South African Court Freezes Gupta Mine Rehab Funds

• South African Court Freezes Gupta Mine Rehab Funds

The South African High Court in Pretoria has restricted access to 1.75 billion rand ($130 million) in rehabilitation-trust accounts for two mines owned by companies linked to the politically connected Gupta family, according to The Organisation Undoing Tax Abuse, a civic action group.

The interim order directs India’s Bank of Baroda to continue to hold the trust funds of the Optimum and Koornfontein coal mines in accounts in the trusts’ names, the group said in an emailed statement Tuesday. The trustees or those with signing powers are barred from “directly or indirectly dealing in any way with, disposing of or removing from” South Africa any of the funds or assets of the trusts, OUTA said, citing the interim court order.

The Gupta family are friends of South African President Jacob Zuma and have been in business with one of his sons. They have been accused of wielding undue influence on the state. The Guptas and Zuma deny any wrongdoing.

Lenders including South Africa’s four biggest banks and Bank of China Ltd. have canceled their accounts amid concerns the companies risked falling foul of regulators and the law.

OUTA said Sept. 21 it was seeking a court order to freeze the trust-fund accounts to ensure that the money didn’t leave the country, after companies controlled by the Guptas lost a court bid to prevent Bank of Baroda from shutting their accounts.

Under South African minerals law, the funds must be set aside for managing the environmental damage caused by mining and to restore and rehabilitate the area when the mine is closed.

Concerns about whether the rehabilitation trust fund for the Optimum mine may have misappropriated were unfounded and the money was “safe and sound,” Gert van der Merwe, the Guptas’ lawyer, said in October last year.

The Guptas’ Oakbay Investments holding company said in August it agreed to sell the unit that owns the Optimum and Koornfontein coal mines to Charles King SA, a Swiss company. The family has also outlined plans to sell its media unit.