The Guptas and President Jacob Zuma’s son Duduzane Zuma on Friday announced their resignation from Oakbay Investments and Oakbay Resources and Energy [JSE:ORL].
This family, which owns Oakbay, includes Atul, Ajay, Chetali, Rajesh “Tony”, Arti and Varun Gupta.
Ajay and Atul were the co-chairs of Oakbay Investments, while Atul was the chair of Oakbay Resources and Energy. Varun Gupta was the CEO of Oakbay Resources and Energy, while Duduzane Zuma was a director of Shiva Uranium.
The family has come under increasing pressure due to allegations that they influenced President Jacob Zuma’s appointment of Mines Minister Mosebenzi Zwane and former finance minister Des van Rooyen, as well as offering ministerial posts to Deputy Finance Minister Mcebisi Jonas and former ANC MP Vytjie Mentor.
The allegations are that in return for these positions, these ministers would ensure the Guptas received government business and contracts, resulting in “state capture”.
Oakbay’s auditor KPMG, their banks FNB and Absa and their sponsor Sasfin Capital all cut ties with the Guptas in March. “An update regarding the company’s banking relationships will be provided shortly,” Oakbay Resources and Energy said in a statement on Friday.
Its share price dropped 0.19% to R26.75 at 14:40 with a market capitalisation of R21bn. It had recovered much of its losses since February 10, when the price dropped from R30.50 to 7.55.
Why the Guptas resigned
The decision to resign with immediate effect “follows a sustained political attack on the company, and the concern that the jobs and livelihoods of nearly one thousand employees would be at immediate risk as a result of the outgoing director’s association with the company”, Oakbay Resources announced.
“It is with deep regret and a heavy heart, that following a period of sustained political attack on our family and our businesses, we took the decision yesterday to resign all executive and non-executive positions held in Oakbay Investments, by Gupta family members,” the Guptas said in a statement.”
“Oakbay’s executive committee and the CEOs of each of the businesses will continue to oversee the management and running of the business and all portfolio companies going forward,” the Guptas said.
“We find it totally unacceptable that several thousand direct employees and tens of thousands of their dependants will have to suffer as a result of the campaign against Oakbay and the Gupta family.
“By stepping down from all executive and non-executive positions and any involvement in the business, we hope to save the livelihoods of tens of thousands of people in our great rainbow nation.”
The Guptas asked the establishment “that holds the livelihoods of tens of thousands in its hands: Can you do the right thing now that we have stepped aside?”.
Why Zuma resigned
Duduzane Zuma said in a separate statement that he will step down from all Oakbay companies and exit his investments.
“I, like any other South African citizen, have constitutionally protected rights.
“My history and background is no different from that of all previously disadvantaged black people.
“The economy is necessarily skewed against us, which is the very basis of the struggle for political and economic emancipation.
“It is beyond dispute that our political miracle did not usher in an economic miracle for our people, hence the grinding poverty, unemployment and persisting inequality.”
“Poverty in South Africa carries a black face and I didn’t invent that,” Zuma said.
“Notwithstanding my efforts to participate meaningfully in the economy, aspersions were cast on me and my family.
“As a result therefore, I have decided to relinquish all positions that I hold at Oakbay companies and am exiting investments to preserve the jobs of Oakbay’s thousands of employees and to de-politicise my participation in business.
“Lastly, I will continue to be part of my generation whose mission is the economic emancipation of our people. This, my generation will achieve. Like our fathers achieved political liberation for us.”
Oakbay has invested R10bn in SA
According to a press statement, Oakbay Investments has invested more than R10bn in South Africa and employs more than 4 500 people.
“The Gupta family has a 23-year history of strong business performance and turnaround skills,” it said. “This strong performance has come almost entirely via successful activity in the private sector, with less than 1% of the Group’s revenue coming from government contracts.”
“Sector diversification has also enabled Oakbay companies to deliver consistent growth and job creation throughout times of both economic boom and bust.
“For example, 47 000 jobs have been lost in South Africa’s mining sector between 2012 and 2015. In contrast, Oakbay’s mining companies have created 3 500 jobs in the sector.”
State capture a side show – Oakbay
This week Oakbay Investment CEO Nazeem Howa flatly denied that the Gupta-owned company was involved in “state capture”.
“I think it (state capture) has become a side show,” he said on SABC 2 on Wednesday. “The shareholders or any of our professional CEOs who run any part of our business have never spoken about its ability to capture state or appoint ministers.
“One would then have to assume that we have a puppet government in place to say that we can influence any particular leader,” he said. “I don’t believe that any of our leaders can be called a puppet in any way.
“We’re primarily business people,” he said. “We want to do business, we don’t want to get involved in politics.”
Board member Terence Rensen will become Oakbay Resources chairperson, while finance director Trevor Scott will become Oakbay Resources acting CEO until a new candidate is selected to fill the vacant positions, the company said.
Why Oakbay needs a new auditor
Meanwhile, the Johannesburg Stock Exchange (JSE) said on Friday that Oakbay requires an auditor to remain listed. Andre Visser, general manager of Issuer Regulation at the JSE, told Fin24 that the requirement to have an auditor is a statutory obligation in terms of the Companies Act.
“The JSE listings requirements require the appointment of an accredited auditor. In order to be an accredited auditor, the firm must be registered with the IRBA (the SA audit regulator) and in addition also comply with additional entry criteria and ongoing obligation in terms of the Listings Requirements.
“The JSE accreditation process is aimed at raising the standard as it related to auditors for listed companies which ultimate provides additional investor protection.
“The role of the accredited auditor is to express and opinion on the financial statements which provides investors and other stakeholder with the necessary comfort that they can rely on the financial statement.”