Bank of Baroda objects to freezing of funds in South Africa

Bank of Baroda objected to the freezing of some of its funds in South Africa after it was alleged to have helped transfer money meant for the development of a government-backed dairy farm to the politically connected Gupta family and their associates.

The 30 million-rand ($2.5 million) preservation order is wrong because the money due to clients had already been withdrawn and the attachment of an equal amount of the lender’s own funds is “unsustainable,” Luke Spiller, a legal representative for the Bank of Baroda, said in the Free State province’s High Court in Bloemfontein on Thursday.

The court documents showed that other banks transferred cash to the same dairy farm but their money wasn’t frozen, making the order against Bank of Baroda unfair, the lawyer said.

The case is related to a state-owned farm in the Free State leased to Gupta-linked company Estina (Pty) in 2012. The regional government agreed to help develop the land, but the High Court on Jan. 19 gave the National Prosecuting Authority permission to freeze the project’s assets after more than 220 million rand destined for the farm was said to have been transferred to Atul Gupta, one of three brothers, and a number of companies and associates. State prosecutors allege Atul Gupta received 10 million rand.

Atul Gupta and businesses linked to his family have applied to the same court to reconsider the assets’ attachment. The Gupta family have close ties to former President Jacob Zuma and have been accused of using the association to win state business and influence government appointments. Zuma and the Guptas have denied wrongdoing. The crackdown on the dairy farm project came just weeks after South African President Cyril Ramaphosa replaced Zuma as head of the ruling African National Congress.

The prosecutor’s papers are “a national embarrassment,” Michael Hellens, a lawyer acting for a number of Gupta-linked companies including Oakbay Investments Pty Ltd., said in the same court. The chief prosecutor failed to provide evidence that money destined for Estina went into accounts with the Bank of Baroda and then to the Guptas and their associates, he said.