More Gupta firms placed under business rescue
IOL / 27 FEBRUARY 2018 - 09.47 / BHEKI MBANJWA
Two KwaZulu-Natal-based business rescue practitioners have taken control of seven companies owned by the controversial Gupta family after the companies filed for business rescue last week.
The main task of the practitioners would be to find another transactional bank for the companies who may find themselves without one at the end of next month when the Bank of Baroda closes its South African operation.
Ajay and Atul Gupta File picture: Independent Media
In line with Chapter 6 of the companies act, practitioners Louis Klopper and Kurt Knoop will take control of the affairs of the companies, which include Tegeta Resources, Optimum Coal Mine and Shiva Uranium.
“Our role is to facilitate the rehabilitation of the company and ultimately restructure the affairs of the company in such a manner that we can rescue the company, because the last thing we want to see is another two or three or four thousand people join the unemployment queue,” said Klopper.
He said the Gupta companies were “basically sound businesses”, but the main challenge remained the issue of them facing the possibility of not having anyone to bank with. This means that Klopper and Knoop only have about a month to find another bank for the companies.
Klopper said mining companies could not survive without a bank as by their nature they have to transact on a day-to-day basis.
“If in 30 days none of these banks want to open accounts for these companies, about 6000 to 7000 mine workers will be out of the job because there is no transactional banking, which means I cannot get sales and I cannot pay expenses. It is that simple.”
The Bank of Baroda had been the last bank willing to do business with the Guptas after four South African commercial banks closed Gupta accounts in 2006 flagging suspicious transactions. The Bank of Baroda tried last year to close the Gupta accounts and was met with a court challenge from the companies. Earlier this year it announced it was closing its operations in South Africa.
“The companies are now under the control of the practitioners and not under control of the management or shareholders because the practitioners now take over the control of the company instead of pre existing managers and executives. So all we can do now is really to approach the banks and say ‘the situation has changed’,” he said.
Klopper said while there was a stigma attached to business rescue, there were many benefits that struggling companies could derive from it.
“You have an independent person that is not emotionally attached to your company to assist and fix what is wrong with your company,” he said.
Workers on some of the Gupta mines had complained of not being paid last week.
However, Klopper said workers would be paid this week.
“We were appointed on Friday and we had arranged funds on Friday already. The funds are there and the staff are going to be paid between today and Friday at all the mines,” he said.
Ben Theron of the Organisation Undoing Tax Abuse, said he was equally worried about jobs and the impact this could have on the coal mines.
“Every effort should be made to keep the mines open to ensure job security for the miners and the continuation of the crucial coal supply to Eskom” Theron said.
He added, however, that he believed the companies were struggling and that could mean that the Guptas had moved money offshore.
The news that the companies were placed under business rescue came as the DA made damning allegations against some of the companies.
Party MP Dean McPherson said Broad-Based Black Economic Empowerment (BBBEE) certificates from Tegeta, Optimum and Trillian were possibly fraudulent.
The DA had made a Promotion of Access to Information (PAIA) application to Eskom for the certificates.
The party said that an analysis of the certificates showed that the companies might have misrepresented facts relating to their turnover and black ownership. It said it would make such information available to the commission that will be probing state capture.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER