Cabinet has asked President Jacob Zuma to launch a judicial inquiry into why the country’s top banks cut ties with Oakbay Investments, the company owned by the wealthy Gupta family, who have been accused of holding undue political sway over Zuma.

The prominent business family is accused by the opposition of being behind Zuma’s abrupt sacking of former Finance Minister Nhlanhla Nene in December, a move that rattled investor confidence and triggered calls for the president’s resignation.

The Guptas, whose businesses stretch from media to mining, have denied using their friendship with Zuma to influence his decisions, including Cabinet appointments, or advance their business interests. The president has admitted the Guptas are his friends but denies anything improper.

The proposed inquiry could trigger further political turmoil after markets were rocked by a police investigation of Finance Minister Pravin Gordhan.
A large local asset manager said on Wednesday it would no longer lend to state firms because of the political uncertainty.

Cabinet said in a statement released late on Thursday that the judicial inquiry should consider taking legal action against the banks for closing the accounts of the Guptas’ company, Oakbay Investments.

The main Democratic Alliance (DA) said on Friday that the call for an inquiry was “a political hit sponsored by the Guptas” and that it would petition Zuma not to establish the judicial team to look into the matter.

Presidency spokesperson Bongani Ngqulunga said he could not immediately comment. The South African banking association said it would await Zuma’s response before taking any further action.

Oakbay said in April that it would struggle after the banks closed its accounts, and that 7 500 jobs could be affected. A family spokesperson for the Indian-born businessmen, who moved to South Africa in the early 1990s, said the inquiry would not change plans announced on Saturday to exit its South African businesses this year.

Several banks and companies had cut ties with Oakbay, including South Africa’s top four: Standard Bank, Nedbank, Barclays Africa’s Absa and First National Bank (FNB), part of FirstRand.

An inter-ministerial team, set up by Cabinet in April to look into the reason for the account closures, said the banks were influenced by “innuendo and potentially reckless media statements” about the Guptas.

As part of its recommendations, Cabinet also urged Zuma to set up a state bank and called for new banking licences to be issued to end the “oligopoly” in the industry. – Reuters