Indian tax authorities have conducted raids on property owned by the South African Gupta business family, who are currently mired in controversy. The raids were carried out on property the family owns in India.
The Gupta brothers and the former South African President Zuma have been linked to corruption, with the resulting scandal ending with Zuma’s forced resignation.
Former South African President Jacob Zuma’s government has been accused of improper dealings with the South African based Gupta family. Brothers Ajay, Atul and Rajesh (also known as Tony) Gupta, all in their 40s, relocated to South Africa from India's northern state of Uttar Pradesh in 1993.
They run a company called the Sahara Group (no relation to the Indian company of the same name). They have interests in computers, mining, air travel, energy, technology and media. In 2016, leaked emails and documents (over 100,000) appeared to highlight improper dealings between the Gupta family and the government. The family has been able to land a number of lucrative government deals for decades. Additionally, Zuma and his family have strong ties to the Guptas. Zuma’s daughter Duduzile was a Director at Sahara Computers. His son, who was also a Director of one of the Gupta-owned companies, stepped down due to public pressure.
There has been significant backlash against both Zuma and the Gupta family. Thousands have taken to the streets to protest the alleged influence wielded by the Guptas. Zuma and the Gupta family have denied any wrongdoing.
Two days after the former president stepped down, Ajay Gupta was declared a fugitive from justice by South African authorities after failing to turn himself over to the authorities. Reports note that they have fled the country.
In addition to the investigation, the Gupta brothers are under the scanner in India as well. Residences and offices which are part of the Gupta business family have been raided by Indian tax authorities. "The investigation is ongoing, and we will divulge all information after the probe is completed," Harish Kumar, a senior tax official in the Indian state of Uttar Pradesh, told Al Jazeera. Even though they are South African citizens, the Guptas still have property in India.
Hemindra Hazari, an Indian financial research analyst and banking expert spoke about the development noting, “This Indian action could be based on an official request sent by the South African government, to try to retrieve some of the money that the Guptas have allegedly taken out of South Africa. The other reason is also that the Bank of Baroda, which is a majority government-owned bank has been acutely impacted because of the Gupta connection.”
The Gupta brothers have taken out loans worth crores from Indian banks. Bank of Baroda has stated that the bank would not suffer losses due to the scandal. “We are aware that eight companies of the group have gone under business rescue and business rescue practitioners have been appointed,” said Eric Tucker, general manager, head of international banking at Bank of Baroda. “The exposure to the Gupta entities is a confidential matter. However, in the context of BoB’s size, the exposure is not very material and does not impose any significant risk on us. We are adequately covered in the accounts under business rescue and have a detailed plan for recovery in the accounts. As of now we remain confident of our ability to recover our dues.”
Our assessment is that these raids come during a period when Indian banks are suffering losses due to bad loans. It remains to be seen if the banks linked to the Guptas will have to deal with negative consequences. Additionally, the controversy around the Gupta brothers can also affect ties between India and South Africa. There are concerns that this would damage India’s image in the African continent.