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Updated Feb 21, 2020

Another development has arisen in South Africa’s Judicial Commission of Inquiry into Allegations of State Capture, or the Zondo Commission in short, which is tasked with investigating claims that the administration of former president Jacob Zuma and the Gupta family engaged in fraudulent practices involving bribes, corrupt contracts with state-run enterprises, and manipulation of government policy for the benefit of the Guptas’ private businesses.

A new investigative report co-authored by Open Secrets and Shadow World Investigations looks at the role of South African-based Nedbank and the Indian-based Baroda Bank, the latter heavily involved in aiding the Gupta family in money laundering, usually through multiple suspicious intercompany loans. Baroda’s practices were so egregious that even lower-level officials within the bank began flagging these transactions, eventually leading to an R11 million fine and the closure of all Baroda Bank’s South African branches.

Naturally, the role that Baroda Bank played in the Gupta family’s state capture has led many to portray the Indian bank as the central enabler, but this new report highlights a critical complication: because Baroda was a foreign bank, it required a domestic South African partner to operate, which is where Nedbank came into play. Nedbank is one of South Africa’s four largest banks, with more than R1 trillion in assets. Nedbank helped Baroda clear transactions by allowing the latter to use Nedbank’s infrastructure for all financial transactions. This partnership, the investigators argue, enabled both institutions to avoid responsibility for identifying and flagging suspicious behavior linked to these accounts.

Nedbank has maintained that it was manipulated, like so many other South African institutions, by the Gupta family’s criminal network. The new evidence, now in the hands of the Zondo Commission, challenges this portrayal, which could very well compel Nedbank executives to testify before the commission. Should sufficient evidence of wrongdoing be established, the next step would be to figure out how much Nedbank should be required to pay back and what sort of civil or criminal action Nedbank executives should face.

 

https://www.dailymaverick.co.za/article/2020-02-20-nedbank-and-the-bank-of-baroda-banking-on-state-capture/

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