas alleging that he had been offered a R600 million bribe and the position of finance minister by a Gupta brother and subsequent allegations about the Gupta family made by former ANC MP Vytjie Mentor and former Government Communication and Information System (GCIS) boss Themba Maseko.
Sinton said Standard Bank’s decision to end its relationship with the Gupta family was also influenced by Absa’s decision to terminate with Gupta-linked entities.
He added that banks had received an invitation to meet with the ANC at Luthuli House about the Guptas’ account, and that they agreed to attend out of “respect”.
Sinton reportedly said following the bank’s decision to end its relationship with the Gupta family, Oakbay, a company owned by the family, launched a campaign aimed at convincing the bank to reverse its decision.
Standard Bank met with Oakbay’s management following the decision, Sinton testified, where the Gupta-linked company’s leaders allegedly told the bank that media reports linking Oakbay to corruption were incorrect.
The company’s executives had argued that since the Gupta brothers had resigned as directors of Oakbay they were no longer involved in the company’s running.
The company, Sinton testified, had allegedly requested Standard Bank to transfer a billion rand to Bank of Baroda, which the Gupta family acquired the services of after the closure of its accounts by the South African banks. The Ciziten.
