Project description

The project, assessing over 17 000 transactions from within the Johannesburg-based branch of the Bank of Baroda, exposed the bank’s deliberate and hands-on role in facilitating money laundering to the tune of billions in illegally obtained wealth amassed by the Guptas, an Indian-born family at the heart of South Africa’s "state capture" scandal. The structure evidenced collusion with former President Jacob Zuma directly, via influence, and indirectly through his son Duduzane Zuma, a proxy for his father. Alongside these key players were public officials at the helm of state-owned entities such as Transnet and Eskom — the source of much of the siphoned billions. When South African banks decided to shut down accounts held by the Guptas, their associates and related entities, inflow to Baroda increased dramatically. Baroda’s senior officials including the CEO Sanjiv Gupta, directly protected the Guptas by providing illegal authorisation letters and guarentees as well as voiding transactions with exorbitant risk percentages or flagged as suspicious activities. These were quickly resolved as genuine activities. The fundamental role played by Baroda helped enable corrosion, disempowerment and marginalisation of the country’s democratic institutions including core units of the South African Reserve Bank, Treasury and the Financial Intelligence Center who were prevented from accessing information that should have been reasonably available. In the process, the financial hemorrhaging of primary institutions would be fast-tracked via Baroda.
Main points from the investigation included:
a) Officials in the bank’s South African branch deliberately suppressing employees’ reports of suspicious transactions so that regulators would not be made aware of them.
b) In some cases, the transactions and deposits lacked required documentation. When information was provided, it often included had major inconsistencies or was incorrect.
c) Among the transactions were tens of millions of back-to-back intercompany loans with no bona fide business or legal purpose. This was designed to disguise the origins of the money as well as make it available for use in other schemes..
d) Just seven of at least two dozen Gupta-related entities transacted close to 4.5 billion rand (about $532 million based on an average exchange rate of 10 years) among both real Gupta firms and shell companies controlled by the family.
e) The amount of cash flowing through the Gupta accounts was so large that it dominated the transactions of the entire Bank of Baroda branch in Johannesburg.
f) By continuing to do business with the Guptas and their shell companies, the Bank of Baroda knowingly provided a lifeline to the family when other South African banks shut down their accounts including provision of money to politically-flagged individuals.
g) Beneficiaries included former President Zuma’s son Duduzane Zuma, a director and shareholder in many of the companies, as well as Gloria Negeme Zuma, the former President’s wife, who received a salary of 160,000 rand ($12,300) per month.
h) Former president Zuma appointed or backed many of the key officials that made the family’s schemes possible including ministers and the heads of state-owned entities such as Eskom and Transnet.

Budget cuts have been announced for the country to the tune of 85 billion in the next few years forcing the poor to pay for corruption of political elites and their corporate camouflaged-fixers where these funds are not recovered.

What makes this project innovative?

Over 60% of South Africans earn $100 per month or less. Just 8 Gupta companies managed to launder about half a billion dollars in siphoned public funds.
Yet the role of banks consciously aiding this --- public and private, "offshore" and onshore --- is often framed as marginal, incidental or largely irrelevant to the structures at play. Against political corruption and corporate fixers, banks have emerged as technically "neutral" institutions despite the deliberate and corrupting role in courting, facilitating, concealing and protecting illegal actors --- purely for the purpose of profit. Large and risky capital injections allow for banks to score higher fees, increase liquidity among other reasons. This project aimed to put the banks in the spotlight as the laundromats making it all possible by "interviewing" the data. It was a very humble addition to a much broader project involving global media groups that had worked on the issue of "state capture" for several years. Though considerable suspicion and instances had been known, the systemic and deliberate role played by Baroda had not yet been proved through their own data-intensive financial records, documents etc.

What was the impact of your project? How did you measure it?

The story resulted in actions such as criminal charges against Baroda in addition to other sensitive processes and outcomes involving law enforcement units in five countries (which we unfortunately are not allowed to discuss). Information was submitted formally to relevant institutions including South Africa's Treasury, Reserve Bank among others. The bank closed its South African branch in 2018 --- a motion put in place coinciding with our questions in late December and early January.

Source and methodology

In the course of investigating the role of the Bank of Baroda in South Africa’s Gupta sandal, OCCRP received a large volume data for transactions that took place through Baroda and internal documents concerning their South Africa branch. Save for specific exceptions, the banking data largely covered five years of transactions (2012-2016) involving Baroda's Johannesburg branch --- one of two maintained in South Africa. The data was manually investigated and then scraped to remove and control for inconsistency, replication and incomplete information. Transactions were split into inflow and outflow with a unique ID imprinted to each record ensuring that the source of every transaction could be traced back to the relevant bank statements.
Removed were shell company accounts only tenuously connected to the Guptas and their associated group. Also removed were certain pieces of data involving persons, companies, trusts and call accounts that OCCRP will be using for future investigations. Companies and persons relevant to our article have been made available for the public interest.

Technologies Used

We had a very skilled team but used basic software.

Project members

Josy Joseph (The Hindu), Julia Renouprez (Open Up), OCCRP's editorial and fact-checking team as well as the sources.

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