Zuma’s controversial friends the Guptas and his son step down from business roles

PUBLISHED : Sunday, 10 April, 2016, 2:09pm
UPDATED : Sunday, 10 April, 2016, 2:09pm

Members of a family with ties to South African President Jacob Zuma resigned from management positions in the companies they control following a wave of controversy surrounding the Guptas’ alleged influence over the country’s leader.

The resignations of Atul Gupta and Varun Gupta from Oakbay Resources and Energy came after financial-services groups including accounting firm KPMG dropped the company and other Gupta-controlled businesses as clients as questions about the family’s influence over Zuma mounted. 

Sasfin Holdings has ceased being Oakbay’s broker, while Barclays Africa Group’s Absa unit and FirstRand’s First National Bank stopped providing banking services to all businesses of Oakbay Investments, the holding group. Zuma’s son, Duduzane, stepped down as a director of the company’s Shiva Uranium unit, Oakbay said.

The company contacted Zuma and the ministers of finance, labour, mines “to express deep disappointment over the decisions of our banking partners and to make it very clear that livelihoods are at risk if we are unable to restore these important banking relationships”, co-director Nazeem Howa said in letter to staff which was obtained by Bloomberg.

The scrutiny has been considerable over the course of the last few months ... It doesn’t look like this is going to dissipate soon
Mike Davies, an analyst

The decision comes as pressure is mounting on Zuma to resign as president following a court ruling over his response to a graft ombudsman report and after allegations by senior officials of the ruling African National Congress that the wealthy Indian family offered them cabinet posts in exchange for business concessions. The claims have spurred probes by the party and the Public Protector. The Guptas deny any wrongdoing.

This looks like somewhat of a strategic retreat
Anne Fruhauf, risk advisor

“The scrutiny has been considerable over the course of the last few months,” Mike Davies, an analyst with Kigoda Consulting in Cape Town, said by phone. “It doesn’t look like this is going to dissipate soon.”

Atul Gupta stepped down as non-executive chairman of Oakbay Resources, a listed-unit of Oakbay Investments, while Chief Executive Officer Varun Gupta is also leaving the company, the mining group said in a statement Friday. Oakbay said in a separate statement that a major Asian bank, which preferred to remain anonymous, was servicing the company.

“This looks like somewhat of a strategic retreat,” Anne Fruhauf, vice president at New York-based risk adviser Teneo Intelligence, said in an e-mailed response to questions. It is “a damage limitation exercise in response to the growing political toxicity of the Gupta’s business affairs,” she said.